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The CAC index has edged upwards in the Friday session. The index is currently trading at 5181.50 and is up 0.48% on the day. On the release front, French consumer spending impressed with a 1.0% gain, beating the estimate of 0.5%. On the inflation front, French Preliminary CPI edged lower to 0.0%, matching the forecast. In the eurozone, CPI Flash Estimate edged lower to 1.3%, but this was above the estimate of 1.2%.

There was positive news on Friday, as consumer spending beat expectations and climbed 1.0% in June. This was the indicator's strongest gain since January 2015. A recent INSEE survey pointed to renewed consumer confidence, and it the renewed optimism has translated into stronger spending, a significant sign that the French economy continues to improve. INSEE also revised upwards its estimate for France's GDP for the first quarter to 0.5%, up from 0.4% earlier in June. Still, inflation levels remain stubbornly low, as underscored by French Preliminary CPI, which dropped to a flat 0.0%.

This week's ECB forum for central bankers in Sintra, Portugal was the talk of the markets. The meeting turned into the market-mover of the week (if not of the month), as the euro jumped 1.9%, while the pound soared 2.1%. The currencies posted the sharp gains after hawkish comments from Draghi and BoE Governor Mark Carney. Draghi was upbeat about the eurozone economy and put a positive spin on inflation, stating that "deflationary forces have been replaced by reflationary ones". Draghi said that the ECB's stimulus program was needed for now, but would be gradually withdrawn once inflation moved higher. The markets read Draghi's comments as a declaration that the ECB was planning to tighten policy. After the euro jumped, the ECB tried to dampen the stampede to snap up euros, with ECB sources saying that the markets had "misjudged" Draghi's remarks. This impeded the euro's rally, but only briefly. There was a similar reaction from the pound, which jumped above the 1.30 level for the first time since May after Carney left the door open for a rate hike. Carney appeared to backtrack from remarks last week, when he warned against rate increases in the near future. The impressive rallies by the euro and the pound could signal increased coordination among central banks, acccording to Stephen Innes, senior trader at OANDA:

"A game changer of a week as hawkish central bank commentary steamrolled the markets"… traders are now contemplating who will be next to join the lineup. No one wants to miss out on this party realising there's a co-ordinated policy shift afoot and the chance to catch the removal of an easing bias is far too seductive for traders to ignore."

The US economy slowed down in the first quarter, but there was some good news on Thursday, as the revised GDP reading was raised to 1.4%, better than the initial estimate of 1.2% in May. The improvement was attributed to stronger consumer spending and an increase in exports. Earlier in the year, the markets were braced for a very poor quarter, with the first estimate in April projecting a gain of only 0.7%. Will we see better numbers in the second quarter? That may be a tall order, as consumer spending and manufacturing numbers in Q2 have missed expectations. Housing numbers have been mixed, and inflation remains below the Fed's target of 2 percent. At the same time, the US labor markets remains very tight, with the unemployment rate at a 16-year low of 4.3%. Stronger global economic conditions have increased the demand for US products, boosting the export sector.

USD/CHF - 0.9583

Original strategy :

Sell at 0.9645, Target: 0.9545, Stop: 0.9680

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 0.9645, Target: 0.9545, Stop: 0.9680

Position : -

Target :  -

Stop : -

As the greenback has recovered after marginal fall to 0.9552, suggesting minor consolidation would be seen and recovery to 0.9600-10 is likely, however, reckon resistance at 0.9647 would limit upside and bring another decline later, below said support would signal recent decline from 0.9771 top is still in progress, hence further weakness to 0.9545-49 (2 times extension of 0.9771-0.9676 measuring from 0.9738) would follow but reckon downside would be limited to 0.9525-30 (50% projection of 1.10100-0.9613 measuring from 0.9771) and 0.9500 should hold, price should stay above 0.9470 (61.8% projection), bring rebound later. 

In view of this, would not chase this fall here and we are looking to sell dollar on recovery as resistance at 0.9647 should limit upside. Only above previous support at 0.9676 (now resistance) would defer and suggest a temporary low is formed, risk test of another previous support at 0.9692. 

GBP/USD - 1.2971

Original strategy :

Buy at 1.2920, Target: 1.3020, Stop: 1.2885

Position : - 

Target :  -

Stop : -

New strategy  :

Buy at 1.2920, Target: 1.3020, Stop: 1.2885

Position : -

Target :  -

Stop : -

As cable has continued trading with a firm undertone after this week’s rally, adding credence to our bullish view that recent upmove is still in progress and may extend further gain towards recent high 1.3048, however, loss of near term upward momentum should prevent sharp move beyond 1.3075-80 today and reckon 1.4100 would hold on first testing, risk from there has increased for a retreat to take place later. 

In view of this, we are looking to buy cable again on pullback as support at 1.2916 should limit downside and bring another rally. Below 1.2890-95 would defer and risk test of previous resistance at 1.2861, break there would suggest a temporary top is formed instead, risk weakness to 1.2830-35 but support at 1.2794 should remain intact.

EUR/USD - 1.1411

Original strategy  :

Buy at 1.1350, Target: 1.1450, Stop: 1.1315

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.1350, Target: 1.1450, Stop: 1.1315

Position : -

Target :  -

Stop : -

As the single currency has maintained a firm undertone after recent rally, adding credence to our bullish view that recent rise is still in progress and may extend further gain to 1.1455-60 (61.8% projection of 1.1119-1.1389 measuring from 1.1292), then 1.1480, however, overbought condition should prevent sharp move beyond 1.1500, risk from there has increased for a retreat later.

In view of this, would not chase this rise here and would be prudent to buy euro on pullback as 1.1350-55 should limit upside. Below 1.1315-20 would defer but only break of indicated support at 1.1292 would signal a temporary top is formed, bring correction to 1.1255-60 later.

USD/JPY - 112.00

Original strategy  :

Sell at 112.40, Target: 111.40, Stop: 112.75

Position :  -

Target :  -

Stop : -

New strategy  :

Sell at 112.40, Target: 111.40, Stop: 112.75

Position :  -

Target :  -

Stop : -

Although the greenback rose to as high as 112.93 yesterday, the subsequent sharp retreat signals top has been formed there and consolidation with downside bias is seen for weakness to 111.46 support, a firm break below there would add credence to this view, brig further fall towards 111.15-20 but support at 110.95 should remain intact, bring rebound later.

In view of this, we are looking to sell dollar on recovery as 112.40-45 should limit upside and bring another decline. Above 112.70-75 would risk retest of said resistance at 112.93 but break there is needed to confirm recent upmove has resumed for headway to 113.15-20.

The well-orchestrated hawkish remarks by a chorus of central bank heavyweights this week have punished global stocks with speculation mounting over whether the era of cheap money is soon coming to an end. Asian shares concluded mostly lower on Friday, despite China's Manufacturing PMI exceeding original estimates, while European shares were a mixed bag amidst cautious trading. With investor anxiety rising over historically low interest rates and central bank bond buying potentially coming to an end, Wall Street could come under further pressure this afternoon. This has been an extremely lively week dictated by central bankers and unexpected surprises, with participants likely using the weekend to mull over the events that have occurred.

Dollar Index sinks to 95.50

The increasingly hawkish comments from central banks outside of the US have eroded the Greenback's allure with the Dollar Index sinking towards 95.50 during Friday's trading session. Investors seem to be keeping a safe distance from the Dollar amid signs of decelerating growth in the US while political instability in Washington continues to raise questions over Trump's ability to move forward with his pro-growth agenda. Although economic activity in the US grew more than expected in Q1 at 1.4%, this did little to quell a painful selloff of prices. The technical view suggests that the Dollar Index remains heavily bearish on the daily charts with repeated weakness below 95.50 opening a path towards 94.00.

Sterling bulls take a breather

Sterling was under noticeable pressure on Friday following reports that consumer confidence in the UK has fallen to its lowest level since just after the Brexit vote in June 2016. The latest figures from the Office for National Statistics (ONS) illustrated a gloomy picture for consumers as the terrible combination of higher prices and sluggish wage growth squeezed household budgets. While the lingering impact of Bank of England Governor Mark Carney's hawkish comments made earlier this week may support Sterling in the short term, I feel the upside remains limited in the longer term as investors come to grips with the realities of Brexit.

From a technical standpoint, Sterling is undeniably bullish on the daily charts with buyers in firm control above 1.2775. A technical correction could be on the cards with the formation of a new higher lower creating a stepping stone for bulls to attack the 1.3000 resistance once again.

WTI Crude edges higher...

WTI Crude popped higher during Friday's trading session on the back a decline in weekly US crude production and Dollar weakness, but the bias still remains heavily bearish amid oversupply fears. Oil has remained extremely pressured due to the high global crude inventories, therefore any appreciation in prices may be treated as a technical bounce for sellers to drive the commodity lower. As oil continues to find comfort at depressed levels despite OPEC's efforts to stabilize the markets, questions have been raised about whether OPEC will introduce further output cuts to reduce the global glut and ultimately prop prices higher. I feel that OPEC's apparent reluctance to do this may give permission to sellers to attack the commodity further.

Commodity spotlight - Gold

Gold was pressured below $1255 this week despite the Dollar extending its losses and equities falling. Generally speaking, a vulnerable US Dollar and depressed stock markets would have the ability to support the yellow metal, however in this case it seems that the prospect of tighter global monetary policy has inspired bears to make a move. With hawkish comments this week from central bank heavyweights sparking speculation that the era of cheap money is coming to an end, Gold may struggle to maintain its ground in the short term. As the Brexit woes, political uncertainty in Washington and concerns over oil's oversupply trigger risk aversion, safe haven assets such as Gold are likely to remain supported in the longer term.

USDCAD: The pair continues to weaken extending further on Friday and opening the door more declines. Support stands at the 1.2950 level where a break will aim at the 1.2900 level. Further down, support comes in at the 1.2850 level where a turn lower may occur. But if further weakness is triggered support comes in at the 1.2800 level. Its daily RSI is bearish and pointing lower suggesting further weakness. Conversely, resistance lies at the 1.3050 level where a violation will target the 1.3100 level. Further up, resistance resides at the 1.3150 level and then the 1.3200 level. All in all, USDCAD looks to weaken further.

Notes/Observations

European June CPI nudges lower month on month but in line with forecasts, whilst French CPI was flat

German Unemployment rises for the first time in 8 months

Germany 10 year Bund trades at 6 week lows before retracing sharply on short covering flows.

Overnight

Asia:

China official PMIs hit 3-month high

Japan core CPI reaches 2-year high and recorded the fifth monthly increase, Industrial Output fell at fastest pace since Mar 2011.

South Korea President Moon and US President Trump promise to make joint efforts to denuclearize North Korea

Europe:

Eurozone Flash CPI comes in line with forecasts but dips slightly from the prior month, French prelim CPI flat y/y.

German unemployment recorded first rise in 8 months and 2nd rise in the past 14 months while unemployment rate remained unchanged.

Bayer shares fall sharply after announcing it expects negative earnings impact from Its Brazilian Crop Science Business

BoE Haldane noted policy makers are watching for signs of wage growth pickup, reiterates any policy tightening will be limited & gradual

UK consumer confidence hits 11 month low with higher inflation and weaker wage growth cited

Americas:

Fed's Bullard (non-voter, dovish): Sees more sympathy at the Fed for view that inflation is not coming back to target as quick as first thought

Economic Data

(EU) EURO ZONE JUN CPI ESTIMATE Y/Y: 1.3% V 1.3%E; CPI CORE Y/Y: 1.1% V 1.0%E

(DE) GERMANY JUN UNEMPLOYMENT CHANGE: +7K V -10KE; UNEMPLOYMENT RATE: 5.7%E V 5.7%E (First rise in unemployment in 8 months)

(DE) GERMANY MAY RETAIL SALES M/M: 0.5% V 0.3%E; Y/Y: 4.8% V 2.8%E

(FR) FRANCE JUN PRELIMINARY CPI M/M: 0.0% V 0.0%E; Y/Y: 0.7% V 0.7%E

(UK) JUNE GFK CONSUMER CONFIDENCE: -10 V -7E (11-month low)

(UK) Q1 FINAL GDP Q/Q: 0.2% V 0.2%E; Y/Y: 2.0% V 2.0%E

(UK) Q1 FINAL TOTAL BUSINESS INVESTMENT Q/Q: 0.6% V 0.6% PRELIM; Y/Y: 0.7% V 0.8% PRELIM

(CH) SWISS JUN KOF LEADING INDICATOR: 105.5 V 102.2E

(NO) NORWAY JUN UNEMPLOYMENT RATE: 2.6% V 2.6%E

(AT) Austria May PPI M/M: -0.4% v 0.2% prior; Y/Y: 2.0% v 2.8% prior

(NO) Norway May Retail Sales W/Auto Fuel M/M: 1.3% v 0.0%e

Fixed Income Issuance:

(IT) ITALY DEBT AGENCY (TESORO) SELLS TOTAL OF €6.35B V €5.5-6.5B INDICATED IN 5-YEAR AND 10-YEAR BTP BONDS

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx50 +0.3% at 3,479, FTSE -0.1% at 7,343, DAX +0.2% at 12,438, CAC-40 +0.4% at 5,178, IBEX-35 +0.3% at 10,559, FTSE MIB +0.3% at 20,766, SMI +0.3% at 8,975, S&P 500 Futures +0.1%]

Market Focal Points/Key Themes: European stocks opened down in line with Asia, but rebounded during the session; more hawkish tone from central bankers kept sentiment depressed; oil continued to support energy stocks; German healthcare sector dragged down by Bayer; UK stocks weighed down by strong pound; Delivery Hero debuts at €26.90/shr; attention shifting to core PCE deflator out later today; few companies reporting in US session with Kingtone and Terraform

Equities

Consumer discretionary [Technicolor TCH.FR -8.4% (cuts outlook), Trinity Mirror (TNI.UK) +5.8% (trading update), Adidas ADS.DE +3.3% (Nike reported)]

Energy [Vopak VPK.NL -2.3% (analyst action)]

Healthcare [Bayer BAYN.DE -3.9%, (cuts outlook)]

Financials [Uniplol UNI.IT +2.9% (restructuring)]

Industrials [Subsea 7 SUBC.NO +2.5% (acquisition)]

Materials [Polyus Gold PGIL.UK -1.3% (placement)

Technology [Soitec SOIT.FR +0.3% (placement)]

Speakers

Non seen

Currencies

EURUSD trades below 1.14 giving back some ground after the recent strong run up this week as prelim Eurozone CPI came in line with forecasts, EURYEN slips to new daily low trading below 127.50.

GBPUSD falls after the UK current account widened in the first quarter, falling to 1.2984 with immediate support seen at 1.2975.

Fixed Income

Bund futures trade at 162.51 up 34 ticks bouncing sharply of 161.88 which marked new 6 week lows as the downward momentum continued. The bounce higher has been put down to short covering with continued upside eyeing 162.58, a move lower looks to retest 161.88.

Friday’s liquidity report showed Thursday’s excess liquidity fell to €1.612T a fall of €22B from €1.634T prior. Use of the marginal lending facility rose to €126M from €100M prior.

Corporate issuance was quiet entering into the US holidays. Issuance for the first 6 months of the year posted a record high of 718.7B slightly ahead of the $718.2B posted in 2015. January was the biggest month with over $176B.
For the week ending June 28th, Lipper US Fund flows reported IG funds net inflows of $724.3M bringing YTD inflows to $66.6B, High Yield funds reported outflows of $1.74B bringing YTD outflows to $6.57B.

Looking Ahead

05:30 (SL) Sri Lanka Jun CPI Y/Y: No est v 6.0% prior

06:00 (PT) Portugal May Retail sales M/M: No est v 1.5% prior; Y/Y: No est v 4.9% prior

06:00 (PT) Portugal May Industrial Production M/M: No est v 0.2% prior; Y/Y: No est v -1.2% prior

07:30 (IN) India Weekly Forex Reserves

08:00 (PL) Poland Jun Preliminary CPI M/M: 0.1%e v 0.0% prior; Y/Y: 1.9%e v 1.9% prior

08:00 (BR) Brazil May National Unemployment Rate: 13.7%e v 13.6% prior

08:00 (ZA) South Africa May Trade Balance (ZAR): No est v 5.1B prior

08:00 (ZA) South Africa May Budget Balance (ZAR): No est v -30.7B prior

08:15 (UK) Baltic Dry Bulk Index

08:30 (US) May Personal Income: 0.3%e v 0.4% prior; Personal Spending: 0.1%e v 0.4% prior, Real Personal Spending (PCE): 0.2%e v 0.2% prior

08:30 (US) May PCE Deflator M/M: -0.1%e v 0.2% prior; Y/Y: 1.5%e v 1.7% prior

08:30 (US) May PCE Core M/M: 0.0%e v 0.2% prior; Y/Y: 1.4%e v 1.5% prior

08:30 (CA) Canada Apr GDP M/M: No est v 0.5% prior; Y/Y: No est v 3.2% prior

08:30 (CA) Canada May Industrial Product Price M/M: No est v 0.6% prior; Raw Materials Price Index M/M: No est v 1.6% prior

09:00 (RU) Russia Q1 Final Current Account: No est v $22.8B prior

09:00 (CL) Chile May Unemployment Rate: No est v 6.7% prior

09:00 (CL) Chile May Manufacturing Production Y/Y: No est v -7.5% prior, Industrial Production Y/Y: No est v -4.2% prior

09:00 (CL) Chile May Total Copper Production: No est v 429.2K prior

09:30 (BR) Brazil May Primary Budget Balance (BRL): No est v 13.0B prior; Nominal Budget Balance: NO est v -15.4B prior, Net Debt % GDP: No est v 47.7% prior

09:45 (US) Jun Chicago Purchasing Manager: 58.0e v 59.4 prior

10:00 (MX) Mexico May Net Outstanding Loans (MXN): No est v 3.73T prior

10:00 (US) June Final Michigan Confidence: 94.5e v 94.5 prelim

10:30 (CA) Bank of Canada (BOC) Q2 Senior Loan Officer Survey: No est v -1.9 prior; Business Outlook Future Sales: No est v 21 prior

11:00 (CO) Colombia May Urban Unemployment Rate: 10.2%e v 10.7% prior; National Unemployment: No est v 8.9% prior

13:00 (US) Weekly Baker Hughes Rig Count data

15:00 (CO) Colombia Central Bank Interest Rate Decision: Expected to cut Overnight Lending Rate by 50bps to 5.75%

GOLD Sideways.

Gold's is trading sideways above key support. Hourly support is located at 1236 (26/06/2017 low). Stronger support is given at 1214 (09/05/2017 low). Hourly resistance can be found at 1247 (intraday high) then 1258 (23/06/2017 high). Expected to show renewed bullish pressures.

In the long-term, the technical structure suggests that there is a growing upside momentum. A break of 1392 (17/03/2014) is necessary ton confirm it, A major support can be found at 1045 (05/02/2010 low).

SILVER Bullish bounce fades.

Silver's bullish bounce quickly faded. Closest support is given at 16.29 (26/06/2017 low). Strong support is given at 16.06 (09/05/2017 low). Key resistance is given at a distance at 17.75 (06/06/2017 high). The road seems wide open for further decline.

In the long-term, the death cross indicates that further downsides are very likely. Resistance is located at 25.11 (28/08/2013 high). Strong support can be found at 11.75 (20/04/2009).

CRUDE OIL Continued bullish consolidation.

Crude oil is now consolidating higher since the commodity hit 11-month low. Support is given at 42.05 (21/06/2017 low). Expected to show renewed weakness.

In the long-term, crude oil has recovered after its sharp decline last year. However, we consider that further weakness are very likely. Strong support lies at 35.24 (05/04/2016) while resistance can now be found at 55.24 (03/01/2017 high).

EUR/JPY Bullish consolidation.

EUR/JPY is now consolidating after its recent rally. Key resistance is located at 128.83 (30/06/2017). Hourly support can be found at 127.10 (30/06/2017). Next support is given at 122.56 (18/05/2017 low). Further upside is favored.

In the longer term, the technical structure validates a medium-term succession of lower highs and lower lows. As a result, the resistance at 149.78 (08/12/2014 high) has likely marked the end of the rise that started in July 2012. Strong support at 94.12 (24/07/2012 low) looks nonetheless far away.

EUR/GBP Selling pressure increases.

EUR/GBP has broken downtrend resistance triggering a move towards 1.0987. Hourly support can be located at Support can be found at 0.8652 (08/06/2017 low). Expected to show further consolidation.

In the long-term, the pair has largely recovered from recent lows in 2015. The technical structure suggests a growing upside momentum. The pair is trading above from its 200 DMA. Strong resistance can be found at 0.9500 psychological level

EUR/CHF Recovery gains strength.

EUR/CHF's short-term bullish pressures are definitely on after clear break of downtrend channel. Hourly support is located at a distance at 1.0792 (03/05/2017 low) while the pair is heading towards resistance given at 1.0987 (12/05/2017 high).

In the longer term, the technical structure is mixed. Resistance can be found at 1.1200 (04/02/2015 high). Yet,the ECB's QE programme is likely to cause persistent selling pressures on the euro, which should weigh on EUR/CHF. Supports can be found at 1.0184 (28/01/2015 low) and 1.0082 (27/01/2015 low).