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Market movers today

It is a very quiet start to the week with no important data today. Two Fed speakers are due to speak. Harker (voter, hawkish) and Kashkari (voter, dovish) may give more insight into the scope for a rate rise in June.

In the rest of the week, German ifo (Tuesday), Euro Flash PMI (Wednesday) and the OPEC meeting (Thursday) will be in focus.

In the Scandi count ries, employment data and retail sales figures in Denmark are due out .

Selected market news

Asian stocks are edging higher this morning, following caut ious gains on Wall Street on Friday, though the US dollar remains under pressure as Washington's political turmoil undermines confidence in the out look for Trump's economic policy. Market focus this week is likely to remain cent red on what is happening around Trump. In his inaugural t rip overseas, US President Donald Trump called on Arab leaders to do their fair share to drive out terrorism from their count ries in a speech in Saudi Arabia on Sunday. More ‘headlines' will hit the market as the trip progresses, with the NATO meeting and the G7 summit at the weekend being the most important events.

Meanwhile, North Korea fired another ballistic missile into waters off its east coast yesterday, its second missile test in a week. This also complicates plans by South Korea's new President Moon Jae-in to seek ways to reduce the conflict with his neighbour. Tensions are rising fast between the US and North Korea and a furtherescalation of the conflict is likely if North Korea cont inues with plans to carry out another nuclear test (see also Research: The rising risk from North Korea - and what it means for markets, 27 April 2017).

With political risks in Europe somewhat abat ing, after Emmanuel Macron's win in the French presidential election, focus today shifts back to Greece's debt problems, as eurozone finance ministers meet in Brussels to discuss the issue of debt relief. The Greek parliament narrowly approved another reform package last week, containing spending cuts and reduct ions in pensions and tax allowances, t riggering renewed st reet protests. The open issue, however, remains a possible debt relief for the country, which the IMF demands as a prerequisite to participate in further funding, but EU leaders, especially Germany, are still opposing. A deal is needed for Greece to draw its next instalment of bailout aid and make a EUR7.5bn debt repayment in July; however, it is quest ionable whether an agreement between the part ies can be reached today. Should a deal on debt relief be found, Greece might issue its first sovereign bond in three years as early as July, to test market appet ite before its bailout programme expires in mid-2018, according to Greek officials.

OPEC and other oil producers seemed on course to an agreement to extend supply cuts at the meeting on Thursday, with Saudi Arabia saying most part icipants are on board with the plan to rein in a global supply glut . An extension of the supply cuts seems also largely priced into the oil market now, with Brent crude trading at USD54.1bl this morning.

For the 24 hours to 23:00 GMT, the AUD rose 0.57% against the USD and closed at 0.7455 on Friday.

LME Copper prices rose 1.93% or $106.0/MT to $5596.0/MT. Aluminium prices rose 1.73% or $33.0/MT to $1938.0/MT.

In the Asian session, at GMT0300, the pair is trading at 0.7443, with the AUD trading 0.16% lower against the USD from Friday’s close.

The pair is expected to find support at 0.7413, and a fall through could take it to the next support level of 0.7383. The pair is expected to find its first resistance at 0.7471, and a rise through could take it to the next resistance level of 0.7499.

Moving ahead, consumer confidence index for the week ended 21 May, due for release at night, will be assessed by market particpants.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the EUR rose 0.86% against the USD and closed at 1.1202 on Friday.

On the macro front, the Euro-zone's consumer confidence index rose less than expected to a level of -3.3 in May, reaching its best level in a decade as the region shrugged off populist political risks in 2017. Markets expected for an advance to a level of -3.0, after recording a level of -3.6 in the prior month.

Additionally, the Eurozone's seasonally adjusted current account surplus eased to €34.1 billion in March from a revised figure of €37.8 billion recorded in the last month.

Elsewhere, Germany's producer prices climbed 3.4% YoY in April to their highest level in nearly six years, surpassing market expectations for a gain of 3.2% and following a rise of 3.1% in the previous month.

The greenback fell against its major peers on Friday, as political uncertainty continued to weigh on the currency and depressed investor sentiment.

In the US, St. Louis Federal Reserve (Fed) President James Bullard stated that central bank's proposed interest rate hikes might be too aggressive, citing that the nation's economy had slowed since March and inflation had also dipped, thus making the case for a continued go-slow approach.

In the Asian session, at GMT0300, the pair is trading at 1.1190, with the EUR trading 0.11% lower against the USD from Friday's close.

The pair is expected to find support at 1.1122, and a fall through could take it to the next support level of 1.1053. The pair is expected to find its first resistance at 1.1235, and a rise through could take it to the next resistance level of 1.1279.

With no economic data in the Euro-zone today, traders will look forward to the US Chicago Fed National Activity index for April, scheduled later in the day, for further direction in the currency pair.

The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the GBP rose 0.7% against the USD and closed at 1.3033 on Friday.

Data revealed that the CBI industrial trends total orders surprisingly advanced to 9.0 in May, mainly driven by faster growth in export orders, against market consensus to remain unchanged at 4.0 as reported in the previous month.

Over the weekend, Rightmove house prices rose 1.2% on a monthly basis in May in the UK, from 1.1% gain recorded in the last month.

In the Asian session, at GMT0300, the pair is trading at 1.2995, with the GBP trading 0.29% lower against the USD from Friday’s close.

The pair is expected to find support at 1.2943, and a fall through could take it to the next support level of 1.2891. The pair is expected to find its first resistance at 1.3043, and a rise through could take it to the next resistance level of 1.3091.

In absence of any major economic releases in the UK today, market participants will look forward to global macroeconomic events for direction.

The currency pair is trading between its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.3% against the JPY and closed at 111.15 on Friday.

Over the weekend, macro data indicated that Japan's Merchandise total trade balance narrowed more than expected to ¥481.7 billion in April, from ¥614.7 billion reported in the previous month. Markets expected the figures to decrease to ¥520.7 billion. Moreover, the nation's exports jumped 7.5% YoY in

April, less than analysts' expectations of 8.0% gain, helped by strong demand in Asia for semiconductors, semiconductor-making equipment and steel. Exports had risen 12.0% in the prior month. On the other hand, imports rose 15.1%, more than expectations of 14.8% rise, after recording a 15.8% growth in the previous month.

In the Asian session, at GMT0300, the pair is trading at 111.45, with the USD trading 0.27% higher against the JPY from Friday's close.

The pair is expected to find support at 111.08, and a fall through could take it to the next support level of 110.72. The pair is expected to find its first resistance at 111.75, and a rise through could take it to the next resistance level of 112.06.

Going forward, traders will keep a close eye on preliminary reading of Japan's Nikkei manufacturing PMI data for May, slated to release overnight, to gauge strength in the nation's manufacturing sector.

The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD declined 0.66% against the CHF and closed at 0.9730 on Friday.

In the Asian session, at GMT0300, the pair is trading at 0.9736, with the USD trading 0.06% higher against the CHF from Friday’s close.

The pair is expected to find support at 0.9704, and a fall through could take it to the next support level of 0.9671. The pair is expected to find its first resistance at 0.9787, and a rise through could take it to the next resistance level of 0.9837.

With no major economic data in Switzerland today, market participants will look forward to Swiss trade balance figures for April, scheduled to release tomorrow.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.7% against the CAD and closed at 1.3515 on Friday.

Macroeconomic data showed that Canada's consumer price inflation rose less than expected 1.6% YoY in April, matching the gain in March, as higher energy costs offset a seventh consecutive decline in grocery prices. Markets were expecting consumer prices to rise 1.7%. Moreover, the nation's retail sales advanced 0.7% on a monthly basis in March, exceeding market projections of 0.4% gain, buoyed by increased purchases at new and used cars dealers. Retail sales recorded a revised drop of 0.4% in the previous month.

In the Asian session, at GMT0300, the pair is trading at 1.3526, with the USD trading 0.08% higher against the CAD from Friday's close.

The pair is expected to find support at 1.3486, and a fall through could take it to the next support level of 1.3446. The pair is expected to find its first resistance at 1.3585, and a rise through could take it to the next resistance level of 1.3644.

On the occasion of Victoria Day in Canada today, trading trends in the currency pair will be determined by global macroeconomic factors.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

Weekly

    •    Last Candlesticks pattern: Shooting star 
    •    Time of formation: 03 May 2016
    •    Trend bias: Down

Daily

    •    Last Candlesticks pattern: Shooting star
    •    Time of formation: 3 May 2016
    •    Trend bias: Sideways

EUR/USD – 1.0946

The single currency only retreated to as low as 1.0839 last week before rising again (we recommended to buy euro at 1.0800 last week and missed the entry), the subsequent rally above 1.1025 resistance adds credence to our bullish view that the erratic upmove from 1.0340 low is still in progress, hence further gain to previous resistance at 1.1300 would be seen, however, near term overbought condition should limit upside to 1.1327 and previous chart resistance at 1.1366 should hold from here, risk from there is seen for a retreat later.

On the downside, whilst initial pullback to 1.1150 cannot be ruled out, reckon downside would be limited to support at 1.1076 would risk test of previous resistance at 1.1025 (now support as well as current level of the Tenkan-Sen) but only a daily close below there would suggest top is possibly formed instead, risk weakness to 1.0950-60 but the Kijun-Sen (now at 1.0907) would limit downside and price should stay well above said support at 1.0839.

Recommendation: Buy at 1.1120 for 1.1320 with stop below 1.1020.

On the weekly chart, last week’s rally formed a long white candlestick, adding credence to our view that the erratic rise from 1.0340 low is still in progress and test of previous resistance at 1.1300 is likely, however, a break of previous resistance at 1.1366 is needed to retain bullishness and signal early downtrend has ended at 1.0340, bring further rise to 1.1428 but reckon 1.1500 would hold and price should falter well below another previous chart resistance at 1.1616.

On the downside, expect pullback to be limited to 1.1120-30 and bring another rise later to aforesaid upside targets. Below the upper Kumo (now at 1.1070) would defer and risk weakness to 1.1025 (previous resistance now support) but break there is needed to signal top is formed instead, bring further fall to 1.0965-70 but support at 1.0922 (last week’s low) should remain intact, price should stay well above last week’s low at 1.0839, bring another rise later.

Weekly

    •    Last Candlesticks pattern: Marubozu
    •    Time of formation: 14 Nov 2016
    •    Trend bias: Down

Daily

    •    Last Candlesticks pattern: Shooting star
    •    Time of formation: 15 Feb 2017
    •    Trend bias: Down

USD/JPY – 111.48

Despite rising to 114.37 earlier this month, the subsequent stronger-than-expected retreat suggest top has been formed there and downside risk remains for weakness to 110.00-10, however, reckon downside would be limited to 109.59 support and minor support at 108.88 should hold, price should stay well above recent low at 108.13, bring rebound later.

On the upside, whilst the recovery from 110.24 may bring recovery to 111.70-75, reckon upside would be limited to the upper Kumo (now at 112.12) and the Tenkan-Sen (now at 112.31) should hold, bring another decline. Above 112.73 would bring recovery to 113.10-15 but only a daily close above there would suggest low is formed,  bring a stronger rebound to 113.85, having said that, upside should be limited and price should falter below resistance at 114.37.

Recommendation : Stand aside for this week

On the weekly chart, last week’s stronger-than-expected retreat dampened our bullishness and suggesting the rebound from 108.13 has ended there, hence consolidation with mild downside bias is seen for weakness to 110.00-10, however, break of 109.59 support is needed to add credence to this view, bring further fall to 108.85-90 but said support at 108.13 should remain intact. In the event dollar drops below said support at 108.13, this would signal the fall from 118.66 top has resumed and extend weakness towards previous resistance at 107.49.

On the upside, expect recovery to be limited to 112.00-05 and previous support at 112.39 should hold, bring another decline later. Above 112.70-75 would risk a stronger rebound to 113.10-15, however, break there is needed to signal the retreat from 114.37 has ended instead, bring further gain to the Kijun-Sen (now at 113.40) but break of 113.85 is needed to confirm and bring retest of 114.37 later. Looking ahead, only break of said resistance at 114.37 would extend the rise from 108.13 to 114.60-65 (61.8% Fibonacci retracement of 118.66-108.13), then towards resistance at 115.51 which is likely to hold from here.

Currency pair USD/JPY

The USD/JPY bounced at the golden ratio Fib of 61.8% level and it seems likely that the wave C (brown) has been completed once price breaks above the smaller resistance trend line (orange). A break above or below the small contracting triangle chart pattern (green/orange) could play a key role in a push towards the 78.6% Fib or next resistance (red).

The USD/JPY could however first build a wave 4 (orange) correction and a wave 5 (orange) continuation before completing wave C (brown).

Currency pair EUR/USD

The EUR/USD indeed started and completed a wave 4 (purple) correction as expected last week. Price is now developing a bullish continuation within wave 5 (purple), which could complete a wave C (blue). A break above 1.13 invalidates the wave 2 (green) correction.

The EUR/USD bounced at the Fibonacci levels of wave 4 (purple) and then broke above the resistance trend line (dotted red). A new 5 wave (pink) formation is most likely occurring within wave 5 (purple). The current pause could be a wave 4 (pink) as long as price stays above 61.8% Fib of wave 4.

Currency pair GBP/USD

The GBP/USD could be building a wave 1-2 (grey) but this depends on whether price is able to break below the channel. A break above the 100% level indicates the invalidation of wave 2 and the potential for an uptrend continuation.

The GBP/USD break above the resistance (red) invalidates wave 2 (grey) whereas a break below the support (blue) could indicate a bearish breakout.