Last week
AUDJPY, AUDUSD, EURJPY, EURUSD, GBPJPY, and GBPUSD all finished positive for
the week after a strong sell off the week before. EURUSD and GBPUSD rallied the
strongest. Will the rally continue for a second week or was that a short relief
rally within the longer-term downtrend?

 

AUDJPY Daily chart:

 

Monthly
support at 86.24, resistance at 90.29 and 90.72.

Weekly
support at 86.24, resistance at 94.31 and 95.73.

Daily support
at 87.28, resistance at 90.43 and 91.16.

Price
rallied and held at the 90.29 monthly resistance level last week. Will price
hold at the 90.29 monthly resistance level and decline down to the 86.24
monthly support level this week?

 

 

AUDUSD Daily chart:

 

Monthly
support at 0.6991, 0.6967, and 0.6826, resistance at 0.7555.

Weekly
support at 0.6967, resistance at 0.7314.

Daily
support at 0.6828, resistance at 0.7030 and 0.7051.

Price
rallied and held at the 0.7030 and 0.7051 daily resistance levels last week.
Will price hold at the 0.7030 and 0.7051 daily resistance levels for a move
back below the 0.7000 level this week?

 

 

EURJPY Daily chart:

 

Monthly
support at 134.12 and 133.47, resistance at 137.49.

Weekly
support at 133.14, resistance at 137.52.

Daily
support at 134.77 and 132.65, resistance at 135.51 and 136.49.

Price was
range bound and held above the 134.12 monthly support last week. Will price
continue to consolidate between 134.12 monthly support and 136.49 daily
resistance this week?

 

EURUSD Daily chart:

 

Monthly support
at 1.0522, 1.0462, and 1.0340, resistance at 1.0635.

Weekly
support at 1.0522, resistance at 1.0635.

Daily
support at 1.0471, resistance at 1.0642.

Price
rallied back to the 1.0600 level last week. Will price hold at the 1.0600
resistance level and move back below the 1.0522 monthly support level this
week?

 

GBPJPY Daily chart:

 

Monthly
support at 158.21 and 150.97, resistance at 163.06 and 163.87.

Weekly
support at 158.06 and 152.89, resistance at 163.06.

Daily
support at 159.04 and 155.59, resistance at 159.61 and 161.85.

Price was
range bound and held above the 158.21 monthly support last week. Will price
continue to consolidate between 158.21 monthly support and 161.85 daily
resistance this week?

 

 

GBPUSD Daily chart:

 

Weekly
support at 1.2251, 1.2195 and 1.2074, resistance at 1.2647.

Daily
support at 1.2411 and 1.2155, resistance at 1.2614.

Price
rallied back to the 1.2500 level last week. Will price hold at the 1.2500
resistance level and move back below the 1.2411 daily support level this week?

 

 

This content
may have been written by a third party. ACY makes no representation or warranty
and assumes no liability as to the accuracy or completeness of the information
provided, nor any loss arising from any investment based on a recommendation,
forecast or other information supplied by any third-party. This content is
information only, and does not constitute financial, investment or other advice
on which you can rely.

 

This article
was written by Duncan Cooper – Senior Market Strategist & Trading Mentor.

Shanghai is China’s biggest city, financial hub, and a key driver of the entire country’s economy. Jing’an district is a central key commercial area, its to require all supermarkets and shops to shut, and residents to stay home, until at least Tuesday.Mass testing will take place from Sunday until Tuesday.
Adds Reuters:

The use of all exit permits previously given to residents that allowed them to leave their homes will be suspended, the district added without saying why.

Shanghai has been inching towards reopening, this is a setback and a risk negative at the margin come Monday. 

Russia has banned nearly 1,000 Americans, including President Biden, Vice President Harris, and many others from the US administration, from entering the country.
This comes in response to the US support of Ukraine. From a Foreign Ministry news release:

“In the context of response to the constantly imposed anti-Russian sanctions by the United States and in connection with incoming requests about the personal composition of our national ‘stop list,’ the Russian Foreign Ministry publishes a list of American citizens who are permanently banned from entering the Russian Federation”

Former President Trump was not banned. Current Senator Rand Paul, who delayed a Senate vote on aid for Ukraine last week when he was the only senator to object was also not banned. The only prominent Trump administration official included in the ban is former secretary of state Mike Pompeo.
Russia also banned former senators John McCain, Harry Reid, and Orrin Hatch, even though they are all dead. 

Trump lost the 2020 presidential election to Joe Biden

Incumbent Prime Minister Scott Morrison conceded defeat Saturday evening. His LNP coalition lost 20 seats, including several high profile MPs. Australian Treasurer Josh Frydenberg lost his seat, a seat held by the conservatives for generations; for 120+ years up until Saturday. Frydenberg lost to an independent.

Labor leader Anthony Albanese will form a new Australian government. Its not clear at this stage (counting continues) if Labor will form a majority or minority government. 
Labor has won 72 seats but needs 76 to govern in majority, otherwise it’ll form a minority, relying on the Greens &/or independents to pass its legislation. Labor, too, was hit by the independent vote, it lost a high-profile MP.

The Greens are on course to win up to 4 seats.

The independents have won 11 seats.

The new government is now faced with the massive task of reigning in massive federal debt, which surged in the past few years  – the pandemic response played a major role in this. Its also going to be faced with the beginning of the Reserve Bank of Australia interest rate hiking cycle. The RBA lifted the cash rate at its May meeting, for the first time in more than 11 years, with more to come in June and after. I suspect not a lot of AUD impact on Monday, Australian politics have not been a focus for it. On Friday US time:There was a steady bid in the kiwi. It along with the Australian dollar both tested the Asian lows and held, then moved up.

MUFG Research recommends a new ToTW trade: long CHF/TRY (spot ref: 16.30) with a target at 17.3 and a stop at 15.70.
MUFG also maintains a short AUD/JPY with a target of 84.50 and a stop at 92.50.
„We are recommending a new long CHF/TRY trade idea, and maintaining our short AUD/JPY trade idea. We want to add a short TRY leg to reflect our long-held bearish outlook,“ MUFG notes.For bank trade ideas, check out eFX Plus. For a limited time, get a 7 day free trial, basic for $79 per month and premium at $109 per month. Get it here.

Kuroda told G7 that BOJ will patiently continue with powerful easing
Fed Bullard: We have to get inflation under control. We have a good plan to do so
Eurozone May consumer confidence flash reading -21.1 vs -21.5 expected
ECB’s Visco: We must get out of negative rates without adding uncertainty to the market
Baker Hughes US oil rig count 576 vs 563 prior
ECB’s Villeroy: The inflation fight means normalizing interest rates
ECB’s Nagel: Negative interest rates are a thing of the past

Markets:

Gold up $3 to $1844
US 10-year yields down 7 bps to 2.79%
WTI crude oil up 95-cents to $110.83
S&P 500 up 0.1%
Nasdaq -0.3%
NZD leads, EUR lags

The weekly decline in the S&P 500 was the seventh in a row, which is the longest streak since 2001. The worst-ever streaks were 8 weeks in 2001 and 1970. I’ve attached from forward returns after 6, 7 and 8 weeks below from Compound Advisors.
There’s plenty of focus on stocks at the moment. The S&P 500 opened higher then was down more than 2% at the lows but recovered very late in the day to finish fractionally higher.
What’s interesting is that the correlation with FX has broken down.The dollar was generally softer today and yen crosses were largely higher. That’s a shift from the recent trend.
Bonds are also offering a different tone with yields down for the second week in a row. That might reflect risk aversion but it at least makes the argument that deleveraging has run its course, at least for now.
In terms of intraday moves, it was a chop in FX. The price action was ultimately sideways on most fronts in New York trade, though cable closed near the highs and the euro closer to the lows.
There was a steady bid in the kiwi. It along with the Australian dollar both tested the Asian lows and held, then moved up.
CAD lagged its cousins but not dramatically. Oil was higher once again as the incredible resilience continued. That wasn’t much of a help for the loonie though as concerns about housing mount. Note that Canada is off on Monday for a holiday.
Have a great weekend.

The major US stock indices snatched victory from the jaws of defeat – at least for the Dow industrial average and S&P index. The NASDAQ index still closed negative on the day as did the Russell 2000. However, both indices had moral victories after erasing most of the intraday declines (the Nasdaq was down -3.10% at session lows).  At session lows:The Dow industrial average was down -617.37 points or -1.98% S&P index was down -90.29 points or -2.31%NASDAQ index was down -352.81 points or -3.10%At the end of the day:Dow industrial average rose 7.45 points or 0.02% at 31260.57S&P index rose 0.60 points or 0.02% at 3901.38NASDAQ index fell -33.87 points or -0.30% at 11354.63Russell 2000 fell -2.95 points or -0.17% at 1773.26Fed’s Bullard speaking on FOXBusiness was anticipated by markets. Stocks were trading near low levels as he started to speak, with expectations he would be ultra hawkish. Instead he maintained that he prefers 50 basis point hikes (and not 75 or 100 bps). He sees above trend growth going forward. He sees employment moving lower to perhaps less 3%, and does not see a recession in 2022 or 2023. He DOES expect rates to rise to 3.5% by the end of the year which implies 50 basis point hikes at each Fed meeting until then. However, that is the cost of doing business to have his upbeat economic viewpoint. Stocks started to bounce soon after he was done speaking.The bad news for the indices is:The Dow still closed lower for the 8th consecutive week which has not been done since 1923The S&P and NASDAQ index also closed lower for the 7th consecutive week. For the week:Dow industrial average fell -2.9%S&P fell -3.02%NASDAQ index fell -3.28%The last month of trading has seen:Dow industrial average -10.15%S&P index -11.18%NASDAQ index -13.81%Today the S&P index broke into bear market territory with the index falling -20.9% from its all-time high. However, the end of day rally has led to a close around -19% from that all-time high. Closing in bear market territory was averted.The NASDAQ index reached a new year – and cycle – low and traded down -31.93% from its all-time high reached in November before rebounding.The Dow industrial average also reached a new cycle low as it fell to -17.09% from its January all-time high before rebounding into the close.Next week earnings will be highlighted by:Zoom on Monday.  Toll Brothers and Best Buy on Tuesday. Snowflake, Box, and Nvidia on Wednesday.  Dell, Macy’s, Costco on Thursday.  All have the potential to tell a story about the market, the economy and inflation. Zoom is considered a pandemic stock, but does it have a more lasting place post pandemic?Toll Brothers expectations for future growth will be of interest as the Fed tries to slow down the rampant housing marketBest Buy is another retail barometer.  Will it show signs of slowing and price issues?Snowflake is one  of those growth companies whose earnings have to grow into their elevated stock price. Even so, it’s stock is down -63.46% from its November highNvidia is the darling of the chip stocks, but is down -48% from its all-time highDell is barometer for of computer demandMacy’s a brick-and-mortar retailer is trying to do more business online. What do they see from the consumer?Costco as close as April 8, traded at its all-time high price. The last 6 weeks have seen the price move down -32%. The stock is closing  below its 100 week moving average this week at $416.43. The high price in early April was $612.27.This week both Walmart and Target disappointed and spoke to margins being hammered by higher costs.  Their earnings changed the tone of the stock market and views on the economy, inflation and even the Fed (will they bite the bullet and go 100 bps).  Fed’s Bullard eased some of those fears at least for now.  

There’s a consistent theme of US dollar weakness across the board this week. That goes along with falling yields and rising gold.
It’s a picture that looks more like a broader turn than anything we’re seeing in the stock market, though some of the strength into Friday’s close is promising.
I’m not a fan of the dollar index but it paints a good picture at the moment and shows the potential for a retracement, even within the ongoing trend.

A dip to 101 would be a standard-sort of 38.2% retracement from the February lows.On the flipside, the the old high combined with the 2017 high formed something of a double top and we might just be seeing a retest of that before another leg higher.What I think we’re seeing play out in the bigger picture is that a global central banks are being forced to join the Fed in tightening. It may not be at the same pace but there wasn’t much hiking priced in for Europe but now there is. So far the BOJ is holding the line but the SNB showed cracks this week.Secondly, the US dollar benefited from a special bid due to technology stocks. That bubble is bursting at the moment and it will draw money out of the US during the next wave of investing, which will be in value stocks.

Crude oil futures settle at $113.23. That’s up $1.02 or 0.91%. That is for the June contract which goes off the board today. The July contract meanwhile is closing up $0.39 at $110.28. Norway today announced that April preliminary oil production fell to 1.66 million barrels per day vs. expectations 1.86 million barrels per day. The decline is likely due to oil field maintenance work. Nevertheless any disruption oil production is a concern. The Baker Hughes recount came in decent with 13 new oil rigs up to 576 and total rigs up 14 to 728. For the week, last week the price closed at $110.49. With the July contract closing at $110.28, the gain for the week is $0.21 or 0.19%. Technically, the price moved up to test a topside trend line during Monday and Tuesday’s trade, but could not sustain momentum and rotated back to the downside. The move lower fell back below the early May high price at $111.37. The high price today reached $111.04. It will take a move above that level to increase the bullish bias with the topside trend line as a target. On the downside the 38.2% retracement $104.50 followed by the rising lower trendline (at $100.25 currently) are downside targets going forward. Crude oil trade between channel trendline

The June oil contract rolled off today at $113.23, up $1.02 to close it out.
The volume and speculative trading is all in July now but that was higher as well, up $43-cents to $110.23.
I feel like I’m beating a dead horse at this point but the resilience in oil is unprecedented. At virtually any other time in history if you had one of the worst stretches for stocks coupled with widespread economic angst, you’d see oil underperforming. Instead, it’s not only outperformed, but it’s made gains. Oil is up 10% in the past four weeks. This is the first close above $110 since March 25.
I keep waiting for this shoe to drop as the mood out there worsens but it’s just not happening. Now there’s talk about Shanghai reopening and at some point stocks need to at least bounce.
It’s increasingly clear that there just isn’t enough supply. I fear how high prices could go, particularly if predictions of Russia losing 3 million barrels per day come true.
The problem for the larger market is that oil spending is taking up a larger share of the wallet. This is data from JPM. Gasoline prices have risen every day since April 26.