They now expect German inflation to hit 7%, after initially forecasting 3.5% inflation in its February forecast. Well, we’re already there and given how things are progressing, it may be the case that inflation pressures stay higher for longer now – not helped of course by the Russia-Ukraine conflict.The more notable thing is that from the survey of 25,000 companies, DIHK says that nearly 40% plan to pass on the higher costs on to customers with more than every second company in industry and trade stating that it was intending to pass on the cost increases.Well, the situation in the UK is a rough look for what may be the case in Europe later in the year.

A news item is being circulated that there was an unsuccessful internal attempt to assassinate Russian President Putin a few months ago. For what it is worth (there is no market impact), but it was from within Russia according to the report. 

Headlines:ECB’s Lagarde: We are likely to be in a position to exit negative rates by end of Q3Germany May Ifo business climate index 93.0 vs 91.4 expectedIfo economist: There are no signs of a recession for nowSNB total sight deposits w.e. 20 May CHF 754.1 bn vs CHF 753.3 bn priorChina warns US not to underestimate its resolve on TaiwanBiden: US economy has problems but recession is not inevitableGermany says ready to go ahead with Russia oil embargo even without HungaryChina cabinet announces package of targeted support measures to bolster the economyBeijing reportedly mulls relaxing hotel quarantine to one week for international arrivalsMarkets:NZD leads, USD lags on the dayEuropean equities mostly higher, S&P 500 futures up 1.0%US 10-year yields up 4.5 bps to 2.83%Gold up 0.8% to $1,861.54WTI crude up 0.9% to $111.25The market is in a more positive mood to kick start the new week, with risk trades being spurred on after mostly coming under pressure over the past two months.Equities are hoping to post a bit more of a recovery with US futures keeping 1% higher, aiding the mood in Europe with major indices in the region also posting a slight advance on the session.The optimism was also helped a little as US president Biden said that China trade tariffs may be under consideration to be lifted/reduced but there was an exchange of blows regarding Taiwan.The dollar was pressured lower across the board on the better risk appetite with the antipodeans leading the charge notably. AUD/USD is up over 1% on a push above 0.7100 while NZD/USD is up over 1% as well, closing in on 0.6500.The euro got a notable nudge after ECB president Lagarde talked up rate hikes in her blog. She made mention that negative rates could be phased out by the end of Q3 and that saw the euro extend gains against the dollar, with EUR/USD rising from 1.0610 to 1.0680.GBP/USD also benefited from the dollar’s sluggishness, with the pair extending a breakout above 1.2500 to near 1.2600 currently.Elsewhere, precious metals and oil are also having a good day with gold up 0.8% to $1,861 and WTI crude pushing higher by nearly 1% to $111 on the day.

S&P 500 futures +1.1%Nasdaq futures +1.0%Dow futures +1.0%Despite a late recovery in the final hours at the end of last week, US equities still endured a rough week and closed lower for a seventh consecutive one. It’s a tough backdrop at the moment and the tech „bubble“ looks to have popped and if so, any signs of recovery may yet be short-lived.As things stand, seven straight weeks of declines is a rather long stretch. That may call for a correction or a retracement of sorts in the weeks to come. But against the backdrop of a global economic slowdown, surging inflation pressures, and central banks aggressively tightening policy, it will be hard for equities to muster any major rally unless the tides turn and sentiment shifts.

That’s a wide range of measures being adopted, including implementing full amount of existing and incremental tax rebates in more industries, increasing tax rebate by more than 140 billion yuan, and annual tax rebate of 2.64 trillion yuan. They will also introduce a  phased reduction of 60 billion yuan in purchase tax on some passenger cars and double the quota for inclusive small and medium enterprise loans this year. (h/t @ Sino_Market).

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.