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.

Headlines:

ECB’s Visco: June rate hike out of the question, July perhaps the time to start
ECB’s Muller: The focus needs to be on fighting high inflation
ECB’s Kazaks says hopes that first rate hike will take place in July
BOE’s Pill: Policy tightening still has further to run
Japan PM Kishida: Rapid movements in the yen currency are undesirable
Russian gas flow to Finland to be halted on 21 May at 0400 GMT
Shanghai feel the economic pinch of lockdown measures in April
UK April retail sales +1.4% vs -0.2% m/m expected
Germany April PPI +2.8% vs +1.4% m/m expected

Markets:

NZD leads, JPY lags on the day
European equities higher; S&P 500 futures up 1.1%
US 10-year yields up 1.4 bps to 2.869%
Gold up 0.1% to $1,843.42
WTI crude up 0.2% to $112.45
Bitcoin up 0.5% to $30,333

It was a quiet session in terms of headline as markets kept steadier overall after a lot of pushing and pulling on the week.
Equities tracked higher, with European indices posting gains of around 1.4% to 1.8% across the board while US futures also extended their advance to over 1% on the session. That said, it will still take a miracle for US stocks to prevent a seventh consecutive weekly decline and that says a lot about sentiment at the moment despite the light respite.
The mood in FX is also not hinting at much although the dollar looks set for a weekly decline – the first in seven.
EUR/USD is little changed around 1.0560-70 levels while USD/JPY is hugging the 128.00 level for the most part with Treasury yields mostly little changed.
The pound saw a decent recovery from 1.2450 to near 1.2500 before sellers stepped in again near the figure level to keep gains in check. Elsewhere, AUD/USD is seen advancing to 0.7050-60 and a weekly close above 0.7000 will be a welcome development for buyers.Besides that, the Chinese yuan continued its snapback on the week, set for its best weekly performance since de-pegging from the dollar back in 2005.
Some food for thought:

Yesterday in
New York, should have been the usual bounce back day for stocks? Instead,
while there was some attempt, the market settled back toward the previous day’s
lows.

 

This is a
somewhat precarious situation and encourages our view that the ‚day and
technical traders‘ were caught enthusiastically long. While the real money
funds were very happy to take advantage of the liquidity provided and continue
to sell down their portfolios.

 

It is a bear
market. Has been all year. US data was worrying in that Existing Home Sales fell
another 2.4%, and New Jobless Claims leapt to 218,000. This remains a low and
good number, but it did exhibit a bit of a break to the upside which could
again indicate the tide is most definitely turning down for the US economy.

 

The ECB
wants to move toward tightening, or so the ’talk’ goes, but it is just way too
late for the ECB who was focussed on being popular, and is just now starting to
chase the inflation wave that has already inundated the region. This will
provide a moment of support for the Euro, but a bit of a ’snowflake in summer’
rally, really. ECB rates will fall further behind US levels, even if the ECB
starts to raise.

 

Additionally,
there is that small thing of war on the doorstep and energy supply concerns
recession likelihood.

 

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
Clifford Bennett, Chief Economist at ACY Securities.

 

Overview:

Watch the video for the key trading levels for AUDJPY,
AUDUSD, EURJPY, EURUSD, GBPJPY, GBPUSD, NZDJPY, NZDUSD, USDCAD, USDJPY, USD
Index, and S&P 500.

 
Key Trading Levels – AUDJPY, AUDUSD, EURJPY, EURUSD, GBPJPY, GBPUSD, NZDJPY, NZDUSD, USDCAD, USDJPY, USD Index, & S&P 500 from ACY Securities Australia on Vimeo.

Read
the updated analysis below:

·      AUDJPY has rallied
back to the 90.29 monthly resistance level.

·      AUDUSD has rallied
back to the 0.7030-51 daily resistance area.

·      EURJPY has
rallied back to the 135.51 daily resistance level after finding support at the
134.14 monthly support level.

·      EURUSD has advanced
and tested the 1.0600 level.

·      GBPJPY has rallied
back to the 159.61 daily resistance level after finding support at the 158.21
monthly support level.

·      GBPUSD has rallied
and retested the 1.2500 level.

·      NZDJPY
has
reversed at the 82.49 monthly resistance level and is now targeting 79.44 last
week’s low.

·      NZDUSD
has
rallied back to the 0.6380 weekly resistance level.

·      USDCAD continues
to find support at the 1.2800 level.

·     
USDJPY has declined down to the 127.51 daily support level.

·      USD Index has
closed back below the 103.81 monthly resistance level.

·      S&P 500 has
declined down to test last week’s low.

 

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 – ACY Securities Senior Market Strategist & Trading Mentor.

Just another day for you and me in paradise, umm, FX land. Bid-offer spreads in early Sydney widened as FX volatility extended, picking up where it left off yesterday. At the close of trade, US bond yields eased while stocks erased losses. It was another day of risk-on, risk-off with the ongoing debate between inflation and recession dominating sentiment. US economic data released yesterday mostly missed expectations. Weekly Unemployment Claims climbed to 218,000 against estimates at 200,000 while the Philadelphia Fed Manufacturing PMI missed forecasts, dropping to 2.6 from a previous 17.6, and lower than estimates at 14.9. The Swiss Franc performed best in this environment. The USD/CHF pair tumbled 1.6% to 0.9720 from 0.9863. New Zealand’s Kiwi (NZD/USD) soared 1.37% against the US Dollar to 0.6380 from 0.6300 yesterday, finishing as second-best performing FX. The Dollar Index, which measures the value of the Greenback against a basket of 6 major currencies, tumbled 0.9% to 102.87 (103.64 yesterday), extending its pullback from a 20-year high (105.01), seen a week ago. The Australian Dollar (AUD/USD) jumped 1.27% to close above the 0.70 cent mark at 0.7050 (0.6968). Elsewhere, broad-based US Dollar selling pushed the Euro (EUR/USD) to 1.0585 from 1.0485, up 1.03%. Sterling (GBP/USD) rebounded from yesterday’s open at 1.2358 to 1.2465. Against the Japanese Yen, the US Dollar dipped to 127.80 (128.32) in classic roller coaster trading. The Greenback was also lower against the Asian and Emerging Market currencies. USD/CNH (US Dollar-Offshore Chinese Yuan) slumped to 6.7300 from 6.7775 while the USD/SGD pair (US Dollar-Singapore Dollar) fell to 1.3805 (1.3895). Global bond yields were mostly lower. The benchmark US 10-year treasury yield settled at 2.84% from 2.88%. Germany’s 10-year Bund yield dropped to 0.94% (1.02%). The UK 10-year Gilt rate was unchanged at 1.86%. Australia’s 10-year treasury yield however rose to 3.38% from 3.35%. Wall Street stocks finished with modest losses after a choppy, see-saw session. The DOW closed at 31,248 (31,362) while the S&P 500 was last at 3,902 (3,906). Other economic data released yesterday saw Australia’s April Employment report gain 4,000 jobs which missed expectations for an increase off 30,000. Australia’s Unemployment Rate fell to 3.9% from 4.0%. US April Existing Home Sales dipped to 5.61 million against expectations of 5.65 million. The US Conference Board Leading Index dipped to -0.3% from a downward revised 0.1% (from 0.3%), and lower than median estimates of 0.0%. EUR/USD – The Euro survived a test of 1.0432 it’s low earlier this week, finishing at 1.0585 (1.0485 open yesterday). Overnight low traded was at 1.0465 in another volatile session amidst mixed risk sentiment. The shared currency rallied to an overnight and near 3-week high at 1.0607 before easing at the close. NZD/USD – The Kiwi, also known as a flightless bird, found its wings yesterday, soaring 1.37% to 0.6380 at the New York close (0.6300). Overnight high traded for the NZD/USD pair was at 0.6417. The Kiwi was sold to a low at 0.6292 before it found its wings. AUD/USD – Against the broadly based weaker US Dollar, the Aussie Battler jumped 1.27% to finish at 0.7050 against yesterday’s 0.6968. Overnight, the AUD/USD pair rallied to a high at 0.7072 while the overnight low traded was 0.6953 in a choppy session. GBP/USD – Sterling also benefitted from the overall US Dollar weakness, rallying 0.96% to 1.2465 from 1.2358 yesterday. The British currency was initially pounded lower to 1.2338 overnight low before rebounding to its New York close. In its own volatile session, the overnight high hit was at 1.2524. On the Lookout: Welcome to Friday after a volatile session in all markets. Today’s economic data calendar kicked off earlier with New Zealand’s Trade Balance climbing to a Surplus of +NZD 584 million, bettering economist’s expectations of a Deficit of -NZD 350 million. However, the previous deficit of -NZD 392 million was revised to a larger deficit of -NZD 581 million. The Kiwi (NZD/USD) climbed modestly to 0.6385 from its opening of 0.6380. Japan followed with its National Core CPI which rose to 2.1%, matching median estimates of a 2.1% rise and higher than a previous 0.8%. Japan’s Annual Headline Inflation Rate for April rose to 2.5% from March’s 1.2% – ACY Finlogix. The UK released its GFK May Consumer Confidence Index which fell to -40 from a previous -38, lower than forecasts at -39. New Zealand releases its April Credit Card Spending data (y/y no f/c, previous was 3.4%). The G7 Finance Ministers and Central Bank Governors conclude their 3-day meeting in Germany. European data kicks off with Germany’s April PPI (m/m f/c 1.4% from 4.9%; y/y f/c 31.5% from 30.9% – ACY Finlogix). The Eurozone also releases its May Flash Consumer Confidence (f/c -21.5 from -22 – ACY Finlogix). The UK follows with its April Retail Sales report (m/m f/c -0.2% from -1.4%; y/y f/c -7.2% from 0.9%). Switzerland releases its Industrial Production (y/y no f/c, previous was 7.3%). Canada kicks off North American data with its March ADP Employment for March (no f/c, previous was 475,000). Over the weekend Australia holds its Parliamentary elections. Trading Perspective: Expect another volatile session as we come to an end of this week. Amidst central bank talk of higher interest rates ahead, risk sentiment remains shaky. Which will provide support for the US Dollar and prevent further gains for its rivals. Equities will edge back down. After tumbling to 102.87, expect the Dollar Index (DXY) to hold current levels and resume its rally. Speculative long Dollar bets have pared their positions which provides added support for the US currency. On the fundamental side, a recession in the US will lead to a global economic downturn. The one certainty that remains is elevated volatility. Prepare for another roller coaster ride so keep those tin helmets on. EUR/USD – it was inevitable for the shared currency to bounce off its lows after too many calls for parity. While that is still a possibility, we can expect consolidation now between 1.04 and 1.07 first up. The Euro closed at 1.0585. Immediate resistance today lies at 1.0610 (overnight high traded was 1.0607). The next resistance level is found at 1.0640, 1.0670 and 1.0700. Immediate support is found at 1.0550, 1.0520 and 1.0490. Look for another choppy session today with a likely range of 1.0480-1.0620. Preference is to sell into Euro strength. AUD/USD – The Battler jumped like a wounded kangaroo to finish at 0.7050 from yesterday’s open at 0.6968. Overnight, the Australian Dollar traded to a high at 0.7072. Immediate resistance today lies at 0.7080 followed by 0.7110. Immediate support can be found at 0.7010, 0.6980 and 0.6950. Look for another choppy one in this puppy today, likely range 0.6970-0.7070. Prefer to sell rallies. The Aussie still has room to head further south. USD/JPY – against the Japanese Yen, the Greenback dipped to 127.80 from 128.32 yesterday. Risk-off sentiment amidst lower US bond yields weighed on the USD/JPY pair. Overnight low traded was at 127.02 while the high recorded was at 128.94. Volatility in this currency pair has rocketed back to the old days. Often, the best traders in the room handled the Dollar Yen. Immediate resistance lies at 128.10, 128.40 and 128.70. On the downside, immediate support can be found at 127.50, 127.20 and 126.90. Look for further volatility in this currency pair, likely range 127.30-128.80. Am neutral here, just trade the range shag. (Source: Finlogix.com) GBP/USD – After getting a pounding earlier in the week, Sterling rebounded to finish at 1.2465 from 1.2358 yesterday. For today, immediate resistance lies at 1.2490 and 1.2520. On the downside, immediate support is found at 1.2430, 1.2400 and 1.2370. We can expect a choppy ride in this currency pair as well, likely between 1.2400-1.2500 first up. Preference is to sell into GBP/USD strength. It’s been a tough and tumble week, happy trading, and a top Friday all. 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 Michael Moran, ACY Senior Currency Strategist at ACY Securities.

This is mainly seen as a sentiment indicator but in other words, it is hinting that we are approaching peak bearishness in markets. That doesn’t quite signal that the selloff may be over but given the pace of the market decline in recent weeks, one can argue that we are perhaps overdue for a technical breather as well.
BofA notes that last week observed $5.2 billion exiting world equities funds, while global bond funds saw $12.3 billion leave – marking a seventh straight week of outflows.
For some context, the BofA ‚Bull & Bear‘ indicator hints at an „unambiguous contrarian buy“ when it falls below 2.0: