• US major indices close mixed with Nasdaq modestly lower. Dow up for 8th day in a row
• What company earnings will be released in the week starting May 13
• Crude oil futures settle at $78.26
• What key economic events the releases are on the schedule starting May 13?
• Goolsbee and Kashkari: In a wait-and-see mode.
• US federal budget for April surplus $210.00 billion versus $244 billion estimate
• Chicago Fed Pres. Goolsbee: Feds inflation target acts as an anchor on expectations
• Baker Hughes oil rig count -3 to 496.
• Fed’s Kashkari and Goolsbee are ahead
• The godfather of quants dies: Jim Simons dead at 86
• Why the bond market might be overreacting to rising UMich inflation expectations
• European indices close higher. German Dax, France CAC & UK FTSE 100 close at record levels
• White House Brainard: Debt ceiling fights have been unproductive
• More Minneapolis Fed Pres. Kashkari: Baseline is strong productivity rates will moderate
• Minn. Fed Pres. Kashkari: Fed is interested in AI because it contributes to productivity
• More from Fed Logan Logan: We want to see everybody testing the discount window
• University of Michigan consumer sentiment (preliminary) for May 67.4 versus 76.0 estimate
• Dallas Fed Pres. Lorie Logan: Fed has made substantial progress on inflation
• Kickstart the FX trading day for April 10 w/a look at the EURUSD, USDJPY and GBPUSD.
• Canada April employment change 90.4K vs 18.0K estimate
• The GBP is the strongest and the NZD is the weakest as the NA session begins
• ForexLive European FX news wrap: Currencies muted, equities look for perfect week
• BOE’s Pill: The persistent parts of inflation are falling

The US session was informed most by the University of Michigan consumer sentiment preliminary data which showed a sharp decline in the sentiment index to 67.4 from 76.0 . The expectations also fell sharply to 66.5 from 75.0 and current conditions also tumbled to 68.8 versus 79.0. To make the data even worse when you inflation expectations rose to 3.5% from 3.2% last month which was the highest level since November 2023. The five year inflation also rose to 3.1% from 3.0% last month.

Although somewhat shocking, there were reports that this month marked the first month that the survey was done electronically versus through phone calls (people pick up phones and answer questions on the economy….hmmmm). The commentary was that statistically people are more pessimistic about inflation when surveyed online. I wonder if generally there also pessimistic about the economy in general.

Nevertheless, the news sent yields higher, and erased gains in the NASDAQ index in particular which was up +91.13 points at session highs before rotating to the downside to as much as -52.74 points lower on the day ast session lows. The index ended up closing near unchanged. The S&P was up 0.17% in the Dow Industrial Average average rose for the 8th consecutive day with a gain of 0.32%.

For the trading week, the Dow closed higher for the 4th consecutive week. Both the Nasdaq and the S&P closed up for the 3rd straight week:

• Dow Industrial Average average rose 2.16%
• S&P index rose 1.85%
• NASDAQ index rose 1.14%

In the US debt market, the yield closed higher across the curve with the shorter end up the most:

• 2- year yield 4.871%, +6.5 basis points
• 5-year yield 4.516%, +5.6 basis points
• 10 year yield 4.500%, +5.1 basis points
• 30-year yield 4.642%, +4.2 basis points

For the trading week, the yields were mixed with the shorter end rising and the longer end falling:

• 2-year was up 5.2 basis points
• 5-year was up 2.8 basis points
• 10-year was down -1.2 basis points
• 30-year was down -2.6 basis points

There was more Fedspeak today with Fed’s Kashkari, Chicago Fed Pres. Goolsbee and Dallas Fed Pres. Lorie Logan all speaking.

Neel Kashkari from the Federal Reserve discussed economic issues and monetary policy, highlighting persistent U.S. housing supply challenges and the impact of higher interest rates on reducing this supply in the short term. Kashkari emphasized the necessity of controlling inflation and noted that low interest rates alone wouldn’t resolve housing issues. He expressed caution about the restrictiveness of current monetary policies, pointing out that the business community doesn’t view financial conditions as tight. Currently in a „wait and see“ mode, Kashkari is open to the possibility of future rate hikes but notes that any decision to increase rates would require significant justification. He remains uncertain about the neutral rate’s current level, suggesting a period of steady rates ahead unless conditions change markedly.Meanwhile, Chicago Fed Pres. Goolsbee was also talking a lot today discussed the managing inflation, particularly emphasizing the 2% target as an anchor for expectations. He acknowledged the current high short-term inflation expectations but cautioned against overreacting to these. Goolsbee highlighted that although inflation has not shown signs of settling at 3%, the real Fed funds rate is the highest it has been in decades, suggesting a restrictive monetary policy stance. He mentioned the complexity of interpreting recent data due to positive supply developments, including a significant boost from increased immigration which adds approximately 80,000 jobs monthly. Housing inflation remains a critical concern, with rates contributing to supply issues but not fully explaining the persistent high inflation in housing. Despite various economic indicators and the challenges of housing inflation, Goolsbee remains cautiously optimistic about reaching the 2% inflation target, provided housing inflation decreases. He also noted the ongoing recovery of supply chains and potential lasting benefits from labor supply increases into 2024, maintaining a stance that nothing is off the table in terms of policy adjustments to control inflation.

Finally, Dallas Fed Pres. Lorie Logan was probably the most hawkish of the three. Logan highlighted that the Federal Reserve has made substantial progress on combating inflation, noting that the economy and labor market are currently strong. However, she expressed concerns, stating that the fight against inflation is not over as the first quarter inflation data was disappointing. Logan pointed out the presence of significant upside risks to inflation and uncertainties around whether the current policy is sufficiently restrictive. She emphasized that it is too early to consider lowering interest rates and stressed the importance of maintaining flexibility in monetary policy. Additionally, Logan suggested that the neutral interest rate level, which balances the economy without stimulating or restraining growth, may have risen, indicating a possible shift in the economic environment that could affect future policy decisions.

In the forex market, the major indices are ending the day fairly scrunched together in up and down trading. The CAD was the strongest of the major currencies, while the NZD was the weakest.

For the trading week, the greenback is ending mixed and little changed vs the major currencies. Below are the % changes of the greenback vs the major currencies:

• EUR, -0.08%
• JPY, +1.849%
• GBP, +0.20%
• CHF, +0.16%
• CAD, -0.11%
• AUD, +0.12%
• NZD, -0.9%

Thank you for your support this week and wish you all a wonderful weekend.

This article was written by Greg Michalowski at www.forexlive.com.

The major stock indice are ending the day mixed with the Nasdaq down marginally. THe S&P and the Dow rose. The Dow closed higher for the 8th consecutive week. The S&P was up nearly 2% on the week and all the indices moved higher this week.

The final numbers are showing:

• Dow industrial average rose 125.06 points or 0.32% at 39512.85
• S&P index rose 8.62 points or 0.17% at 5222.69
• Nasdaq index-5.40 points or -0.03% at16340.87

The small-cap Russell 2000 fell -13.85 points or -0.67% at 2059.77

For the trading week:

• Dow industrial average rose 2.16% (fourth week in a row higher)
• S&P index rose 1.85% (third week in a row higher)
• NASDAQ index rose 1.14% (third week in a row higher)

This article was written by Greg Michalowski at www.forexlive.com.

There are a few major still releases but overall, the market is not going to be influenced much by the results. The one exception will occur until the following week when Nvidia reports earnings scheduled for May 22.

Tuesday, May 14

• Alibaba
• Home Depot
• Sony

Wednesday, May 15

• Cisco *

Thursday, May 16

• Walmart
• Baidu
• John Deere
• Under Armour
• Applied Material *

* After the close

This article was written by Greg Michalowski at www.forexlive.com.

Crude oil futures are settling at $78.26. That is down -1.0% or -1.26%

The price is settling near the lows for the day. The low for the day reached $78.23. We left for the day was at $79.93.

For the trading week, the price was up $0.40 or 0.52%.

Looking at the daily chart, the price action today traded closely between the 200-day moving average above at $80.03 (the high was $79.93) and the 100-day moving average below. $78.33 (the low for the day was just below that level at $78.23).

This article was written by Greg Michalowski at www.forexlive.com.

• Bank rate can be cut when there is sufficient evidence of a downward path in inflation persistence
• Focusing just on the next BOE meeting is a little ill advised
• We must focus on the underlying components of inflation
• But also on the persistent components, not just the headline rate

The comments are pretty much a follow up to the ones we saw from Bailey yesterday. It’s been a pretty boring session for sterling, even with the beats in the UK GDP data earlier. Cable is flat at 1.2525 on the day currently.

This article was written by Justin Low at www.forexlive.com.

• That is if additional evidence received by then confirmed the medium-term inflation outlook embedded in the March projections
• A few members felt sufficiently confident that the three elements of the reaction function gave grounds for a reduction in the policy rates already at the present meeting
• The risk of undershooting the inflation target and eventually having to pay too high a price in terms of declining activity was now seen as being at least as high as the risk of acting too early and overshooting the target
• Broad consensus to wait until the next monetary policy meeting to see further evidence of, and gain sufficient confidence in, a timely and sustained return of inflation to target
• Members stressed the value of waiting until June for further evidence confirming, or indicating a change to, the outlook
• Members stressed that maintaining a data-dependent approach with full optionality at every meeting was warranted
• Data dependence meant not overly focusing on one data point, as the path many indicators took was likely to be bumpy
• Members felt that markets had understood the ECB’s communication and reaction function and were prepared for the possibility of a rate cut at the June meeting
• Full accounts

The most important takeaway from all this is the final bullet point. That being the ECB is prepared for a June rate cut and that they are comfortable with the idea that markets are also prepared for that. ‚Nuff said.

This article was written by Justin Low at www.forexlive.com.

If you think that experienced
traders don’t make mistakes, think again. I remember Stanley Druckenmiller, one
of the best (if not the best) global macro traders in history talking about how
he lost billions when he went long the tech stocks in 2000 missing the top of
the bubble by an hour or so.

Even though he
knew he shouldn’t have done that and told himself many times to refrain from
buying, he eventually fell into the emotional trap of the fear of missing out
(FOMO). He didn’t learn anything from that mistake, it was just a normal human
impulse. The reality is that such emotion driven mistakes do happen and no one
is exempt from them.

Another common
mistake experienced traders fall into is market timing. Timing well the market
consistently is basically impossible. The market is a big chaotic thing that, especially
in the short term, can be noisy and very volatile.

Jim Rogers, another
famous global macro trader who co-founded with George Soros the Quantum Fund,
is not shy to admit that he’s very bad at timing the market and although his
fundamental views often proved right, timing is what made him lose money.

He once went all-in short six stocks that he had the most conviction in. Two months later he was
completely wiped out. Was he wrong? Not at all, because 2 years later all those
six companies went bankrupt. Unfortunately in trading, being right but being early eventually
ends up in being wrong.

Mistakes will be
part of your trading career no matter how good you are or how much knowledge and
experience you have. What will make the difference is how fast you will
recognize your mistakes and how well you will manage them.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• I still have that belief that we can lower rates this year
• We’re hearing from pretty much everyone that pricing power is pretty much at its limit
• That should help with further progress on the inflation front
• We are still seeing robust job growth
• It may take a while for labour market conditions to ebb further
• Still sees a single 25 bps rate cut as being likely for this year
• Thinking less of the extent of rate cuts but more on getting the timing right to start the cycle

It’s still about the timing at the moment with markets favouring a September move. I’d take his comment on there being one rate cut only with a pinch of salt. If the Fed gets going in at any point besides December, we could easily see them go for another as long as the same conditions hold.

This article was written by Justin Low at www.forexlive.com.

The USD weakened across the
board yesterday following a notable miss in the US
initial claims data as that added some more pressure on the USD with the
market weighing the possibility that the labour market could weaken fast enough
in the next months to justify more rate cuts than expected. Overall though, the
price action has been rangebound this week as the lack of key catalysts and the
waiting for the US CPI report kept the market at bay.

The CAD, on the
other hand, has been under pressure in the first part of the week maybe due to
the sustained weakness in crude oil prices and expectations building for the BoC
to cut rates in June, although the employment data today and the Canadian CPI
report on May 21st will likely decide if the BoC will wait until July or
proceed with a cut already in June.

USDCAD
Technical Analysis – Daily Timeframe

On the daily
chart, we can see that USDCAD bounced from the key support
zone around the 1.36 handle where we can also find the confluence
with the trendline
and the 61.8% Fibonacci
retracement level. A break below that support should see the sellers
gaining more conviction and increasing the bearish momentum into new lows. The
buyers, on the other hand, keep on stepping in around these levels to position
for a rally back into the cycle highs around the 1.39 handle.

USDCAD
Technical Analysis – 1 hour Timeframe

On the 1 hour chart,
we can see that the upward trendline got breached recently with the sellers
piling in to extend the drop into the 1.36 support. From a risk management
perspective, the sellers will have a better risk to reward setup around the
downward trendline where they will also find the confluence of the 38.2% Fibonacci
retracement level and the 1.37 handle.

The buyers, on the
other hand, will want to see the price breaking higher to invalidate the
bearish setup and position for a rally into the 1.3785 level. The red lines
marked on the chart define the average
daily range of the pair, which is generally the maximum movement we can get
on any given day barring major surprises in the market.

Upcoming
Catalysts

Today we conclude the week with the Canadian labour market
report and the US University of Michigan consumer sentiment survey. Weak
figures across the board for the Canadian jobs data should raise the probabilities
for a rate cut in June, although there’s not much more to price in. In fact, the
next big event to watch will be the US CPI next Wednesday as that will likely
have a much bigger and lasting impact on the pair.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• We are evidence-based
• Inflation dynamics in the UK are different to that in the US
• There is always volatility when it comes to the data
• We can’t not look at the labour market, even with the latest ONS data shortcomings
• There is no law that says the Fed must move first before other central banks
• One rate cut will still leave us with restrictive monetary policy
• We do not have a very precise view on where rates will end up (Broadbent)

There doesn’t seem to be much added spice in the Q&A here. I will update the post if there’s anything else but I reckon that’s about it in terms of significant headlines from the BOE today.

This article was written by Justin Low at www.forexlive.com.