The NZD is the strongest and the CHF is the weakest as the North American session begins. Today at 8:30 AM, the US PCE data will be released for the month of April. The core PCE is the favored inflation measure for the Fed.

Adam previewed the release yesterday (CLICK HERE) that the consensus is +0.3% m/m but it’s on the razor’s edge as all estimates are nearly-evenly split between +0.2% and +0.3% with the average at +0.25%. Take that as downward bias to the headline..

Other inflation numbers to watch:

• PCE core year-over-year expected at 2.8%, the same as last month
• PCE expected at 0.3% m/m and 2.7% y/y

The focus is going to be on core and in particularly core services ex-housing but don’t discount the headline number. A reading below 2.7% — and something like 2.5% — starts to look awfully close to target even if lapping some high commodity prices is doing much of the lifting.

Adam posted that

The other half of the report focuses on income and spending. The latest round of comments from Fed officials highlighted strong wage growth as a concern. I think that’s a lagging indicator but it’s worth keeping in mind as incomes are expected up 0.3% m/m. Spending is forecast to keep pace with that at +0.3% but I wonder if the US consumer outperforms yet again.

Overnight, the ECB CPI data came in stronger than expected which helped to push up the EURUSD ahead of the interest rate decision next week:

• EUR Core CPI Flash Estimate y/y: Actual: 2.9%, Forecast: 2.7%, Previous: 2.7%
• EUR CPI Flash Estimate y/y: Actual: 2.6%, Forecast: 2.5%, Previous: 2.4%

ECBs Panetta said that the CPI data was neither good nor bad and that policy would still remain restrictive even after several rate cuts.

A snapshot of the other markets as the North American session begins shows

• Crude oil is trading unchanged at $77.91 . At this time yesterday, the price was at $79.08
• Gold is trading +$0.64 or 0.03% at $2344.40. At this time yesterday, the price was higher at $2335.46
• Silver is trading up $0.15 or 0.49% at $31.31. At this time yesterday, the price was at $31.31
• Bitcoin currently trades at $68,395. At this time yesterday, the price was trading at $67,811
• Ethereum is trading at $3805.50. At this time yesterday, the price trading at $3736.20

In the premarket, the snapshot of the major indices are lower after yesterday’s declines: The major US indices are on pace for a lower close

• Dow Industrial Average futures are implying a decline of -9.48 points. Yesterday, the index fell -330.06 point or -0.86% at 38111549
• S&P futures are implying a decline of -6.98 points. Yesterday, the index fell -31.49 points or -0.60% at 5235.47
• Nasdaq futures are implying a decline of -49.10 points. Yesterday, the index fell -183.50 points or -1.08% at 16737.08

European stock indices are trading higher today in the US morning snapshot:

• German DAX, -0.07%
• France CAC , unchanged
• UK FTSE 100, +0.44%
• Spain’s Ibex, -0.10%
• Italy’s FTSE MIB, +0.15% (delayed 10 minutes).

Shares in the Asian Pacific markets were mostly lower:

• Japan’s Nikkei 225, +1.14%
• China’s Shanghai Composite Index, -0.16%
• Hong Kong’s Hang Seng index, -0.83%
• Australia S&P/ASX index, +0.96%

Looking at the US debt market, yields are trading lower after yesterday’s sharp moves to the upside. The coupon auctions this week were less than stellar, forcing yield to the upside:

• 2-year yield 4.941%, +1.2 basis points. At this time yesterday, the yield was at 4.958%
• 5-year yield 4.579%, +0.9 basis points. At this time yesterday, the yield was at 4.611%
• 10-year yield 4.556%, +0.2 basis points. At this time yesterday, the yield was at 4.589%
• 30-year yield 4.683%, -0.2 basis points. At this time yesterday, the yield was at 4.713%

Looking at the treasury yield curve spreads remain in negative territory but moved more toward parity (steeper curve)

• The 2-10 year spread is at -38.7 basis points. At this time yesterday, the spread was at -36.8 basis points.
• The 2-30 year spread is at -25.9 basis points. At this time yesterday, the spread was at -24.2 basis points.

In the European debt market yields in the benchmark 10-year yields are higher::

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

This famous quote by
“Phantom of the Pits” basically covers what trading is all about. The society trains
us from our childhood that we need to do everything right and that we can’t
make mistakes, but that doesn’t work in trading.

Trading is not
about being right, it’s about making money. Mistakes, losses, setbacks are all
part of the process. As traders we can try to minimise them, but we can’t
eliminate them completely from the equation.

You might have
heard another famous saying that goes like “cut your losses short and let your
profits run”. This is another way of saying that when you see that your trades
are not working out as expected, you should walk away from you positions fast.

Conversely, when you
really see the ball, when you know that you are right, you should maximise your
winners by letting your profits run and even increase the position.

Druckenmiller once
said that Soros was the best loss taker he’s ever seen. He didn’t care whether
he was winning or losing on a trade. If a trade didn’t work, he was confident
enough about his ability to win on other trades that he could easily walk away
from the positions. If you’re extremely confident in yourself, taking a loss
doesn’t bother you.

Being the best
loser is all about minimising the losses and deeply accept them as part of the process. This will also keep you in the game for longer and increase your chances of success. Don’t try to flip accounts or become rich quick because 99.99% of the time it ends up in blowups.

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

Headlines:

• Japan spent nearly ¥10 trillion on yen-tervention in the past four weeks
• Japan finance minister says closely watching FX moves
• BOJ panelist warns of inflation overshoot, urges the central bank to raise rates further
• Eurozone May CPI +2.6% vs +2.5% y/y expected
• France May preliminary CPI +2.2% vs +2.4% y/y expected
• Italy May CPI Y/Y 0.8% vs.0.8% expected
• France Q1 final GDP +0.2% vs +0.2% q/q prelim
• Italy Q1 final GDP +0.3% vs +0.3% q/q prelim
• Germany April retail sales -1.2% vs -0.1% m/m expected
• Germany April import price index +0.7% vs +0.5% m/m expected
• UK April mortgage approvals 61.14k vs 61.50k expected
• UK May Nationwide house prices +0.4% vs +0.1% m/m expected

Markets:

• CAD leads, CHF lags on the day
• European equities mixed; S&P 500 futures down 0.3%
• US 10-year yields up 0.6 bps to 4.560%
• Gold flat at $2,342.98
• WTI crude down 0.1% to $77.83
• Bitcoin down 0.4% to $68,180

The dollar is mixed as May trading starts to wind down, though we still have the US PCE price data coming up later.

The greenback is recouping losses against the yen and franc from yesterday but is slightly lower elsewhere. EUR/USD is up 0.1% to 1.0845, helped by a stronger than estimated Eurozone inflation report. Meanwhile, commodity currencies are also higher and that is despite a more sluggish risk mood overall. USD/CAD is down 0.3% to 1.3635 and AUD/USD up 0.2% to 0.6645 on the day.

As for USD/JPY, the pair moved up from 156.80 earlier in the day to 157.30 and is holding thereabouts now. USD/CHF is also seen up 0.3% to 0.9060, after a low of 0.9023 in Asia trading.

In other markets, European indices are looking fairly mixed as US futures are languishing further on the week. The bond market is keeping steadier but it’s all on the US PCE price data and potential month-end trickery next to see how we’re going to finish things this week/month.

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

Fundamental
Overview

The USD got a
boost from the strong US Consumer Confidence data which triggered an aggressive rise in long term
Treasury yields. The report however just showed that the labour market remains
resilient which is good news for growth and not necessarily bad news for
inflation. The greenback benefited also from the risk-off sentiment which looks
increasingly likely that it was caused more by the month-end flows rather than
a fundamental driver.

The NZD, on the other hand,
remains supported from the hawkish RBNZ decision where the central bank pushed
further out the timing for a rate cut and even added that they considered a
rate hike. Moreover, the risk-on sentiment is supportive for commodity
currencies like the NZD, so if it this were to continue, we could see even more
gains ahead for the Kiwi.

NZDUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that NZDUSD continues to consolidate in a roughly 60 pips range as traders
await a breakout to get things going. The price recently fell below the trendline
which increased the risk of a bigger correction to the downside, although the
price will need to break below the 0.6080 level to confirm it and see the bearish
momentum increasing. For now, the buyers remain in control with the 0.6218
level being the first target.

NZDUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that more clearly the rangebound price action with the latest bounce on the
0.6084 support
as the risk mood improved yesterday with falling Treasury yields. It looks
increasingly likely that the price action of the past couple of days was caused
mainly by month-end flows.

NZDUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we got a breakout recently but all the gains were erased as the risk
sentiment soured. The buyers stepped in again around the support to position
for another breakout and target the 0.6218 level. The sellers, on the other
hand, will likely pile in around the resistance to position for a drop back
into the support and target a break lower. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we conclude the week with the US PCE report. This
report is unlikely to change anything for the Fed as the central bank remains
in a “wait and see” mode. If we get a good report though (or even in line), we
might see the risk-on sentiment coming back. On the other hand, hotter than
expected figures might weigh on the sentiment a bit.

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

After some back and forth action, the pair was more or less flat as we got into European trading today. Sellers wrestled back some momentum amid a drop in bond yields yesterday but today, we’re seeing buyers return the favour in erasing most of the decline from the day before:

The minor support around 156.55-57 has helped to keep buyers in the game, with price action holding above that as seen on the hourly chart above. Buyers did try to work with that over last few sessions but failed to move above the 100-hour moving average (red line). That is until we got to European trading today, before a push back above 157.00 as well.

Now, buyers are back in near-term control as they look to inch closer towards potential intervention territory by Tokyo. The MOF just confirmed that they spent nearly ¥10 trillion to prop up the yen in the past four weeks. So, that will likely keep traders a bit more cautious before the weekend at least.

We’ll see though. There is still the US PCE price data to come later in the day.

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

Headlines:

• Swiss franc set for first monthly advance against the dollar this year
• Dollar pares gains in mixed flows to start the session
• What is a bear steepener and why it matters?
• Spain May preliminary CPI +3.6% vs +3.7% y/y expected
• Eurozone April unemployment rate 6.4% vs 6.5% expected
• Eurozone May final consumer confidence -14.3 vs -14.3 prelim
• Switzerland Q1 GDP +0.5% vs +0.3% q/q expected
• Dollar selling one to watch for this month-end – Deutsche

Markets:

• CHF leads, USD lags on the day
• European equities higher; S&P 500 futures down 0.4%
• US 10-year yields down 3.2 bps to 4.591%
• Gold down 0.1% to $2,337.01
• WTI crude flat at $79.24
• Bitcoin up 0.6% to $67,842

Trading in Europe today was a bit mixed, as the early gains in the dollar and opening losses in regional indices were turned around during the session.

The greenback was a little higher in Asia as the risk mood was more sour, with equity futures pointing lower. That led to a softer open in Europe but we’re now seeing stocks hold a little higher with the dollar also lagging across the board. US futures are still down though, but S&P 500 futures have at least halved losses on the day.

EUR/USD was flirting with a firmer drop under 1.0800 early on but is now a little higher at 1.0820 with large option expiries at 1.0800 and 1.0825 also in play. USD/JPY is down 0.6% to 156.70 after some back and forth trading, with the pair having fallen to a low of 156.55 then moving back up to 157.20 before coming back down.

The Swiss franc is the top performer though, with USD/CHF down 0.7% to 0.9070 with the pair poised for its first monthly drop this year.

In other markets, bond yields are down with 10-year Treasury yields seen lower by 3 bps to 4.59%. Meanwhile, commodities remain sluggish with gold down at $2,337 but at least off its earlier low of $2,322.

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

USD/CHF has seen gains in each of the opening four months this year. But in May trading, the pair looks set for its first monthly decline now. A chunk of that will owe to today’s drop, after having seen a bounce off key support at 0.9000 earlier this month.

The combination of a stronger dollar and a quick shift by the SNB to rate cuts in March has helped to precipitate the rise in USD/CHF this year. The Swiss central bank made their move as inflation pressures look to be coming well under control. However, there is still lingering uncertainty as evident with things in the US, Europe, and UK.

So, the SNB must not be too complacent in their approach. If the franc also continues to weaken, that might invite more inflation down the road for the Swiss economy. And as SNB president Jordan outlined earlier here, that is the key risk that they have to watch out for right now.

If they are to cut rates further, it will see more pressure on the franc. But at the same time, they’d be hoping to avoid too much of that so as to not stir up higher inflation.

The risk backdrop earlier today was rather sluggish and it was a good a time as any for the SNB to work some of their magic. But we’re now seeing mixed flows in European morning trade, though the franc is still unfazed and sitting at the highs for the day.

But in the case of USD/CHF, there is still key support closer to 0.9000 at this stage. As long as that holds, the pair can still maintain a more bullish momentum in the bigger picture.

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

They make the case that May was a positive month for US equities, hence rebalancing flows will result in outflows for the dollar. This matches up with what Barclays argued from last week here.

At the same time, Deutsche says that their model also points to positive flows in the CAD and GBP. This comes as both Canadian and UK equities have lagged behind their US counterparts this month. In that lieu, they see the most selling in USD/CAD and most demand in GBP/USD for this month-end.

Typically, these flows can play out during the week but they can be particularly evident at the London fix in the last few days of the month. So, that might be one to watch out for later today or tomorrow.

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

Fundamental
Overview

The USD got a boost from
the strong US Consumer Confidence data which triggered an aggressive
rise in long term Treasury yields. The report however just showed that the
labour market remains resilient which is good news for growth and not
necessarily bad news for inflation. The greenback benefited also from the
risk-off sentiment which seems to be caused more by the month-end flows rather
than a fundamental driver.

The GBP, on the other hand,
has been supported by a slightly more hawkish repricing in interest rates
expectations following the hot UK CPI report last week which saw the chances of a
rate cut in June evaporating. If we go back into risk-on sentiment, the
greenback could start losing ground against the Pound again.

GBPUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that GBPUSD managed to eventually hit the 1.28 handle. The pair started to
drop steadily since then as the risk-off sentiment in the markets boosted the
US Dollar. If the correction extends further, we can expect the buyers to lean
on the trendline
around the 1.2630 level to position for a rally into new highs with a good risk
to reward setup.

The sellers, on the other hand, will want to see the price
breaking lower to invalidate the bullish setup and position for a drop into the
1.25 handle next.

GBPUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have the confluence of the previous swing high and the
50.0% Fibonacci retracement level around the trendline. This
should technically strengthen the support and give the buyers a bit more
conviction for a bounce. A break below that support
should give the sellers more control and increase the bearish momentum.

GBPUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a good resistance at the 1.2710 level where we can find the
confluence of the downward minor trendline and the 38.2% Fibonacci retracement
level.

This is where we can expect the sellers to step in with a defined risk
above the trendline to position for a drop into the major trendline with a good
risk to reward setup. The buyers, on the other hand, will want to see the price
breaking higher to invalidate the bearish setup and start targeting new highs.

Upcoming
Catalysts

Today we will see the latest US Jobless Claims figures, while tomorrow we
conclude the week with the US PCE report.

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

Fundamental
Overview

The markets went into
risk-off on Tuesday after the strong US Consumer Confidence data which triggered an aggressive
rise in long term Treasury yields. The report however just showed that the
labour market remains resilient which is good news for growth and not
necessarily bad news for inflation.

The month-end flows could
also be skewing the picture. The negative sentiment weighed on Bitcoin although
much less than in other markets, which might also be a signal that as soon as
the sentiment changes, we could see some more upside.

Bitcoin
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that Bitcoin is testing the 67275 support.
This is where we can expect the buyers to step in with a defined risk below the
level to position for a rally into the cycle highs. The sellers, on the other
hand, will want to see the price breaking lower to open the door for a drop
into the 60000 support next.

Bitcoin Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have some nice confluence
around the support with the trendline
and the 38.2% Fibonacci
retracement level. This should technically strengthen the support zone and
give the buyers a bit more conviction for a bounce. A break below the trendline,
on the other hand, will likely give the sellers more control and possibly
trigger a bigger correction.

Bitcoin Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that the first resistance comes around the 68861 swing level. A break above
that level should open the door for a rally into the 70639 swing high.

Upcoming
Catalysts

Today we will see the latest US Jobless Claims figures, while tomorrow we
conclude the week with the US PCE report.

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