Markets are calm for the Federal Reserve’s decision on the interest rate decision on Wednesday
Clear risk-off markets across the board straight from the open. Trump was typically forthright before likely fractious G-7 meeting with emerging markets concerns and negative Apple-related news drive sentiment.
Market is waiting for FOMC on Wednesday and for the decision of interest rate and for the the press conference which will make an impact on the market.
The JPY rallied, lead by the EURJPY breaking back below the 129.00, with the AUD continuing in the Asian session underperformance after China trade surplus is smaller than expected. ZAR was heavily offered as emerging market outflows continue as the USDTRY retraces 50.0% of yesterday’s fall after the rate hike.
Bunds and USTs rally sharply, as large UST futures block adding to the upside momentum.
NASDAQ futures spike lower after the Negative Apple News hits, dragging the E-mini S&P futures through thursday’s low. The European cash equity markets also lower across the board with the bank and auto sectors lagging.
In the key headlines for the European session:
- Trump tells EU, Canada to take down tariffs or the U.S. “will more than match”.
- Apple told its supply chain to prepare ~20% fewer components for iPhones debuting in the latter half of this year, compared with last year’s orders.
- European Industrial Production: Germany -1.0% vs +0.3% estimate; France -0.5% vs +0.3% estimate.
- Italy to ask for more funds from the EU budget: according to Industry Minister Di Maio.
- China May Trade Balance: $24.9 Billion vs $33.3 Billion estimate; Exports 12.6% vs 11.1% estimate; Imports 26.0% vs 18.0% estimate
- Japan Q1 Final GDP: -0.6% vs -0.4% estimate.
The European session is taken over by the U.S. market as the risk event of the day lies with the G-7 summit where Trump and the Rest of the G-7 leaders were together to discuss a variety of topics ranging from Trade, North-Korea, and Climate Changes. All these will surely have an effect on the market as a whole.
Looking into the economic calendar for the day, Canada will be in the spotlight as it releases its employment report which is forecasted to be a good figure compared to last months -1.1K as unemployment is expected to remain as is at 5.8%.
Global stocks were awash in a sea of red after Apple Inc. prepared its supply chain for a drop-in order; high-beta emerging-market currencies like the rand were under pressure. Meanwhile, Treasuries rose as the trading session saw frantic trading in futures yet again, with a block trade representing the equivalent of more than $2 billion changing hands.
EUR/USD – At bar 7 on daily DeMark sell set-up as bullish set- up extends; bulls need June 1 low to hold on pullbacks to keep cycle lows intact with 21-DMA setting the tone.
GBP/USD – Cable rebound tests 21-DMA as flagged and marginally closes above; room for correction around 1.3600 should key resistance at 1.3450-60 fail to cap on a closing basis.
USD/JPY – Slight bullish bias; close above 110.27 suggests test of cycle highs possible; 55-weekly MA comes into play.
AUD/USD – DeMark buy countdown on the monthly unfolds as the pair heads for another week of gains; close above 55-DMA (0.7612) will keep upside risks intact as Aussie looks for cloud bottom to support; 0.7660, the 61.8% Fibonacci retracement of drop since April 19, caps for now.
EURCHF – Thursday reversal threatens bullish outlook.