22 May: Risk aversion eases as Huawei sanctions delayed. Draghi speaking, FOMC Minutes in focus Wednesday

By | May 22, 2019

 

Risk aversion eased a little on Tuesday as traders took heart from the US decision to delay the sanctions of Huawei for 90 days, with the stockmarkets ending the session +0.8%/+1.0%, taking US yields and US$Jpy along for the ride as demand for as safe haven diminished. Otherwise markets have generally been fairly rangebound and confined to a tight range. The Aud$ and the Kiwi have so far held on to their recent lows but look heavy, as does Sterling, which is struggling to hold on to 1.2700 amid growing fears that UK PM Theresa May will fail to persuade her colleagues to back the latest version of her Brexit withdrawal deal.

Elsewhere, the metals have done nothing and WTI is down by around 0.3% on the day, but remains within its recent range.

Wednesday will start off with the Q1 NZ Retail Sales (exp 0.0%qq, Ex-Autos; +0.9%) Australian WBC Leading Index and the Q1 Construction Work Done in an otherwise quiet Asian session although, note that the Fed’s Bullard will be talking during the late Asian afternoon. Europe will also be threadbare in terms of data, with just the UK CPI to provide any guidance although Mario Draghi will be speaking and may add some volatility to the Euro. The main event of the session will be the FOMC Minutes, which seem likely to maintain the status quo and to continue the Fed mantra that the next interest rate move, either up or down, will be data dependent, as they continue to sit on their hands for now.

Economic data highlights will include:

Wed: NZ Retail Sales, Australian WBC Leading Index, Q1 Construction Work Done, Fed’s Bullard Speech, ECB Mario Draghi Speech, UK CPI, PPI, RPI, US Mortgage Approvals, FOMC Minutes, EIA Crude Oil Stocks Weekly Change

Market moves, in brief:          

FX: DXY 98.03 (+0.10%)

Bonds: US10Y; 2.429% (+0.37%), German 10Y; -0.063% (+28.21%), UK 10Y; 1.085% (+2.01%), Australian 10Y; 1.645% (-2.45%), NZ 10Y; 1.805% (-0.82 %), China 10Y; 3.310% (+0.88%)

Stock Indices: DJI; +0.77%, S+P; +0.85%, NASDAQ; +1.08%, EUStoxx50; +0.50%, FTSE100; +0.25%, Shanghai Composite; +1.23%,

Metals: Gold $1275 oz (-0.2%), Silver $14.45 oz (-0.10%), Copper $2.7140 lb (-0.55%), Iron Ore $96.56 per tonne (NYMEX) (+0.20%),

Oil: WTI $ 62.95 pb (-0.33%)

CURRENCIES
EURUSD: 1.1163
Res  1.1175  1.1190  1.1205
Sup  1.1145  1.1130  1.1110
USDJPY: 110.49
Res  110.65  110.85  111.05
Sup  110.35  110.20  110.00
GBPUSD: 1.2702
Res  1.2750  1.2775  1.2820
Sup  1.2685  1.2650  1.2620
USDCHF: 1.0111
Res  1.0130  1.0150  1.0170
Sup  1.0095  1.0075  1.0055
AUDUSD: 0.6885
Res  0.6900  0.6920  0.6940
Sup  0.6865  0.6845  0.6820
NZDUSD: 0.6507
Res  0.6520  0.6530  0.6540
Sup  0.6500  0.6490  0.6480
INDICES / COMMODITIES
S&P.fs: 2865
Res  2875  2885  2895
Sup  2855  2845  2835
DJ30.fs: 25873
Res  25900  25980  26040
Sup  25805  25725.  25630
SPI200.fs: 6506
Res  6520  6535  6550
Sup  6490  6475  6460
XAUUSD: 1274.78
Res  1280  1285  1290
Sup  1270  1265  1260
XAGUSD: 14.45
Res  14.50  14.60  14.70
Sup  14.35  14.25  14.15
WTI.fs: 62.97
Res  63.45  63.90  64.40
Sup  62.60  62.15  61.70