Risk appetite wanes?

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Daily Outlook – 21 May 2020

By: Andria Pichidi

Stock markets closed higher in Europe and on Wall Street yesterday, but Asian markets pared early gains and DAX and FTSE100 futures are down -0.7% and -0.4% respectively, while US futures have lost -0.4 to -0.5% so far
Germany’s ZEW investor confidence jumped sharply higher this month.
Preliminary PMIs reported from Australia and Japan – both indicated a drop further into contraction for manufacturing and a deeply contracted but slightly improved reading for services.
The US Senate passed a bill that could ban some Chinese companies from listing on U.S. exchanges
Fresh criticism from US President Trump of China’s leadership added to concerns that we are heading for a new trade war.
FOMC minutes that showed a discussion of yield curve control. However, only a “few” of the Committee members suggested using either QE or the balance sheet to cap rates. Also, minutes highlighted the risk to not just economic growth, but also financial stability.
Canadian CPI plunged -0.2% y/y in April, surprising no one.
GBP weakened, while USD strengthened against all major currencies.
USOIL jumped to -$34.40, after Kuwait and Saudi Arabia announced that they will halt production from their joint oil field as of June 1 for one month

USDIndex – rebound from 98.95 to R1 at 99.45. PP set at 99.22
EUR – eased to 1.0950 (50-period SMA). PP at 1.0963 with R1 at 1.1010 and S1 at 1.0930
JPY – at 107.75, although the yen gained against most other currencies. PP at 107.60 and R1 at 108.87
GBP – down below S1 and 1.2200 level., reversing 50% since Friday rally. S2 at 1.2180 with S1 at 1.2140
AUD – steady at 0.6550 area. Currently below PP at 0.6578. S1 is at 0.6540
CAD – under 1.3900 as crude oil prices edged higher. PP 1.3925. R1: 1.3985 and S1 at 1.3880

GOLD – after topping to 1753 it turned lower to 1738 at day’s S2. Further down, strong support awaits at $1,728, which is the convergence of the SMA 50-4h and the Fibonacci 38.2% one-week.

Bitcoin – Rounding top?

TODAY: Preliminary PMI readings for the Eurozone, US, and the UK will be interesting.US weekly Jobless Claims along with Fed’s Powell and Clarida speech expected to dominate the markets.

Biggest mover – AUDUSD (-0.60%) The AUDUSD was the biggest loser overnight. Th asset declined by nearly 66 pips. MACD zeroed, however, it has not turned negative yet, RSI has flattened at 41, while the fast Stochastics have rebounded from OS zone. Hence indicators along with the fact sustained a move above week’s trendline suggest that as long as the asset holds above 0.6540 (S1), decline looks to have run out of steam. H1 ATR 0.0011, Daily ATR 0.0080


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