STATE OF THE MARKETS

Thin markets amid US labor day. Global equities from FTSE (+0.19%), DAX (+0.79%) and Nikkei (+2.19%) climbed higher on Monday, while the US markets closed for Memorial Day. Last week’s rebound in the equities markets continued to spur buying interests in value names in tech and banks. Dollar continues to be sold, on the way to 101 the figure, while inversion remains between the 7Y (2.76%) and 10Y (2.74%) maturities.

In the commodities market, China’s reopening and resistance in the EU to ban Russian oil, continue to drive crude higher above $116/bl. Gold remains on firm bid above $1,850/oz as investors weigh further rate decisions by the US Federal Reserves. Elsewhere, iron ore is stalled at $133/tn as markets await a new catalyst for the next move.

In the FX space, bullish sentiments in the short and medium term accounts continue, as Aussie and Kiwi advance further in the demand territories. Short term traders seemed ready to bid King Dollar as it falls to the 101 handle while long term accounts seemed more bearish for Sterling.

On Tuesday, markets continue to look for the latest development in EU sanctions against Russian oil while waiting for earning reports from Ambarella (AMBA), ChargePoint (CHPT), HP Inc (HPQ), Salesforce (CRM) and Sportsman Warehouse (SPWH) as well as the latest numbers in Case/Schiller home price, Chicago PMI and Dallas Fed manufacturing index.

OUR PICK – EUR/CHF.

The ECB may raise rates to lift the Euro. Recent announcement by ECB President Lagarde that the European Central Bank is likely to bring its rate to Zero by September and continue raising rates after that, has lifted Euro especially against negative yielding currencies like the Swiss and Yen. We expect the trend to continue as long as the ECB narrative remains intact.

Disclaimer:

This article is for general information purpose only. It is not an investment advice or a solicitation to buy or sell any securities. Opinions expressed are of the authors and not necessarily of MFM Securities Limited or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.