Friday May 27th, 2022

The US$ & oil prices are steady, equity markets rally, while US yields ease as risk optimism improves. Chinese tech shares jumped after two of the largest internet company’s sales topped estimates, European shares rally for the best weekly advance since mid-March and US futures advance snappy a seven-week losing streak. The US$ bounces off a fresh monthly low and oil prices oil prices are on track for a weekly rise amid global supply concerns. Intraday US Personal Consumption Expenditures price index, Michigan Consumer Sentiment Index, Personal Income & Spending data will help provide direction to markets. In other news. Apple supplier faces worker revolt in locked down China factory. Citigroup joins BlackRock & Morgan Stanley downgrades US stocks on recession risk flagging risks stemming from a slowing US economy. Taiwan cuts 2022 growth forecast and raised its inflation outlook for 2022 due to covid and surging pricing. Bankrupt Sri Lanka takes Russian oil as fuel crisis persists. Moscow-backed separatists claims they control Lyman a key town in east Ukraine. The currency markets. The US$ is set for its biggest weekly drop in nearly 4-months as interest rate bets cool. CNY firms in volatile trade, but economic slowdown concerns linger. GBP heading for its 2nd weekly gain after the announcement of the UK household support plan. CNY firms 0.4% while Asian currencies firm 0.25% on average vs US$. Trading currencies benefit from a weaker US$, CHF is Flat, while JPY, MXN & NOK are up 0.1%, ZAR firms 0.2%, and AUD & NZD strengthen 0.6% vs US$.

Oil prices continue higher, on track for another weekly rise amid growing optimisms and ongoing global supply concerns. C$ advances towards the May 5th highs of 1.2709 as risk on sentiment rises helping oil prices extend gains, CAD bond yields rise and a poll of 30 economist all see BoC raising rates at its June 1st meeting. Intraday a flurry of US economic data releases will help provide direct, while our bias continues to favour a stronger C$ vs US$. Support resets to 1.2709 (May 5th), if breached look for 1.2682 next while resistance lowers to 1.2792.

Euro fails to hold above 1.0750 ahead of US$ data releases. Euro remains on track to post gains for a 2nd week, but the technical outlook suggests Euro will remain capped on any rallies towards 1.0800. Intraday investors will be focused on ECB Lane speech for ongoing guidance on ECB interest rate hikes in July & September and US data release with a PCE inflation being the key focus for investors. Ahead of the US memorial weekend, expect markets to consolidate with Euro holding within its current range. Support holds at 1.0650, while remains at 1.0750.

EURGBP slips as the pound rallies following the announcement of the UK household support plan. Support holds at .8470 (1.1806) while resistance remains at .8600 (1.1628).

GBP consolidates its weekly gains above 1.2600 heading into the US data releases. The pound heads for a 2nd-weekly gain after the UK household support plan. Chancellor Sunak says household support will have ‘minimum impact’ on UK inflation, while North Sea oil and gas producers hit back at GBP 5 Bln windfall tax. The household support plan will help the BoE modify its recent ‘very grim forecast’ which had forecast a contraction in UK growth in Q4. Intraday US data releases will provide direction to the pound today. Support resets to 1.2570, while resistance rises to 1.2680.