FX News Today
- FOMC: It wasn’t perhaps quite as dovish as some market participants were anticipating, which inspired a modest rise in the Dollar. The minutes showed that “many” believe downside risks had abated, and that low inflation was likely “transitory,” though “several” worried that low inflation expectations could become anchored.
- Investors are increasingly pricing in a lengthy trade war and bond markets remain the beneficiaries as central banks turn increasingly cautious, leaving markets to hope for additional support measures.
- China bourses meanwhile underperformed again amid growing fears in the tech sector of further US. sanctions and the tech heavy Shenzen Comp lost -1.7%, the CSI 300 fell back -1.2% and the Hang Seng 1.5% as China’s People’s Daily ramped up rhetoric against U.S. moves targeting Chinese companies.
- The Yuan also remained under pressure. Topix and Nikkei fared slightly better, but also corrected -0.45% and -0.72% respectively.
- US stock futures are also heading south, led by a 0.6% drop in the NASDAQ future.
- The WTI future meanwhile fell back to just USD 60.87 per barrel after higher than expected US stock piles hit markets yesterday.
- German Q1 GDP was confirmed at 0.4% q/q, in line with the initial report and signalling a recovery after two weak quarters.
- The European Parliament elections get underway today with voting in the UK.
- Voting will take place through to the weekend across EU countries and the outcome is likely to be a parliament with a much higher share of Eurosceptic parties.
Charts of the Day
- USDJPY has been fairly steady through the NY morning session, ranging between 110.43 and 110.26 since the open. Moderate risk-off conditions have kept a cap on the pairing, with the 20-day moving average, currently at 110.50, reverting to a resistance level. Support comes in at Tuesday’s low of 110.03.
Main Macro Events Today
- Services and Manufacturing PMI (EUR, GMT 08:00) – Preliminary Manufacturing and Composite PMIs are expected to increase in May, to 48.2 and 51.8 respectively while the Services PMI is forecast at 53.
- German IFO (EUR, GMT 08:00) – German IFO business confidence is expected to hold steady at 99.2, after it unexpectedly declined to 99.2 in the April reading from 99.7 in March.
- European Parliamentary Elections – DAY 1
Support and Resistance levels
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