A look at the day ahead in U.S. and global markets from Mike Dolan
Wall Street looks set to end the shortened week slightly punch drunk, with Friday’s May inflation update set to be a decider after a slew of conflicting economic data signals and the latest election twist.
Morning Bid: PCE test for nervy markets
USDCAD 4 HOUR CHART – OUTPERFORMING
Having failed to test 1.3743, USDCAD is testing its downside and so far an outperformer..
Whether month-end USD selling is a factor would only be a guess.
In any case, the bottom of the range is at 1.3590-136,14 with 1.3650 likely to set the tone as the day foes on.
As with other currencies, US PCE is the next key focus.
EURUSD 4 HOUR CHART – MONTH END OR MORE?
EURUSD getting a boost out of its crosses (EURGBP, EURJPY) after holding above 1.08 earlier today.
On the upside, 1.0851 = 61.8% FIBO and 1.0859 is the key level as only above it would confirm the low is in.
As I noted, month-end flows can be a factor, especially in EURGBP, which is firmer.
How do we know there is a cross-flow?
EURUSD is a touch firmer and GBPUSD is a touch weaker.
Note, I have seen month-end flows reverse during the day so keep an eye on your charts
The key focus is on US PCE but expect month-end flows to take over on the approach to the 4 PM London fixing.
USDJPY 4 HOUR CHART – Wasd there intrervention?
WHETHER IT WAS INTERVENTION OR NOT YESTERDAY, THE M OVE DOWN HAS PROVED SHORT-LIVED.
On the upside, 157.50-00 remains a nervous zone for the BoJ/MoF as a break of the top end would leave a void until the 160.16 high.
If the goal is to create a 2-way risk, USDJOY needs ti stay below 157.70.
nOTE WEAKER JPY IS EVIDENT ON ITS CROSSES (E.G. eurjpy, cadjpy, audjpy)
With US stocks up sharply during the month of May despite the current setbacks, theory says there should be dollar selling to rebalance forex hedges. As I explain in this article, this is not an exact science but something to be aware of as we trade for month end tomorrow.
So don’t trade with your head stuck in the sand. Just be aware of month-end rebalancing.
lori logan says
–
May 30 (Reuters) – Dallas Federal Reserve Bank President Lorie Logan said on Thursday she believes inflation is still heading to the Fed’s 2% target, although she can imagine “other paths” that the Fed ought to be prepared for, and it is too early to consider cutting interest rates.
“I think there’s good reasons to think that we’re headed to 2% – we’re still on that path, perhaps a bit slower and a little bit bumpier than maybe many thought at the beginning of the year,” Logan said at an event in El Paso, Texas.
“But there’s a lot of uncertainty about that path. And I can imagine other paths that we need to be prepared for. And I continue to be concerned with upside risks around inflation.”
williams says
–
Bloomberg
US Inflation Will Keep Falling With High Interest Rates, Says Fed’s Williams – Bloomberg
Federal Reserve Bank of New York President John Williams said he expects inflation to continue falling in the second half of this year,…
pretty well all wires ape-report same headline
my takeawya being that high interest , the fed has discoverd, is what allegedly will continue to crimp inflation rate
© 2024 Global View