European Open: EUR/USD grinds higher ahead of EU GDP and US retail sales

Asian Indices:

• Australia's ASX 200 index rose by 13.8 points (0.19%) and currently trades at 7,106.80
• Japan's Nikkei 225 index has risen by 87.79 points (0.33%) and currently trades at 26,634.84
• Hong Kong's Hang Seng index has risen by 445.45 points (2.23%) and currently trades at 20,395.66
• China's A50 Index has risen by 145.55 points (1.11%) and currently trades at 13,304.88

 

UK and Europe:

• UK's FTSE 100 futures are currently up 27.5 points (0.37%), the cash market is currently estimated to open at 7,492.30
• Euro STOXX 50 futures are currently up 29 points (0.79%), the cash market is currently estimated to open at 3,714.34
• Germany's DAX futures are currently up 113 points (0.81%), the cash market is currently estimated to open at 14,077.38

 

US Futures:

• DJI futures are currently up 74 points (0.23%)
• S&P 500 futures are currently up 75 points (0.61%)
• Nasdaq 100 futures are currently up 14.25 points (0.36%)

 

Sentiment improved overnight as investors absorbed the positive headlines surrounding Shanghai scaling back their lockdown restrictions. The Hang Seng and HSCE were top performers and rose ~2.5%.

The RBA minutes revealed that the board discussed 15, 25 and 40-bps hike at their last meeting and hinted that a 40-bps hike could be on the cards given the high levels of inflation and strong employment situation. AUD and NZD were the strongest majors and JPY was the weakest during a mild risk-on session.

Jerome Powell is set to speak at 19:00 GMT, so traders will be seeking further clarification for futures rate hikes. US data includes retail sales at 13:30 an industrial production at 14:15. But first we have flash GDP and employment data from the Eurozone at 10:00, which makes EUR/USD an ideal pair to monitor this session.

 

EUR/USD (4-hour): Grinding higher towards resistance

The strong downtrend on EUR/USD stabilised above the 2017 low after some ECB members have called for up to three rate hikes. But markets need to hear hawkish comments from the ultra-dovish ECB President, Christine Lagarde. She speaks four times this week at G7 meetings, and Jerome also Powell speaks tonight – which leaves plenty of opportunity for volatility on the euro.

EUR/USD is grinding higher on the 4-hour chart, although price action appears to be corrective. Our bias remains bearish beneath 1.0500 and we’re looking for evidence of a swing high around the 1.0450/68 or 1.0489 – 1.0500 resistance zones. Our downside target is the 1.0300 – 1.0340 support zone.

 

FTSE: Market Internals

The FTSE 100 pulled back towards (and stalled just above) our 7350 support zone mentioned in yesterday’s report, before reversing higher. Closing above its 50-day eMA and at a 5-day high, we retain a bullish bias today. The initial target is 7500, a break above which brings 7600 into focus.

 

FTSE 350: 4154.12 (0.63%) 16 May 2022

• 175 (50.00%) stocks advanced and 166 (47.43%) declined
• 6 stocks rose to a new 52-week high, 5 fell to new lows
• 26.29% of stocks closed above their 200-day average
• 89.43% of stocks closed above their 50-day average
• 15.43% of stocks closed above their 20-day average

 

Outperformers:

• + 4.62% - Fresnillo PLC (FRES.L)
• + 4.44% - Apax Global Alpha Ltd (APAX.L)
• + 4.28% - TP ICAP Group PLC (TCAPI.L)

 

Underperformers:

• -7.43% - Kainos Group PLC (KNOS.L)
• -7.27% - Network International Holdings PLC (NETW.L)
• -5.68% - Diploma PLC (DPLM.L)

 

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