- Australia's ASX 200 index fell by -18.8 points (-0.26%) and currently trades at 7,142.80
- Japan's Nikkei 225 index has fallen by -109.31 points (-0.38%) and currently trades at 28,750.77
- Hong Kong's Hang Seng index has risen by 123.97 points (0.43%) and currently trades at 29,275.77
UK and Europe:
- UK's FTSE 100 futures are currently down -30 points (-0.43%), the cash market is currently estimated to open at 6,992.61
- Euro STOXX 50 futures are currently up 7 points (0.17%), the cash market is currently estimated to open at 4,046.46
- Germany's DAX futures are currently up 40 points (0.26%), the cash market is currently estimated to open at 15,461.13
Monday US Close:
- DJI futures are currently up 3 points (0.01%), the cash market is currently estimated to open at 34,551.40
- S&P 500 futures are currently up 0.75 points (0.01%), the cash market is currently estimated to open at 4,204.86
- Nasdaq 100 futures are currently down -0.5 points (-0.01%), the cash market is currently estimated to open at 13,686.01
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It was a mixed session for Asian equities, with China’s CSI300 and SSE composite falling around -0.12%, the ASX 200 closed effectively flat and the Hang Seng rose 0.4%. With traders in the UK and US expected to return to their desks we are hopeful volatility will pick up today after the long weekend,
The FTSE 100 remains trapped within a small range of around 60 points, and it could be a flip of a coin as to which way t breaks out if we look at price action along. It has continued to coil up within a triangle on the daily chart and we are hoping this indicates a volatile move could be approaching.
However, June has historically been the most bearish month for the FTSE using average monthly returns over the past 30 years, closing lower in June 70% of the time. Average negative returns around -1.2% with the average down month coming in at -2.9%
And then there’s also the fact that bearish volume has outweighed bullish volume the past four days, with the OBV indicator (On Balance Volume) breaking notably lower to warn of increasingly bearish pressure. Whilst this suggests a downside break could be pending, we need to prices to break beneath 7000 to confirm it. Until then, range trading strategies are preferred between 6695 – 7067.
Forex: RBA keep policy unchanged
The RBA held interest rates as widely expected at 0.1% and maintained their view that a pickup in inflation would be gradual and modest. However, the reduction of the unemployment rate has exceeded their expectations, and its ‘faster than expected recovery’ is expected to continue. The Australian dollar gave back some earlier gains where it was the strongest major of the session, with GBP a close 2nd.
The Australian dollar was trading higher ahead of the meeting after manufacturing PMI expanded at its fastest rate in three years to 61.8 (61.7 previously) and Australia’s current account surplus also hit a new record high. Net exports are only expected to shave -0.6% from Q2 GDP, which is better than the -1.1% headwind expected. Q2 GDP is set to be released for Australia tomorrow.
Momentum on GBP/CHF has turned higher on the daily chart and price action appears to be carving out a head and shoulders bottom reversal. With a break above its neckline around 1.2820 it projects a target at 1.3058, which is around the April highs. However, the 1.2900 and 1.3000 handles would make possible targets on an interim basis. Should prices fail to break above the neckline and a reversal candle forms then we would prefer to see range trading strategies at the range highs.
The US dollar index (DXY) dipped to a four-day low overnight yet volatility remains subdued. Given prices have spent the best part of two weeks ricocheting between 89.60 – 90.40 range trading strategies are preferred. SO, as its now in the lower-third of its range then low volatility dips may seem appealing to bulls.
USD/JPY fell to a three-day low before caring out a swing low around a 50% retracement level. If prices can hold above 106.35 then we favour a break of trendline resistance on its hourly chart.
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Commodities: Oil teases YTD highs ahead of OPEC
Brent prices are probing this year’s highs and sits fractionally above 70 ahead of today’s OPEC meeting, where traders want to know if OPEC will go ahead with plans to increase output over June and July. Given May’s output from OPEC members was below their maximum threshold it looks increasingly likely that supply will be increased today. And that could weigh on oil prices, unless OPEC disappoints and sends brent above 70.
Gold touched a fresh four-month high before retreating, yet remains elevated above 1900. Our bis remains bullish above 1875 but its reluctance to sustain any bullish momentum makes us a little nervous at these highs (especially as the US dollar index remains support above January’s low).
Price action on silver is a little more convincing, which saw prices break (and hold) above $28 and reach our first target of the February high at 28.22. Our bias remains bullish on the rising channel.
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