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    EUR dipped lower amid ECB meeting

    Market Brief

    G10 Advancers and Decliners vs USD
    NZD 0.23
    AUD 0.19
    JPY 0.10
    SEK 0.06
    CAD 0.01
    EUR -0.03
    DKK -0.03
    NOK -0.04
    CHF -0.06
    GBP -0.10
    Global Indexes Current Level % Change
    Nikkei 225 Index 16642.23 0.48
    Hang Seng Index 20949.16 0.43
    Shanghai Index 2938.002 0.44
    FTSE futures 6210 0.4
    DAX futures 10246.5 0.26
    SMI Futures 8238 0.24
    S&P future 2103.5 -0.01
    Global Indexes Current Level % Change
    Gold 1212.18 0.1
    Silver 16.06 0.41
    VIX 13.63 -4.01
    Crude wti 49.25 0.16
    USD Index 95.52 -0.05

    As expected the ECB remained on hold Thursday as it left its €1.8 trillion stimulus unchanged. During the press conference, Mario Draghi did not forget to warn speculators, reiterating that the ECB was ready for more action if necessary. However, for now the European institution is still waiting for the effects of the last round of stimulus to come to light. As usual after an ECB meeting, EUR/USD dipped lower and reached 1.1142 during the Asian session.

    Across the Atlantic, Thursday’s ADP job report failed to send a clear signal ahead of today’s NFP as the private sector added 173k jobs in May, matching expectations. The previous month’s reading was revised higher from 156k to 166k. This afternoon’s Non-Farm payrolls are expected to come in at 160k, stable compared to March. In our opinion, a very strong reading will be required to convince the market to keep faith in a June rate hike. Indeed, the US economic data released over the last few days, especially from the manufacturing sector, which is very sensitive to variations of the greenback, were all but supportive of a June rate hike. We therefore anticipate that the USD will start adjusting the downside against most G10 currency and especially the yen and the euro.

    USD/JPY moved sideways in Tokyo, trading in a tight range within 108.50 and 109.14, and consolidated below the previous support that lies at 109 (previous low and psychological level). We expect the negative momentum to gather pace as traders will begin to price out a summer rate hike. On the downside, a first resistance can be found at 106.49 (low from May 6th). The next one lies at 105.55 (low from May 3rd) and should provide a solid support to the pair.

    In the equity market, Asian regional indices are blinking green across the screen on expectations that accommodative monetary policy will continue to be the norm across the globe. In mainland China, the Shanghai Composite was up 0.44% and the Shenzhen Composite rose 0.77%. Offshore, Hong Kong’s Hang Seng was up 0.43%, while Taiwan’s Taiex surged 0.37%. In Japan, the Nikkei 225 was up 0.48%, while the Topix index edged up 0.41%. In Europe, equity futures are following the Asian lead with futures on the Footsie edging higher by 0.40%, while those on the German DAX were up 0.26%.

    Today traders will be watching CPI from Turkey; Markit PMI from Spain, Italy, France, Germany, the UK, the US and Brazil; industrial production from Sweden; unemployment rate from Norway; trade balance, NFPs, unemployment rate, factory orders, ISM non-manufacturing composite and durable goods orders from the US.


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