Market Update – May 11 – BOE & Sterling In Focus Following US CPI

By
Analysis Team
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Trading Leveraged Products is risky
The USDIndex tanked to 101.00 following the cooler CPI reading yesterday and remains pressured as yields also tick lower following gains yesterday. US Stocks closed mixed and  Asian markets are broadly higher.  Sterling came off 1-year highs but remains supported with BOE front and centre today. NZD outperforms in Asian trading. Disney earnings disappointed (Disney+ subscriptions in particular) and shares fell -4.5% after hours. Chinese CPI data fell again (0.1% vs 0.7%) and PPI data worsened and remained deflationary and in contraction (-3.6% vs. -2.5%).
Overnight  –  Japanese bank lending ticked higher as the BOJ continued to send the same mixed signals. Yellen opened the G7 meeting saying that a US debt impasse threatens US global leadership, and a default would produce economic, financial ‘catastrophe’ .
  • FX – USDIndex declined from 101.50 resistance to 101.00, after US CPI broke below  5% for the first time since May 2021. Trades at 101.30) now. EUR tested and rejected  1.1000 again and trades at 1.0970. JPY slipped from 135.50 below 134.00, before recovering to 134.20 now.  Sterling tested and declined from 1-year highs, again, at 1.2670 yesterday but holds 1.2600 today ahead of the expected 25 bp interest rate hike from the BOE.
  • Stocks- US markets closed mixed (-0.09% to +1.04%) with the NASDAQ leading. (GOOGL +4.10%, AMZN +3.35% & #AXP -3.06%,  #PYPL -3.83%) – US500 closed +18pts 4137, FUTS are trading at 4161 today mid-way between key resistance at 4175 & 4150. 

  • Commodities – USOil – Futures tested over $73.75 and hold $73.00 today. Gold – spiked to $2050 again, reverted to $2020 support and trades at $2030 now. 
  • Cryptocurrencies – BTC recovered the key $28k, dipped to test $26.75k lows & trades at $27.5k now.  

Today – US Weekly Claims & PPI, BOE Policy Announcement & Press Conference, OPEC MOMR, Speeches from US Treasury Secretary Yellen, Fed’s Waller, ECB’s Schnabel & de Guindos.

Biggest FX Mover @ (06:30 GMT) NZDCHF (+0.20%). Continued to rally from the breach of 0.5600 on Monday to 0.5675 highs today, next resistance 0.5700.  MAs aligned higher, MACD histogram & signal line positive & rising, RSI 58.70 & rising, H1 ATR 0.00083, Daily ATR 0.00517.

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Stuart Cowell

Head Market Analyst

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