CFD Markets News and Forecasts — 04-06-2021

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04.06.2021
19:29
Key events for next week: Japan, eurozone and UK GDP, Canada and the United States trade balance, China and the United States consumer price index, Bank of Canada and the ECB interest rate decisions

On Monday, at 01:30 GMT, Australia will release the ANZ vacancy index for May. At 03:00 GMT, China will announce a change in the foreign trade balance for May. At 05:00 GMT, Japan will present the index of leading economic indicators for April. At 05:45 GMT, Switzerland will report the change in the unemployment rate for May. At 06:00 GMT, Germany will announce a change in industrial orders for April. At 06:30 GMT, Switzerland will publish the consumer price index for May. At 07:00 GMT, Switzerland will announce the change in the SNB's foreign currency reserves for May. At 07:30 GMT, Britain will release the Halifax house price index for May. At 08:30 GMT, the euro zone will present the Sentix investor confidence indicator for June. At 19:00 GMT, the US will report the change in the volume of consumer lending for April. At 23:30 GMT, Japan will announce a change in the level of wages for April, and at 23:50 GMT - a change in the volume of GDP for the 1st quarter and the current account balance for April.

On Tuesday. At 01:30 GMT, Australia will release the NAB Business confidence index for May. At 05:00 GMT, in Japan, the Eco Watchers Survey will be released. At 06:00 GMT, Germany will report a change in industrial production for April. At 06:45 GMT, France will announce a change in the foreign trade balance for April. At 09:00 GMT, Germany and the eurozone will present the ZEW business sentiment index for June. Also at 09:00 GMT, the euro zone will report changes in GDP and employment for the 1st quarter. At 12:30 GMT, Canada and the United States will announce a change in the foreign trade balance for April. At 14:00 GMT, the United States will announce changes in the level of vacancies and labor turnover for April.

On Wednesday, at 00:30 GMT, Australia will release the Westpac consumer confidence index for June. At 01:00 GMT, New Zealand will present the ANZ business confidence indicator for June. At 01:30 GMT, China will publish the consumer price index and the producer price index for May. At 06:00 GMT, Japan will report a change in equipment orders for May. Also at 06:00 GMT, Germany will announce a change in the trade balance for April. At 14:00 GMT, in Canada, the Bank of Canada's interest rate decision will be announced. Also at 14:00 GMT, the US will report the change in wholesale stocks for April. At 14:30 GMT, the US will announce changes in oil reserves according to the Ministry of Energy.

On Thursday, at 04:30 GMT, Japan will report a change in industrial production for April. At 05:30 GMT, France will announce the change in the number of people employed in the non-agricultural sector for the 2nd quarter, as well as the volume of industrial production for April. At 11:45 GMT in the euro zone, the ECB's interest rate decision will be published, and at 12:30 GMT, the ECB will hold a press conference. Also at 12:30 GMT, the US will report a change in the number of initial applications for unemployment benefits and release the consumer price index for May. At 22:30 GMT, New Zealand will release the Business NZ manufacturing PMI for May.

On Friday, at 02:00 GMT, China will announce changes in retail sales, fixed asset investment and industrial production for May. At 06:00 GMT, Britain will report changes in GDP, industrial output, manufacturing output, visible trade balance and construction volume for April. At 06:30 GMT, Switzerland will release the producer and import price index for May. At 06:45 GMT, France will publish the consumer price index for May. At 12:30 GMT, Canada will announce a change in the capacity utilization rate for the 1st quarter. At 14:00 GMT, the US will present the Reuters/Michigan consumer sentiment index for June. At 17:00 GMT, in the United States, the Baker Hughes report on the number of active oil drilling rigs will be released.

19:00
DJIA +0.52% 34,755.56 +178.52 Nasdaq +1.48% 13,816.05 +201.54 S&P +0.89% 4,230.09 +37.24
17:01
U.S.: Baker Hughes Oil Rig Count, June 359
16:01
European stocks closed: FTSE 100 7,069.04 +4.69 +0.07% DAX 15,692.90 +60.23 +0.39% CAC 40 6,515.66 +7.74 +0.12%
14:47
Cleveland Fed president Mester: Fed is looking for and basing policy decisions on outcomes - CNBC

  • Says May employment report was solid but she wants to see further progress
  • Notes that the participation rate has only made it halfway back
  • Substantial further progress doesn't necessarily mean returning to pre-pandemic levels in labor market
  • There are several factors affecting labor supply including health concerns and child care
  • Says she's focused on prime-age workforce participation because of acceleration of retirement during pandemic
  • Fed wants to be deliberately patient with monetary policy
  • Fed will discuss policy stance as economy continues to improve
  • Fed is looking at what the data says and not just the forecast
  • Some valuations in stock market look higher than can be supported by fundamentals but Fed's policy is not driving that
  • Treasury market had issues at start of the pandemic and Fed is looking at longer-term issues
  • Expects to see progress continue to be made on the employment front
  • The key point is Fed is attuned to the risks on upside and downside

14:30
U.S. factory orders decline more than expected in April

The U.S. Commerce Department reported on Friday that the value of new factory orders fell 0.6 percent m-o-m in April, following a revised 1.4 percent m-o-m gain in March (originally a 1.1 percent m-o-m advance). That marked the first drop in factory orders since April 2020.

Economists had forecast a 0.2 percent m-o-m decrease.

According to the report, orders for transport equipment (-6.6 percent m-o-m) demonstrated the biggest decline in April.

Meanwhile, total factory orders excluding transportation, a volatile part of the overall reading, increased 0.5 percent m-o-m in April (compared to an upwardly 2.3 percent m-o-m surge in March), while orders for nondefense capital goods excluding aircraft, a measure of business spending plans, climbed 2.2 percent m-o-m instead of advancing 2.3 percent m-o-m as reported last month. The report also showed that shipments of core capital goods rose 0.9 percent m-o-m in April, unrevised from last month’s estimate.

Overall, durable goods orders fell 1.3 percent m-o-m in April, while orders for nondurable goods edged up 0.1 percent m-o-m.

14:06
Growth of Canada's private sector activity accelerates in May

The Ivey Business School Purchasing Managers Index (PMI), measuring Canada’s economic activity, rose to 64.7 in May from 60.6 in April.

A reading above 50 signals expansion, while a reading below 50 indicates contraction.

Within sub-indexes, the employment measure surged to 67.0 in May from 58.0 in the previous month, while the inventories indicator climbed to 65.3 from 59.4. At the same time, the prices index decreased to 78.6 in May from 80.0 in April and the supplier deliveries gauge declined to 34.8 from 37.8.

14:00
U.S.: Factory Orders , April -0.6% (forecast -0.2%)
14:00
Canada: Ivey Purchasing Managers Index, May 64.7
13:42
Supply strains hold back the U.S. jobs market - ING

James Knightley, Chief International Economist at ING, notes that the U.S. jobs growth disappointed again in May, but this is not a demand issue.

"US payrolls growth has disappointed again in May with a net 559,000 jobs created versus expectations of 675,000. The range of expectations was wide at 335,000 to 1 million, but we had suspected it would come in on the softer side due to a lack of labour supply rather than any drop-off in the demand for workers."

"While the lost jobs continue to be clawed back in aggregate there are still 7.63mn fewer people in work than before the pandemic started. Federal Reserve officials will likely use this to justify their dovish message on eventual interest rate rises. That said, we don’t think this means the Fed is right to say there is no need to raise interest rates until 2024."

"The softness in job creation is supply related, not demand related and with wage rates picking up more than expected (0.5% month-on-month versus 0.2% consensus), there is growing evidence that the labour market will add to medium-term inflation pressures."

"The slowdown in both the manufacturing and service sector ISM employment components was pinned on companies struggling to find suitable workers and this message was reinforced by data from the National Federation of Independent Businesses overnight. It reported the fourth consecutive new record high for the proportion of small businesses that have vacancies that they couldn’t fill."

"The lack of supply of workers was also acknowledged in this week’s Federal Reserve Beige Book where “a growing number of firms offered signing bonuses and increased starting wages to attract and retain workers”."

"The problem was highlighted by the labour participation rate dropping back to 61.6% in May. The obvious reasons are ongoing child-care issues surrounding home schooling, which is forcing many parents to stay at home rather than go out to work. Secondly, there is also still some concern from some workers about returning given the pandemic isn’t over. Thirdly, some older workers who lost their jobs may simply have decided to retire early. Finally, there is the debate over the impact from extended and uprated unemployment benefits. They may have weakened the financial incentive of going out to work, particularly for low paid roles, especially when you factor in associated costs of commuting and any childcare."

13:32
U.S. Stocks open: Dow +0.37%, Nasdaq +0.68%, S&P +0.51%
13:24
Before the bell: S&P futures +0.38%, NASDAQ futures +0.45%

U.S. stock-index futures rose on Friday after official data showed that the U.S. employers added fewer jobs than anticipated in May, easing concerns about the U.S. economy running too hot and forcing the Fed to begin tightening monetary policy sooner than planned.


Global Stocks:

Index/commodity

Last

Today's Change, points

Today's Change, %

Nikkei

28,941.52

-116.59

-0.40%

Hang Seng

28,918.10

-47.93

-0.17%

Shanghai

3,591.84

+7.63

+0.21%

S&P/ASX

7,295.40

+35.30

+0.49%

FTSE

7,053.45

-10.90

-0.15%

CAC

6,512.61

+4.69

+0.07%

DAX

15,648.28

+15.61

+0.10%

Crude oil

$69.27


+0.67%

Gold

$1,885.40


+0.65%

13:01
Wall Street. Stocks before the bell

(company / ticker / price / change ($/%) / volume)


3M Co

MMM

203.4

-0.27(-0.13%)

808

ALCOA INC.

AA

39.1

0.38(0.98%)

47301

ALTRIA GROUP INC.

MO

49.83

0.05(0.10%)

56408

Amazon.com Inc., NASDAQ

AMZN

3,204.01

17.00(0.53%)

61106

American Express Co

AXP

164.68

0.16(0.10%)

535

Apple Inc.

AAPL

124.19

0.65(0.53%)

986879

AT&T Inc

T

29.28

0.05(0.17%)

124655

Boeing Co

BA

252

1.68(0.67%)

70951

Caterpillar Inc

CAT

244

0.16(0.07%)

1756

Chevron Corp

CVX

108.52

0.93(0.86%)

4327

Cisco Systems Inc

CSCO

53.4

0.07(0.13%)

20958

Citigroup Inc., NYSE

C

79.91

0.28(0.35%)

44479

Exxon Mobil Corp

XOM

61.42

0.24(0.39%)

71683

Facebook, Inc.

FB

326.49

0.45(0.14%)

87661

FedEx Corporation, NYSE

FDX

308

1.69(0.55%)

895

Ford Motor Co.

F

16.45

0.46(2.88%)

4416766

Freeport-McMoRan Copper & Gold Inc., NYSE

FCX

42.25

0.38(0.91%)

115173

General Electric Co

GE

14.17

0.08(0.57%)

232194

General Motors Company, NYSE

GM

63.85

0.39(0.61%)

346966

Goldman Sachs

GS

390.5

1.78(0.46%)

12531

Google Inc.

GOOG

2,406.10

1.49(0.06%)

4444

Hewlett-Packard Co.

HPQ

30.05

0.12(0.40%)

13730

Home Depot Inc

HD

312

0.57(0.18%)

3480

HONEYWELL INTERNATIONAL INC.

HON

229.09

-0.11(-0.05%)

432

Intel Corp

INTC

56.45

0.21(0.37%)

64813

International Business Machines Co...

IBM

145.65

0.10(0.07%)

2674

International Paper Company

IP

64.7

0.51(0.79%)

7142

Johnson & Johnson

JNJ

166.3

0.26(0.16%)

2141

JPMorgan Chase and Co

JPM

166.6

0.43(0.26%)

34634

McDonald's Corp

MCD

232.02

-0.43(-0.19%)

1376

Merck & Co Inc

MRK

74.1

0.19(0.26%)

9223

Microsoft Corp

MSFT

247.25

1.54(0.63%)

110663

Nike

NKE

134.26

0.09(0.07%)

2774

Pfizer Inc

PFE

39.06

0.09(0.23%)

58732

Procter & Gamble Co

PG

135.31

-0.54(-0.40%)

5008

Starbucks Corporation, NASDAQ

SBUX

111.57

0.45(0.41%)

11829

Tesla Motors, Inc., NASDAQ

TSLA

581.33

8.49(1.48%)

596228

The Coca-Cola Co

KO

55.74

0.10(0.18%)

16764

Twitter, Inc., NYSE

TWTR

57.25

0.24(0.42%)

56738

Verizon Communications Inc

VZ

57.04

0.06(0.11%)

27947

Visa

V

229.26

1.15(0.50%)

6776

Walt Disney Co

DIS

176.16

-0.08(-0.05%)

25070

Yandex N.V., NASDAQ

YNDX

67.29

0.54(0.81%)

3323

12:59
Canada sheds 68,000 new jobs in May; unemployment rate rises to 8.2 percent

Statistics Canada reported on Friday that the number of employed people decreased by 68,000 m-o-m in May (or -0.4 percent m-o-m) after an unrevised decline of 207,100 m-o-m in the previous month. Economists had forecast a drop of 20,000 m-o-m.

Meanwhile, Canada's unemployment rate rose to 8.2 percent in May from 8.1 percent in April, matching economists’ forecast for 8.2 percent. This was the highest rate since February.

According to the report, full-time employment decreased 13,800 (or -0.1 percent m-o-m) in May, while part-time jobs declined by 54,200 (or -1.6 percent m-o-m).

In May, the number of public sector employees fell by 10,100 (or -0.3 percent m-o-m), and the number of private sector employees dropped by 60,400 (or -0.5 percent m-o-m). Meanwhile, the number of self-employed rose 2,600 (or +0.1 percent m-o-m) last month.

Sector-wise, employment decreased both in goods-producing (-1.2 percent m-o-m) and service-producing (-0.1 percent m-o-m) businesses.

12:47
Downgrades before the market open

Freeport-McMoRan (FCX) downgraded to Neutral from Outperform at Exane BNP Paribas; target $40.30

12:46
U.S. nonfarm payrolls rise less than forecast in May; unemployment rate drops slightly more than expected

The U.S. Labor Department announced on Friday that nonfarm payrolls rose by 559,000 in May after a revised 278,000 increase in the prior month (originally a gain of 266,000).

According to the report, notable job gains occurred in leisure and hospitality (+292,000 jobs), in public (+103,000) and private (+41,000) education, and in health care and social assistance (+46,000).

The unemployment rate fell to 5.8 percent in May from 6.1 percent in April. This was the lowest rate since March 2020.

Economists had forecast the nonfarm payrolls to increase by 650,000 and the jobless rate to drop to 5.9 percent.

The labor force participation rate edged down to 61.6 percent in May from 61.7 percent in the previous month, while hourly earnings for private-sector workers advanced 0.5 percent m-o-m (or $0.15) to $30.33, following an unrevised 0.7 percent m-o-m increase in April. Economists had forecast the average hourly earnings to edge up 0.2 percent m-o-m in May. Over the year, the average hourly earnings jumped 2.0 percent in May, following a revised 0.4 percent gain in April (originally an increase of 0.3 percent).

The average workweek was unchanged at 34.9 hours in May, being slightly below economists' forecast for 35.0 hours.

12:30
U.S.: Nonfarm Payrolls, May 559 (forecast 650)
12:30
Canada: Unemployment rate, May 8.2% (forecast 8.2%)
12:30
Canada: Employment , May -68 (forecast -20)
12:30
Canada: Labor Productivity, Quarter I -1.7%
12:30
U.S.: Average hourly earnings , May 0.5% (forecast 0.2%)
12:30
U.S.: Labor Force Participation Rate, May 61.6%
12:30
U.S.: Private Nonfarm Payrolls, May 492 (forecast 600)
12:30
U.S.: Average workweek, May 34.9 (forecast 35)
12:30
U.S.: Government Payrolls, May 67
12:30
U.S.: Manufacturing Payrolls, May 23 (forecast 24)
12:30
U.S.: Unemployment Rate, May 5.8% (forecast 5.9%)
12:15
NZD/USD set to tackle the late February high of 0.7465 - CIBC

FXStreet notes that the New Zealand dollar has consolidated earlier gains over the last month. The outlook for the kiwi remains positive, but economists at CIBC Capital Markets have tempered the expected pace of gains.

“The RBNZ delivered a projected track for the cash rate (OCR) with a first hike identified in H2 of next year. While that was only slightly ahead of market pricing heading into the decision, the confirmation promoted a firm rally in the NZD.” 

“OCR projections had not been published since early last year. The fact that the bank decided to reinstate them indicates improving confidence over the outlook. Even so, the RBNZ did go to some lengths to remind that the projections were ‘highly conditional’.”

“The yield advantage over all other G10 currencies remains, thereby underscoring NZD support. We anticipate further gains in NZD/USD to target the late February high of 0.7465.”

11:58
European session review: USD little changed as investors await crucial U.S. May jobs report
TimeCountryEventPeriodPrevious valueForecastActual
08:30United KingdomPMI ConstructionMay61.662.364.2
09:00EurozoneRetail Sales (MoM)April3.3%-1.2%-3.1%
09:00EurozoneRetail Sales (YoY)April13.1%25.5%23.9%
11:00EurozoneECB President Lagarde Speaks    
11:00U.S.Fed Chair Powell Speaks    

USD changed little against its major rivals in the European session on Friday as investors awaited a key U.S. jobs report for May, set to be released today at 12:30 GMT.

The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, edged up 0.04% to 90.55.

Economists forecast that the U.S. employers added 650,000 jobs in May following April's gain of 266,000, while the unemployment rate decreased to 5.9% last month from 6.1% in April and hourly wages rose 0.2%.

Market participants have been closely watching for cues on the strength of the U.S. economic recovery and inflation and the possibility that the Federal Reserve might begin tightening monetary policy sooner than planned. A stronger-than-expected jobs/wages data could further stoke concerns about inflation and easing of the Fed's support, despite the repeated reassurances from the Fed officials that current price spikes are temporary and that it is too soon to tighten the central bank’s accommodative policy.

11:17
U.S. dollar weakness vs. yen weakness: three scenarios for the pair - MUFG

FXStreet reports that economists at MUFG Bank expect the USD/JPY to remain firm in the near term, supported by the yen weakening further than the dollar. However, they expect dollar weakness to gradually outpace the yen if the dollar continues to depreciate. The USD/JPY pair is forecast to trend modestly lower through to the end of the fiscal year.

Baseline scenario (probability 65%)

“We expect the dollar will continue to weaken considering the US is posting record-high trade deficits (and current account deficits) and since long-term UST yield levels are unlikely to rise significantly. We expect the USD/JPY to strengthen in the near term. However, growing momentum for the normalization of monetary policy is likely to gradually weigh on risk sentiment. We expect the dollar weakness to outpace the yen by the end of the year.”

Optimistic scenario (probability 30%)

“We would expect long-term UST yields to gradually rise along with stocks if economic sentiment and corporates earnings continued to improve worldwide. In that case, we expect the USD/JPY to gain momentum as the dollar strengthened due to higher interest rates and stock markets rose worldwide (and the yen weakened due to risk on). However, such risk on sentiment would make the dollar a funding currency, meaning it would gradually come under more pressure to weaken than the yen. We, therefore, expect the USD/JPY would become top-heavy at around the 4Q 2018 high of 114.5 and then gradually decline.”

Pessimistic scenario (probability 5%) 

“We expect the dollar to weaken further against the yen than under our baseline scenario if risk-off sentiment were to increase for some reason, such as renewed fears of the pandemic continuing for the long term. In that case, we expect the USD/JPY would rise temporarily as the dollar strengthened more than the yen due to fears of a decline in dollar liquidity. However, we expect the USD/JPY would then fall back as dollar strength softened following a rapid response by central banks to inject liquidity. In addition, during periods of risk-off, the dollar is also likely to maintain a degree of strength (second to the yen), so in this scenario, we would expect cross yen rates to decline further than the USD/JPY.” 

10:58
EUR/USD: Scope for a substantial drop to the 200-DMA at 1.1985 - Credit Suisse

FXStreet reports that the Credit Suisse analyst team notes that EUR/USD has set a top below key support at 1.2134/25 to warn of further weakness to 1.2053/51 – potentially the 200-day moving average (DMA) at 1.1985.

“EUR/USD weakness has accelerated sharply, reinforced by poor daily RSI and MACD momentum and key support from the recent low and 23.6% retracement of the March/May uptrend at 1.2134/25 has been removed to set a near-term top. We look for this to clear the way for further weakness within the broader sideways range for a fall to 1.2053/51 – the mid-May low and 38.2% retracement of the rally from late March.” 

“Whilst we look for the 1.2053/51 zone to hold at first, we now see scope for a move below here to the 55-day average at 1.2025, potentially the 200-day average and ‘measured top objective’ in the 1.2000/1.1985 zone, but with our bias to then look for a floor here.” 

“Resistance moves to 1.2135 initially, above which can see a move back to 1.2163, but with this ideally capping for now."

10:43
Company News: lululemon athletica (LULU) quarterly results beat analysts’ expectations

lululemon athletica (LULU) reported Q1 FY 2022 earnings of $1.16 per share (versus $0.23 per share in Q1 FY 2021), beating analysts’ consensus estimate of $0.91 per share.

The company’s quarterly revenues amounted to $1.226 bln (+88.1% y/y), beating analysts’ consensus estimate of $1.130 bln.

The company also issues upside guidance for Q2 FY 2022, projecting EPS of $1.10-1.15 versus analysts’ consensus estimate of $1.01 and revenues of $1.30-1.33 bln versus analysts’ consensus estimate of $1.2 bln.

For the full FY 2022, it sees EPS of $6.52-6.65 versus analysts’ consensus estimate of $6.49 and revenues of $5.825-5.905 bln versus analysts’ consensus estimate of $5.69 bln.

LULU rose to $320.00 (+0.83%) in pre-market trading.

10:36
GBP/USD to stay steady as vaccination continues, but covid variants pose downside risk - CIBC

FXStreet reports that Jeremy Stretch, Head of G10 FX Strategy at CIBC Capital Markets, believes that vaccine rollout and re-openings should leave sterling steady as the spread of the Delta COVID-19 variant poses a downside risk.

“The rapid UK vaccine rollout, with almost 50% of the adult population now fully vaccinated, will be central to our projection for strong consumer-led growth over the next 12 months. We agree with the view of the outgoing BoE Chief Economist that an atypical recession should result in an atypical recovery.” 

“Markets have moved to price in the prospect of the BoE reversing the 15bps emergency rate cut from March 2020 by November 2022. However, should consumer spending data suggest a much faster rebound, and should the UK labour market withstand the progressive removal of policy support via the jobs retention scheme, the prospect of an even earlier policy reversal is likely to grow.” 

“Strong consumer-led activity, impacting the rate cycle, should provide support for the currency, which should hold relatively steady against the USD but outperform the euro and yen.”

“The key risk is the rising tide of Indian variant Covid cases blowing the re-opening timetable off course. The variant doesn't appear that resistant to those who have completed their vaccination program, so in the race between vaccinations and the virus, we favour the former."

10:21
Company News: Broadcom (AVGO) quarterly results beat analysts’ estimates

Broadcom (AVGO) reported Q2 FY 2021 earnings of $6.62 per share (versus $5.14 per share in Q2 FY 2020), beating analysts’ consensus estimate of $6.46 per share.

The company’s quarterly revenues amounted to $6.610 bln (+15.1% y/y), beating analysts’ consensus estimate of $6.506 bln.

The company also issued upside guidance for Q3 FY 2021, projecting revenues of ~$6.75 bln versus analysts’ consensus estimate of $6.59 bln.

In addition, Broadcom's Board of Directors approved a quarterly cash dividend on its common stock of $3.60/share.

AVGO closed Thursday's trading session at $464.80 (-1.88%).

10:15
USD/CNH now targets the 6.4200 level - UOB

FXStreet reports that FX Strategists at UOB Group notes that the corrective rebound in USD/CNH carries the potential to revisits the 6.4200 level in the next weeks.

24-hour view: “Our expectation for USD to ‘trade within a 6.3792/6.3900 range’ was incorrect as it soared to 6.4000. The rapid advance appears to be running ahead of itself and while there is room for USD to test 6.4100, the next resistance at 6.4200 is unlikely to come into the picture. Support is at 6.3920 followed by 6.3850.”

Next 1-3 weeks: “USD rose to 6.4000 yesterday and the weak phase in USD is deemed to have ended. The current movement is viewed as the early stages of corrective rebound that could extend to 6.4200, with lower odds for extension to 6.4400. On the downside, a break of 6.3760 would indicate that USD is note ready to rebound.”

09:58
Investors keep loading cash fearing stimulus dial backs - BofA

Reuters reports that BofA's latest fund flow statistics showed that investors have piled on more cash and cut exposure to tech stocks, indicating concern over a dialling back of stimulus by central banks.

The investment bank expects market trends in the second half of the year to shift from "quantitative easing to quantitative tightening" and "inflation to stagflation" -- meaning soaring prices despite a decline in economic activity.

Global stocks were treading water on Friday ahead of the Friday's nonfarm payrolls report.

Those expectations seemingly shifted investment trends in recent weeks, with fund managers loading up $16.3 billion in cash for the week to Wednesday, on top of the $68 billion last week.

BofA said $1.6 billion left tech funds, the largest since December 2018. But, flows into equities were still coming albeit at a slower pace, BofA's number crunching showed. Equities attracted $14.7 billion led by banks and material stocks, which typically benefit from an inflationary environment. That has helped Europe, which saw $2.3 billion inflows.

09:40
September policy review and gradually more hawkish Fed limit euro prospects – CIBC

FXStreet reports that economists at Capital Markets don't see that euro move being sustained in the face of a gradually more hawkish tone from the Fed.

“Although the eurozone re-entered a technical recession in Q4/Q1, the prospect of a significant rebound in Q2, extending into H2, points towards ECB GDP forecasts for 2021 and 2022 being revised up from the March projections of 4.0% and 4.1%, respectively. We look for this year to be revised up to around 4.5%, with 2022 above 4.25%. In terms of HICP, we expect the March forecast profile to be raised by around 0.3% across the board. While the growth picture will embolden the hawks on the ECB Governing Council to push for an early reduction in the pace of PEPP bond purchases, the doves, led by President Lagarde, are likely to rule the day, and have the ECB waiting for real data, rather than just forecasts, prior to adjusting the flow of bond purchases. So even if the euro sees some temporary momentum on upcoming data or the prospect of an eventual slowing in bond purchases, we don't see that move being sustained in the face of a gradually more hawkish tone from the Fed.”

09:20
Eurozone retail sales fell sharply in April

According to estimates from Eurostat, in April 2021, the seasonally adjusted volume of retail trade fell by 3.1% in both the euro area and in the EU, compared with March 2021. Economists had expected a 1.2% increase in the euro area. In March 2021, the retail trade volume increased by 3.3% in the euro area and by 3.2% in the EU.

In April 2021 compared with April 2020, the calendar adjusted volume of retail trade increased by 23.9% in the euro area and by 22.4% in the EU. Economists had expected a 25.5% increase.

In the euro area in April 2021, compared with March 2021, the volume of retail trade decreased by 5.1% for nonfood products and by 2.0% for food, drinks and tobacco, while it increased by 0.4% for automotive fuels. In the EU the volume of retail trade decreased by 4.7% for non-food products and by 1.9% for food, drinks and tobacco, while it remained stable for automotive fuels.

In the euro area in April 2021, compared with April 2020, the volume of retail trade increased by 65.5% for automotive fuels, by 42.6% for non-food products and by 3.3% for food, drinks and tobacco. In the EU, the volume of retail trade increased by 54.3% for automotive fuels, by 38.6% for non-food products and by 3.4% for food, drinks and tobacco.

09:00
Eurozone: Retail Sales (YoY), April 23.9% (forecast 25.5%)
09:00
Eurozone: Retail Sales (MoM), April -3.1% (forecast -1.2%)
08:48
UK сonstruction PMI rose more than expected in May

According to the report from IHS Markit/CIPS, May PMI data indicated that the UK construction sector remained on a strong recovery path, with output growth reaching its strongest since September 2014. Moreover, new order volumes increased at the fastest pace since the survey began just over 24 years ago. Input cost inflation was also at a survey-record high during May, reflecting a surge in demand for construction materials and severe supply shortages.

At 64.2 in May, up from 61.6 in April, the seasonally adjusted UK Construction PMI Total Activity Index registered above the 50.0 no change value for the fourth consecutive month and signalled the strongest rate of output growth for just under seven years.

House building (index at 66.3) was the best-performing category of construction activity in May, followed by commercial work (64.4). The latest increase in work on commercial projects was the steepest since August 2007, reflecting strong demand conditions following the reopening of customer-facing areas of the UK economy. Civil engineering activity (index at 61.3) also increased sharply during May, although the pace of expansion eased slightly since the previous month.

The latest survey pointed to a rapid upturn in new business across the construction sector. Around 47% of the survey panel reported higher volumes of new work, while only 11% signalled a reduction. Construction companies attributed the surge in order books to strong demand for residential building work and high levels of confidence about the near term economic outlook.

Construction companies remain highly upbeat about their growth prospects for the next 12 months. Around 61% of the survey panel predict a rise in business activity, while just 8% anticipate a decline. Positive sentiment was mostly attributed to resurgent customer demand, alongside optimism about the UK economic outlook following the successful vaccine roll out.

08:30
United Kingdom: PMI Construction, May 64.2 (forecast 62.3)
08:18
UK new car sales rose significantly in May

According to the latest figures from the Society of Motor Manufacturers and Traders (SMMT), with the year’s first full month of showroom openings, new car registrations in May reached 156,737 units. The total represents an almost eightfold increase on the same month last year, but is down -14.7% on pre-pandemic May 2019, and -13.2% on the 10-year May average.

Uptake was in line with the most recent industry outlook, published in April, which sees the sector anticipating around 1.86 million registrations by the end of the year – with 723,845 achieved so far.

Against a more positive economic backdrop – including OECD forecasting a 7.2% increase in UK GDP during 2021 – fleet registrations grew more than twice as fast as private purchases in May. Large fleets accounted for 50.7% of all new vehicles hitting the road, demonstrating improving business confidence compared to the same month last year.

In terms of segments, dual purpose vehicles saw a small decline in market share in the month, down to 26.7%, leapfrogged by lower medium cars which rose to 27.8%. Superminis remained Britain’s most popular car choice, with a 31.1% share.

Battery electric vehicle (BEV) market share declined from 12.0% a year ago to 8.4% in the past month, although the May 2020 performance was distorted by lockdowns when new cars could only be purchased through click and collect or delivery, giving rise to variable purchasing patterns.

Looking more broadly across 2021, plug-in vehicles now comprise 13.8% of new car registrations, up from 7.2% a year earlier, with the most rapid growth seen in plug-in hybrid (PHEV) derivatives. Pure petrol and mild hybrid petrol cars so far account for 60.4% of registrations, while pure diesel and mild hybrid diesels took a 18.0% share year to date, compared to 64.6% and 22.4% last year.


08:03
UK's Sunak hopes for 'significant progress' at G7

Reuters reports that british finance minister Rishi Sunak said that he expected good progress at a meeting of finance ministers from the Group of Seven rich nations which he is hosting in London.

Priorities included boosting COVID support for vulnerable countries, speeding up transition to net zero carbon emissions and "ensuring that the way we tax large, global especially digital companies is fair and fit for the modern age," he said.

07:42
Eurozone construction activity continues to expand

According to the report from IHS Markit, the Eurozone Construction Total Activity Index rose slightly from 50.1 in April to 50.3 in May, signalling a third consecutive expansion in activity. Though fractional overall, the rate of growth was the quickest recorded since February 2020. Companies often linked the latest rise in activity to the start of new projects as demand growth resumed amid sustained government incentives for the eurozone construction sector. Underlying data indicated that the upturn was centred on house building. There was a softer fall in commercial construction and a quicker decline in infrastructure projects.

May survey data pointed to a further expansion in home building activity across the eurozone, stretching the current period of growth to three months. The rate of increase quickened from April and was the fastest recorded since February 2020. Commercial building activity fell for the fifteenth consecutive month in May, although the rate of decline was the softest since this sequence began. Work undertaken on civil engineering projects decreased again in May. The fall stretched the current period of decline to 22 months. Notably, the pace of contraction was the quickest since February. 

Eurozone construction firms expressed optimism toward the 12 month outlook for the fifth consecutive month in May. The level of positive sentiment strengthened from April and was sharp overall.

07:19
Asian session review: the dollar rose slightly against most currencies

During today's Asian trading, the US dollar rose slightly against the euro and the pound, but declined against the yen and the australian dollar.

The ICE index, which tracks the dollar's performance against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona), rose 0.07%.

Strong data on the US economy released the day before, contributed to the growth of expectations that the Federal Reserve (Fed) will have to start reducing stimulus earlier than it planned, as the US economy is recovering quickly and inflation is strengthening. This factor, as well as the growth in US Treasuries yields, following the news that the Fed will start selling corporate bonds purchased last year as part of the emergency lending mechanism for companies, supported the US currency.

The ISM index of business activity in the US services sector increased to a record 64 points in May, compared with 62.7 points a month earlier. Meanwhile, the number of applications for unemployment benefits in the United States, filed last week, decreased by 20 thousand - to 385 thousand, updating the record low since the beginning of the COVID-19 pandemic.

The focus of the market on Friday is the US unemployment data for May, which should give investors a clearer picture of the situation in the labor market. Experts on average expect an increase in the number of jobs in May by 650 thousand and a decrease in unemployment to 5.9% from April's 6.1%.

07:01
USD/CNY to nosedive towards the 6.20 level by year-end – NBF

FXStreet reports that economists at the National Bank of Canada still see a year-end USD/CNY of 6.20.

“The Chinese central bank has tried to curb CNY appreciation in recent weeks by raising reserve requirements for the foreign exchange deposits of Chinese commercial banks. In addition, some PBoC officials have tried to talk down the currency, claiming it is overvalued. Booming demand for Chinese exports is likely to be sustained over the coming months as US retailers seek to replenish depressed inventories. This demand, along with attractive real-interest-rate differentials, argues for further appreciation of the Chinese currency.”

06:59
Options levels on friday, June 4, 2021 EURUSD GBPUSD

EUR/USD

Resistance levels (open interest**, contracts)

$1.2204 (3152)

$1.2165 (2043)

$1.2140 (3590)

Price at time of writing this review: $1.2112

Support levels (open interest**, contracts):

$1.2087 (1482)

$1.2047 (3579)

$1.1999 (2488)


Comments:

- Overall open interest on the CALL options and PUT options with the expiration date June, 4 is 71634 contracts (according to data from June, 3) with the maximum number of contracts with strike price $1,2100 (3590);


GBP/USD

$1.4203 (1340)

$1.4159 (905)

$1.4127 (1412)

Price at time of writing this review: $1.4104

Support levels (open interest**, contracts):

$1.4069 (790)

$1.4039 (756)

$1.3996 (281)


Comments:

- Overall open interest on the CALL options with the expiration date June, 4 is 20208 contracts, with the maximum number of contracts with strike price $1,5000 (2696);

- Overall open interest on the PUT options with the expiration date June, 4 is 35058 contracts, with the maximum number of contracts with strike price $1,3100 (3957);

- The ratio of PUT/CALL was 1.73 versus 1.72 from the previous trading day according to data from June, 3

 

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.

06:40
Biden proposes 15% corporate minimum tax to win Republican backing of infrastructure plan

Reuters reports that U.S. President Joe Biden offered to scrap his proposed corporate tax hike during negotiations with Republicans, in what would be a major concession by the Democratic president as he works to hammer out an infrastructure deal.

Biden offered to drop plans to raise corporate tax rates as high as 28% and instead set a minimum 15% tax rate aimed at ensuring all companies pay taxes, sources said.

In return, Republicans would have to agree to at least $1 trillion in new infrastructure spending, one source said. And Biden has not given up on seeking as much as $1.7 trillion.

With the change, funding for the plan would lean heavily on increased tax enforcement, scrapping inheritance tax breaks for wealthy families as well as other sources like $75 billion in unspent COVID-19 relief funds, one source said.

06:19
EUR/USD risks a drop to 1.2055 – UOB

FXStreet reports that in opinion of FX Strategists at UOB Group, EUR/USD could extend the downtrend to the mid-1.2000s in the next weeks.

Next 1-3 weeks: “We have expected EUR to trade between 1.2150 and 1.2265 since the start of the week. Yesterday, we indicated that EUR has to ‘close below 1.2150 or above 1.2265 before a sustained directional move can be expected’. However, we did expect the sharp drop during NY session that sent EUR to a low of 1.2116 and the subsequent weak close at 1.2124 (-0.70%). Strong downward momentum is likely to lead to further EUR weakness to 1.2095. There is scope for the weakness to extend to 1.2050 but at this stage, the prospect is not high. Overall, EUR is expected to stay under pressure as long as it does not move above the ‘strong resistance’ at 1.2200.”

06:00
Goldman Sachs says a nuclear deal with Iran could send oil prices higher

CNBC reports that according to Goldman Sachs’ head of energy research, a nuclear deal between the U.S. and Iran could send energy prices higher — even if it means more supply in the oil markets.

While it appears to be contradictory, a deal that brings Iranian barrels back to the market could actually see oil prices rise, said Damien Courvalin, who is also a senior commodity strategist at the bank.

Talks in Vienna are ongoing as Iran and six world powers — the U.S., China, Russia, France, U.K. and Germany — try to salvage the 2015 landmark deal. Officials say there’s been progress, but it remains unclear when negotiations could conclude and oil prices have been seesawing as a result.

Courvalin explained his rationale. He pointed to how oil prices rose in April after OPEC+ said they would gradually raise output from May by adding back 350,000 barrels a day.

“An increase in production … is announced that is above anyone’s expectations — ours included. And yet prices rally, volatility comes down,” he said.

“Why? Because we lifted an uncertainty that was weighing on the market since last year,” he told.

Investors wondered if OPEC would end up in a price war when it tried to increase production, but the oil cartel presented a “convincing path going forward,” Courvalin said.

“You could argue the same for Iran,” he added. Simply knowing will likely “lift some of that uncertainty.”

“If that announcement comes in the next few weeks, in our view, it actually starts that bullish repricing,” he said at that time.

02:30
Commodities. Daily history for Thursday, June 3, 2021
Raw materials Closed Change, %
Brent 71.39 0.21
Silver 27.409 -2.56
Gold 1870.486 -1.98
Palladium 2839.22 -0.14
00:30
Schedule for today, Friday, June 4, 2021
Time Country Event Period Previous value Forecast
08:30 (GMT) United Kingdom PMI Construction May 61.6 62.3
09:00 (GMT) Eurozone Retail Sales (MoM) April 2.7% -1.2%
09:00 (GMT) Eurozone Retail Sales (YoY) April 12% 25.5%
11:00 (GMT) Eurozone ECB President Lagarde Speaks    
11:00 (GMT) U.S. Fed Chair Powell Speaks    
12:30 (GMT) Canada Labor Productivity Quarter I -2%  
12:30 (GMT) U.S. Average workweek May 35 35
12:30 (GMT) U.S. Government Payrolls May 48  
12:30 (GMT) U.S. Manufacturing Payrolls May -18 24
12:30 (GMT) U.S. Average hourly earnings May 0.7% 0.2%
12:30 (GMT) U.S. Labor Force Participation Rate May 61.7%  
12:30 (GMT) U.S. Private Nonfarm Payrolls May 218 600
12:30 (GMT) Canada Employment May -207.1 -20
12:30 (GMT) U.S. Nonfarm Payrolls May 266 650
12:30 (GMT) U.S. Unemployment Rate May 6.1% 5.9%
12:30 (GMT) Canada Unemployment rate May 8.1% 8.2%
14:00 (GMT) U.S. Factory Orders April 1.1% -0.2%
14:00 (GMT) Canada Ivey Purchasing Managers Index May 60.6  
17:00 (GMT) U.S. Baker Hughes Oil Rig Count June    
00:15
Currencies. Daily history for Thursday, June 3, 2021
Pare Closed Change, %
AUDUSD 0.76589 -1.16
EURJPY 133.747 -0
EURUSD 1.2126 -0.7
GBPJPY 155.522 0.19
GBPUSD 1.41011 -0.47
NZDUSD 0.71443 -1.26
USDCAD 1.21078 0.61
USDCHF 0.90335 0.63
USDJPY 110.283 0.68

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