2022-05-20 08:50:00

Daily Technical & Fundamental View


Barring a miraculous turnaround , it would be 7th consecutive week of declines in US stocks. (We`ve only had 8 twice since at least 1997,- in Oct 2008 and Mar 2001.)

Central banks - with their hawkish rhetoric-  have  sofar managed to  deflate the  post pandemic asset price  bubble - most of the markets are almost at 50 % mid point  or thereabouts  (since the pandemic low to the Sugar high ).

The big debate currently centres around whether central banks will need to trigger  recession to force inflation lower.Markets have not yet  factored a recession  and hence the data and earnings of the week cause jitters.

Is it correct to interpret  the retail sector earnings in rudimentary way and  conclude that the weakness is  sign of a weak consumer  - what if we`re simply seeing a consistently strong   shift in spending from goods  to services in as much as the consumer has stocked up goods in the  last two years.  This might very well  be the economy simply healing itself and not a consumer recession.

USD index appears to have lost some impulse in the area just ahead of  104.00. 
Other central bank narratives are  partly balancing out dollar`s recent run perhaps.

ECB minutes showed that question is no longer whether ECB should hike rates in July but by how much.More hawkish ECB talk  with Knot floating the idea of a 50 bps in July. Hiking rates into a recession hit economy wont help currency.Consumer Confidence can improve to -21.5. For now back and forth moves in 1.0500-1.0600

PBOC has kept the one-year LPR stable at 3.7% while the five-year LPR is reduced by 15 bps to 4.45%. 6.7430 weekly close in USDCNY to indicate larger gains next week.

Month of May Comes in at -40, matched a record low hit in Apr 20.(Records for UK consumer confidence go back to 1974). 
Brexit woes mount - rate hike noise - press is full of horror stories about economy 
Any GBP rebound to be sold for 1 2050.

CPI rose to 2.5% while the core CPI jumps to 0.8% -explosively higher than the market consensus . BOJ to stay unmoved for sure.
Jawboning in full swing . Oldtimer Sakaki bara calls for USDJPY 150. Weekly close should get above 128.00 to support upside.

USDINR  gaps down towards range base 77.50 - Oil wont allow below that -should pick up steam to close past 77.64 to bolster the case for upside break .  Today`s reserves data worth seeing