European indices end the day mostly higher (Spain’s Ibex the exception)

German DAX trade to a new all-time high today. France’s CAC traded to its highest level since 2000 this week

the European shares are ending the day mostly higher. The exception is the Spain’s Ibex which is down around -0.5%. For the week, the major indices are mostly higher again with Spain’s Ibex trading in the red. The German DAX traded to a new all-time high at 15705.89. France’s CAC traded to its highs level since 2000 at 6522.23 during yesterday’s trade. The high price today fell just short of that level at 6517.93.

The provisional closes are showing:
  • German DAX, up 0.4%
  • France’s CAC, up 0.1%
  • UK’s FTSE 100, up 0.1%
  • Spain’s Ibex, -0.5%
  • Italy’s FTSE MIB, +0.3%
For the trading week, the major indices moved higher with again the exception being the Spanish Ibex:
  • German DAX, +1.1%
  • France’s CAC, +0.5%
  • UK’s FTSE 100, +0.7%
  • Spain’s Ibex, -1.4%
  • Italy’s FTSE MIB, +1.4%.
A look around the markets, as London/European traders look to exit shows:
  • Spot gold, plus $21.85 or 1.17% at $1892.61. The hi has been able to stay below the $1900 are level at $1896.28.
  • Spot silver is up $0.36 or 1.32% at $27.79. That is off the high price of $27.84 but above the low of $27.23.
  • WTI crude oil futures are up $0.41 at $69.22. It’s high price at $69.76 has remained below the key resistance at $70.
  • Bitcoin is down $-1723 or -4.45% at $36,995. The high price reached $39,291.24. The low price extended to $35,593.23. Elon Musk tweeted that he was more or less breaking up with bitcoin (or out of love at least).
In the US stock market, the major indices are higher led by the NASDAQ index:
  • S&P index up 28.4 points or 0.68% at 4221.
  • NASDAQ index up 185 points or 1.36% at 13800.
  • Dow industrial average up 98 points or 0.28% at 34675.54
In the US debt market, the yields are sharply lower with the 10 year leading the way at -6.1 basis points. The two – 10 year spread is down to 141.88 basis points which is well below the 147.05 closing level from yesterday’s trading.

US dollar moves to new lows against all the major currencies. Some technical levels are being tested/broken

USD making new lows

The USD is making new lows cancel the major currencies. The GBPUSD is now up 90 pips on the day. The AUDUSD and NZDUSD are also running to the upside (lower USD). The USDJPY is down -80 pips (lower dollar too).
EURUSD. The EURUSD has extended briefly above the 50% retracement 1.21786 to a new high of 1.2182.  The 100 hour moving averages at 1.21905 and the 200 hour moving averages at 1.21995.  They would be the next target on further upside momentum.
GBPUSD. THe GBPUSD is up testing the key 1.4200 level. Remember the high price yesterday peaked at 1.4203 but only briefly as traders lined up against the level.  It would take a move above the 1.4200 level to give the pair a more bullish bias with 1.42193 as the next upside target (highs from May 18 and May 27).
USDJPY. The USDJPY is dipping below the 200 hour moving average now at 109.542. The low price just reached 109.48.  The 100 hour moving averages at 109.74.  Stay below the MAs keep sellers more control.
USDCHF. The USDCHF is also trading back below its 200 hour moving average at 0.8986. Earlier, the 100 hour moving average was broken at 0.89976. Like the USDJPY, stay below the moving averages and the sellers remain more control.
USDCAD: The USDCAD is stock right around its 100 and 200 hour moving averages both near 1.2075 as traders await the next shove.   Crude oil is so far staying below the key $70 level. The high price reached $69.76. The current price trades at $69.50.
AUDUSD: The AUDUSD as a just moved back above its 100 and 200 hour moving averages. The 100 hour moving average comes in at 0.7723. The 200 hour moving average comes in a 0.7732. The high price just reached 0.7741.  PS the 100 day moving averages is also at 0.7724 – just above the 100 hour MA. That level is key support now.  Stay below is more bullish.

NZDUSD: The NZDUSD has moved back above its 100 day moving average at 0.7178 (now risk for longs).  Stay above is more bullish. The high has just reached 72086 which is near the swing low from Wednesday’s trade and a swing low from yesterday before breaking to the downside.  Get above that level and traders will be eyeing the 50% retracement of the move down since last week’s high at 0.72203. The 100 hour moving average comes in at 0.72235 and makes that area another key upside target.

The NASDAQ continues to push higher and is currently up 164 points or 1.21% at 13778.31. It’s high price did extend up to 13789.40.
The S&P index is up 26 points or 0.62% at 4218.89. The all-time high price for the S&P is up at 4238.04.
The Dow industrial average is up 94.81 points or 0.28% at 34673. That index is lagging as flows head into the more interest rate sensitive NASDAQ index.
The US 10 year yield is now down -5 basis points at 1.573%.
Gold prices are up $21 or 1.14% at $1892.17. That is just off it’s high price of $1892.30

Eurozone April retail sales -3.1% vs -1.5% m/m expected

Latest data released by Eurostat – 4 June 2021

  • Prior +2.7%; revised to +3.3%
  • Retail sales +23.9% vs +25.0% y/y expected
  • Prior +12.0%; revised to +13.1%

Retail sales activity in the euro area moderated in April after supposed Easter sales boosted the March numbers, with non-food products declining by 4.7% while food, drinks, and tobacco declined by 1.9% on the month.

The outlook towards the summer remains hopeful so we’ll see how things go in the months ahead and if there will be more solid numbers to follow in Q3.

Russia’s Novak: Russia compliance with OPEC+ pact close to 100% in May

Novak says that Russia is playing ball when it comes to OPEC+ compliance

That is comforting but it could be some give before they try and push forward with the proposal to increase output further in the months ahead. As prices threaten to break higher, the urge to pump more is getting harder to resist for OPEC+.
WTI is trading back above $69 currently, as it keeps with the break above $68. There isn’t much resistance until the $70 level but we could just sail by that if the landscape in the oil market and inflation debate remains as it is at the moment.


Novak says that Russia is playing ball when it comes to OPEC+ compliance

US jobs report to prove to be litmus test for the dollar

Can the dollar build on its gains from yesterday?

There is a good argument going into the non-farm payrolls release later that the dollar has built up expectations of a strong report, in which the threshold for further gains may be even higher than before we got the ADP and jobless claims yesterday.
One thing to note is that the ADP figures have not been an accurate indicator of what to expect with the NFP headline so there is that to consider going into the release later.
For now, the dollar is in good standing but will the gains from yesterday prove to be fleeting? A miss on the headline and softer details may yet spark such a reaction but technically, the greenback is at least safe for now.
EUR/USD is keeping under 1.2200 and GBP/USD is backing away from the 1.4200 level while USD/JPY is holding above 110.00 as well. The near-term charts all point to dollar buyers holding control so sellers have much work to do to gather back momentum.
That said, don’t be surprised if there is a two-pronged reaction to the release later. The kneejerk reaction will depend on the headline but what comes after depends on how the market digests the data in full.
A miss and softer details is likely to see yields pull lower alongside the dollar but there is an argument that such a move may be temporary.
The dollar could have already met a short-term bottom this week as the PBOC has also chosen to rein in yuan gains and also the technical picture is much improved.
The fact that the dollar didn’t break lower against key major currencies could also allude to the selling seeing some exhaustion, so there is some room to correct.
Meanwhile, a strong report later may be more straightforward but is it already baked into expectations from yesterday’s move? Perhaps, but I reckon the market may still have second thoughts in the run up to the FOMC meeting in two weeks’ time.

Eurostoxx futures -0.2% in early European trading

Tepid tones to kick start the session

  • German DAX futures -0.1%
  • UK FTSE futures -0.1%
This mirrors the tone in US futures, which are seen down roughly 0.1% for now.
In Asia, the Nikkei closes down 0.4% while the Topix saw a more flattish close in a mixed showing for the region. The Hang Seng is down 0.5% while the Shanghai Composite is up 0.2% going into the closing stages.
The adverse reaction in equities yesterday is still fresh so bear that in mind as we look towards the US non-farm payrolls report later in the day.

June 4 Tiananmen Square massacre – China deploys 7,000 police to prevent remembrance ceremonies

A massive police deployment in Hong Kong to prevent a planned commemoration in Victoria Park.

June 4 1989 was the day the Chinese Communist Party sent in tanks to crush to death hundreds of peaceful protestors in Tiananmen Square.
HK organisers are banned from commemoration activities. China will use its national security law and COVID-19 restrictions, along with the mass deployment of riot-control police to prevent large ceremonies. there are expected to be smaller activities though, hoping to slip past the heavy-handed restrictions.
No-one knows what became of Tank Man:
A massive police deployment in Hong Kong to prevent a planned commemoration in Victoria Park.
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