Intraday Market Thoughts

Optimism Reigns, Technicals the Tell

by Adam Button
May 26, 2020 17:51

Holidays in the UK and US kept a lid on trading to start the week but the overall tone remained positive. In a classic risk-on mode, NZD and AUD led the FX winners, while JPY, CHF lagged with gold and silver. Oil regained $34 on after a Russia issued a positive price outook. CL1 is nearing its 100 DMA at 36.60. CFTC positioning data continued to show largest bets against commodity FX. The S&P500 is retesting its 200-DMA for the first time since March 5th, while DOW30 attempts to fill the down-gap created on that same fateful OPEC weekend. The NASDAQ Premium short was stopped out at 9555 before falling to 9440s, while other tech-related indices have yet to fill their gaps. Below is the English+Arabic video for Premium subscribers.

مؤشرات البورصة تحت غطاء محرك القطاعات (فيديو المشتركين)

The FX market was locked into a tight range to start the week but the broader tone was positive despite the continued tensions surrounding Hong Kong. At this point, it doesn't appear as though the US will hit back with anything that makes China think twice. USD is the weakest of the day as risk-on chases commodity FX.

As a result, European equities stormed higher to start the week. The DAX gained 2.8% to the best levels since the pandemic.

A continued technical spot to watch is in USD/CAD with the pair breaking the post-pandemic low of 1.3850s. The low was rejected again last week but remains within striking distance. Aside from the economic calendar, events to watch this week are earnings from the major Canadian banks. Last week Canada's government-backed mortgage insurance company forecast a 9-18% decline in housing prices and if banks forecast higher loan losses, the market could quickly sour on the loonie. Alternatively, a rosier scenario could be what breaks the range.

On the US front, consumer confidence rebound by less than expected, while new home sales jumped by more than expected with +0.6% vs exp -23%. Markets continue to shake of poor data, but there have been fewer opportunities to evaluate the reactions to surprisingly strong numbers.

CFTC Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +.

EUR +72K vs +78K prior GBP -19K vs -14K prior JPY +28K vs +28K prior CHF +9K vs +7K prior CAD -35K vs -32K prior AUD -39K vs -35K prior NZD -16K vs -16K prior


Latest IMTs