Market started off with bouts of risk aversion but recovered towards the mid of the week last week, although the terrorist incident on Monday didn’t affect the broader market much, it did cause the Sterling to sell off as any geopolitical uncertainties would. Looking at the overall picture one have to conclude that the market is taking it quite well as US stock indices reached fresh all-time highs especially considering the memorial weekend shortened week ahead. Furthermore, Wednesday’s FOMC minutes were somewhat bearish as the Dollar remained relatively weak afterwards. Oil prices moved up ahead of the OPEC meeting quickly dropped back below $50 when oil ministers failed to offer solution. For the week the S&P gained 1.4%, DJIA advanced 1.3%, and the Nasdaq up 2.1%.
During the weekend days news broke out on North Korea firing another missile into the Japanese waters, which in response the US will send the USS Nimitz, one of the world’s largest warships, to join two other carriers, the USS Carl Vinson and the USS Ronald Reagan, in the western Pacific to deter any potential escalation.
The G7 official communique reiterated to keep markets open and “fight protectionism” while standing firm against unfair trade practices, and will remain committed to reducing global imbalances to support growth. The U.S., however, unable to bridge differences over climate change and will not join other countries in committing to the Paris Agreement.
EURUSD: Draghi reiterated that the economic outlook is looking good but support is still needed (not yet considering tapering). German press report noted Greek government could be prepared to go without the next bailout payment, although it has been refuted by Greece, this Greek saga is definitely weighing on the Euro. Looking ahead, I would be willing to buy on dip on the Euro while taking advantage of weak USD. Ultimately with economic improvements expected, EURUSD is a buy in my opinion.
GBPUSD: With elections talks and harsh tone from PM May on walking away without a deal with EU on Brexit, and the fact of the heightened security in the country after last week’s terrorist incident, I’d use caution in going LONG on the GBP right now, but ultimately I would still be looking to BUY on dip, but perhaps take a little bit more time.
USDJPY: Japan showed the world of its low jobless rate of 2.8%, which matched its lowest record back in June of 1994, and needless to say it’s a great economic indicator. But considering the threat of North Korea and the fact JPY is a safe-haven currency, I wouldn’t be surprised to see JPY strengthening a bit, but ultimately I would still be buying on dip, especially if the market were to push the pair below the 110 psychological level.
The key event for the week is the Nonfarm Payroll report, and everything is going to trade around this release as positive indicators are likely positive confirmations of a strong NFP release, whereas any misses are likely to be regarded otherwise. But with this being a shorter week and only 2 days into the month of June, market is likely to be surprised regardless, so I’d recommend only focus on retracement trading method on Friday instead of jumping in full-throttle at release time. This could mean the difference of profit or loss, so use patience and extreme caution.
For a list of news releases scheduled for the week, visit our Calendar page.
Weekly Outlook For May 29 ~ June 2, 2017
May 30, 2017 by 1 Comment