ECB Decision is the Key for Today

Asian indices finished lower today as investor sentiment improves amid upcoming rate cuts from major Central Banks but concerns increase as the US –Mexican negotiations fail. The Nikkei225 finished 0.01 percent lower to 20,774 the Hang Seng benchmark in Hong Kong finished 0.13 percent lower at 26,862. The Shanghai Composite finished 0.94 percent higher to 2,834, while in Singapore the FTSE Straits Times index finished 0.47 percent lower to 3,128. Australian equities rose for a third day, buoyed by optimism of further rate cuts both in Australia and in the US. The ASX200 added 24 points or 0.4% to 6,383. Gains were across the board, with mining and energy stocks the laggards.

European session started on positive foot today for the second day in a row as traders await the ECB decision today later today, DAX30 is adding 0.48 percent to 12,039, CAC40 is 0.68 percent higher at 5,327 while the FTSE MIB in Milan is trading 0.98 percent higher at 20,352. The London Stock Exchange is 0,56 percent higher to 7,260 as trade talks between the US and Mexico were due to resume on Thursday after President Trump tweeted that progress was being made “but not nearly enough”.

XAUUSD Daily Chart

In commodities markets, crude oil continues its bearish bias and now has entered a bear market territory down to 51.82. Oil is down almost 20% from the high in late April, wiping out about half of its rally earlier this year, due to increasing trade worries. Brent oil also trades lower to $60,82 per barrel as major oil producers have yet to agree on adjustments on output. Gold continues to attract investors as safe heaven asset but retreated from yesterday high at 1,344 as the yellow metal had reached overbought levels. The precious metal broke above all major daily moving averages turning the technical picture to bullish. Gold will find support at 1300 round figure and then at 1295 the 100-day moving average while more bids will emerge at 50-day moving average at 1287 on the upside resistance stands at 1344 the high from yesterday session.   

In cryptocurrencies market, bitcoin (BTCUSD) rebounds today and recovers yesterday losses, the daily low for BTC was at 7,592 and the daily high at 7,867. Immediate support for BTC stands now at $7,411 the session low from yesterday. On the upside, strong resistance now stands at 8,000 round figure. Ethereum (ETHUSD) on the other hand trades flat to 245 with capitalization to 26 billion, on the upside the immediate resistance stands at 287 the recent high while the support stands at 200 round figure, Litecoin (LTCUSD) also trades flat at 104. The crypto market cap holds above $173.0B.

On the Lookout: Τoday we have the important ECB meeting for the month of June. Most of the analysts expect that the ECB will keep interest rates unchanged though there is growing speculation it could shift to a more dovish footing.  The Reserve Bank of India (RBI) slashed the benchmark interest rate, the Repo Rate, by 25 bps to 5.75% vs. 6.00% previous, as widely expected.

Australia’s trade surplus dipped slightly in April to a seasonally adjusted $4.87 billion, slightly missing consensus forecasts for a $5 billion surplus.

The markets are expecting the Fed to cut rates by 25 basis points in September this year, according to the Fed funds futures

In the America economic calendar, we await the US Challenger job cuts and trade balance data will be released.

Trading Perspective: In fx markets, the US dollar rebound from the low below 96 that hit yesterday on speculation over Fed rate cut after comments from the Federal Reserve on Monday, raised expectations the U.S. central bank is moving closer to a rate cut. As of writing Greenback is trading at 97.23, while the Aussie dollar trades lower to 0.6971 after the rate cut from the Reserve Bank of Australia. Kiwi trades flat to 0.6623 level as New Zealand has cut its budget surplus forecast for 2019/20 to NZD1.3bn.

GBPUSD retreats from recent high to 1.2679, as the bearish momentum for Cable is still intact amid growing concerns over Brexit. The pair hit the daily low at 1.2668 and the daily high at 1.2692. Major support now stands at 1.26 recent low. On the upside immediate resistance now stands at 1.2723 the high from yesterday. Pound shows persistent weakness amid UK political uncertainty and also on the back of global risk aversion, so any uptick can match excess offers.

In Pound futures markets the open interest shrunk for the fourth consecutive session on Wednesday, by 438 contracts, the volume went down by around 11K contracts.

EURUSD started today flat as traders await the ECB rate decision at 1.1230. The pair is has lost the bullish momentum build since last Friday and an attempt to 1.13 looks possible. On the upside, the immediate resistance stands at 1.13, while more offers will emerge at 1.1375 the 200-day moving average. Support stands at 1.1210 the 50-day moving average, while more bids will emerge at 1.12 round figure. We are following news from Italy as their budget deficit dispute with the European Commission continues, and the political turmoil in Austria and Greece.

In euro futures markets, the open interest increased by more than 11K contracts on Wednesday, volume increased for the second session in a row, this time by around 12.6K contracts.

ecb decision
EURUSD Hourly (H1) Chart

USDJPY consolidates at 108,08, today the pair hit the low at 108.06 and the high at 108.45. The pair will find support at 107.84 recent low, on the upside immediate resistance for the pair now stands at 108.45 the high from the Asian session. The USD price dynamics will continue to drive the pair’s momentum as traders focus shifts to Friday’s closely watched US monthly jobs report (NFP).

In Yen futures markets, open interest shrunk by just 823 contracts on Wednesday and volume decreased by around 8.5K contracts, reaching the third consecutive decline.

USDCAD rebounds breaking above the 1.34 level and trading as of writing at 1.3416 amid USD strength across the board and as the retreat in crude oil prices, Canada’s main export item, seems to have added further weakness in the Canadian Dollar (CAD). The pair will find immediate support at the 100-day moving average around 1.3345 while extra support stands at 1.3300 round figure. On the upside, immediate resistance stands at the 1.35 zone before an attempt to 1.3517 where the 50-day moving average stands.