FTSE -5 points at 7520
DAX -18 points at 12672
CAC -7 points at 5262
Euro Stoxx -10 points at 3544
The European equity markets are set for a flat-to-negative open on Wednesday, following a quiet trading session in Asia. Investors could remain in wait-and-see mode before Thursday’s busy eco-political agenda, including former FBI director Comey’s testimony, the UK snap general election and the European Central Bank (ECB) meeting.
The US dollar pared losses as President Trump backed Saudi’s decision to isolate Qatar for its financial support to religious extremism.
The WTI Crude gained more than $1/barrel, as the American Petroleum Institute revealed that the crude inventories contracted by 4.62 million barrels last week. This is the fifth consecutive week of fall in US crude inventories. The EIA’s weekly report is due today and is expected to confirm the falling inventories. Analysts expect 3.1 million barrel contraction last week, versus -6.4 million printed a week earlier.
Gold softened after trading at a fresh 2017 high of $1’296 on Tuesday. The appetite in the yellow metal remains solid for a renewed attempt to the $1’300 level and the current positive trend should see support at $1’277 (minor 23.6% retracement in May – June rise) and $1’265 (major 38.25 retrace). On the topside, the market reaction to Tuesday’s rally suggests a stronger resistance pre-$1’300 mark. The yellow metal could bump into sellers on expectations that the US yields could recover into the Fed’s June meeting, or thereafter.
The USD/JPY consolidated losses below the 110.00 mark, as the US 10 year yields dipped below 2.15%. Nikkei (+0.02%) and Topix (+0.02%) were flat.
The Australian dollar rallied past the 200-day moving average on the back of a better than expected GDP data. Growth in the first quarter fell to 1.7% year-on-year from 2.4%, slightly better than 1.6% expected by analysts. Soft US yields certainly play a role in the AUD/USD’s current rise. A pick-up in the US yields could harm the Aussie’s recovery. Solid resistance is eyed at 0.7588 (major 61.8% retracement March-June decline).
The European Central Bank (ECB) meets tomorrow is expected to stick with its actual Quantitative Easing (QE) program until December 2017 and start unwinding its asset purchases gradually through 2018. The size of the QE tapering is what investors are curious about. Yet, the ECB will likely remain silent on this particular point, which could lead to disappointment among the euro-bulls this week and trigger a temporary downside correction against the greenback after two-month appreciation.
The EUR/USD remains capped below the 1.1300 barrier, the Trump Election Day resistance. With the US yields seen bottoming, the EUR/USD could be tempted for a pullback to 1.1115 (minor 23.6% retracement on April – June rise) and 1.1011 (major 38.2% retrace).
The pound trades with a mixed sentiment before Thursday’s general snap election. The narrowing gap between Tories and Labour in the latest election polls has mainly increased the volatility in the pound market. A no-winner outcome is expected to be negative for the pound, given the complication it would add to the Brexit negotiations.
Cable will likely remain capped by the solid 1.3045 mid-term resistance before the election and consolidate within the 1.2765 - 1.3045 area, which has been the trading range posterior to the positive breakout on PM Theresa May’s election announcement on April 17.
Quick glance at technicals on LCG Trader:
Nasdaq 100 (CME) (M7) intraday: downside prevails Short positions below 5893.00 (pivot) with targets at 5848.00 & 5835.00 in extension. Above 5893.00, upside potential to 5905 & 5920.
Coffee (ICE US) (N7) intraday: downside prevails. Short positions below 127.35 (pivot) with targets at 123.75 & 122.50 in extension. Above 127.35, upside potential to 128.40 & 129.60.
Dow Jones (CME) (M7) intraday: under pressure. Short positions below 21’185.00 (pivot) with targets at 21’115.00 & 21’090.00 in extension. Above 21’185.00, upside potential to 21’220.00 & 21’265.00.