Date: May26, 2019
Daily Worl d Economic and Financial News
(CNBC): May26, 2019 --- The dollar edged away from two-year highs on Friday after weak U.S. manufacturing activity data sparked worries that the trade conflict with China may hurt the world’s largest economy and affect the currency’s safe-haven status. Against a basket of six major currencies, the dollar was down 0.2% at 97.686 in early European trade and 0.7% off a two-year high of 98.371 hit the previous session.
(CNBC): May26, 2019 --- The dollar weakness helped sterling recover slightly from a 4-1/2 month low while the euro briefly inched above $1.12 to hit a one-week high. Against the yen, the dollar edged down to 109.50 yen, extending losses overnight, when it gave up two-thirds of a percent, its steepest drop in a single session in two months.
(CNBC): May26, 2019 --- The euro might have also been helped by the Dutch part of the EU parliamentary elections, in which an exit poll showed the Labour party of European Commissioner Frans Timmermans won a surprise victory over a Eurosceptic challenger who had been topping opinion surveys. The euro has been pinned lower in recent weeks by the prospect of Eurosceptic parties across the continent performing well in the elections.
(CNBC): May26, 2019 --- Oil prices rose Friday ahead of long U.S. and UK holiday weekends, but posted their biggest weekly drop of the year, pressured by rising inventories and concern over an economic slowdown. Brent crude rose 93 cents, or 1.4% to $67.69 a barrel but the global benchmark still posted a weekly loss of more than 4.5%. U.S. West Texas Intermediate crude rose 1.2% to $58.63, yet it recorded a one-week loss of more than 6%, its biggest of 2019.
(REUTERS): May26, 2019 --- China's banking and insurance regulator said on Saturday it did not expect a persistent decline in the yuan and warned speculative short sellers they would suffer "heavy losses" if they bet against the currency.
(REUTERS): May26, 2019 --- The pound rose on Friday and was set to snap a record losing streak against the euro after British Prime Minister Theresa May set out a departure date after failing to push through a Brexit divorce deal.
(WSJ): May26, 2019 --- U.S. oil prices rose on Friday on renewed optimism that a trade deal between Washington and Beijing could be struck, as investors have been fearing that a protracted tariff war would harm global economic growth. Brent crude futures were at $70.85 a barrel at 0021 GMT, up 48 cents, or 0.7 percent, from their last close. Brent closed little changed in the previous session. U.S. West Texas Intermediate (WTI) crude futures were at $62.29 per barrel, up 59 cents, or 1 percent, from their previous settlement. WTI closed the last session down 0.7 percent.
The EUR/USD pair fell to a fresh multi-year low of 1.1106 this week, but finished it with modest gains, around the critical 1.1200 figure. The 100 pips' recovery by the end of the week was the result of dismal US data combined with some profit-taking, as the greenback was largely overbought, amid safe-haven demand due to escalating tensions between the US and China. The mentioned advance, fell short of affecting the dominant bearish trend of EUR/USD, as data coming from the Old Continent also spurred concerns about the economic future.
European Consumer Confidence improved in May, according to preliminary estimates from the EU Commission, coming in at -6.5 vs. the previous -7.3, yet the shared currency came under selling pressure with the release of Markit May preliminary PMI, as the indexes came in worst-than-anticipated for Germany and the EU. In Germany, the manufacturing index fell to 44.3 vs. 44.4 in April, in contraction territory for a fifth consecutive month. The Services PMI fell to 55.0 from 55.7, both missing the market's expectations. For the whole Union, the picture was quite alike, as the PMI fell to 47.7 and 52.5, respectively. The German IFO survey showed that the Business Climate deteriorated further in May, with the index down to 97.9 from the previous 99.2.
The shared currency didn't collapse with the sour figures, as US Markit PMI also came well below expected and more worrisome, barely holding above the 50.0 level that divides expansion from contraction. The May preliminary Manufacturing PMI fell to 50.6, its lowest in almost ten years, while the Services Index fell to 50.9 its lowest in 36 months. Furthermore, April Durable Goods Orders fell by more than anticipated in April, down by a whopping 2.1%.
The American dollar benefited from risk aversion, as US-Sino escalating tensions fueled demand for the greenback for most of this past week. Equities edged lower, alongside US government bond yields, amid a flight to safety. That said, the downward potential for the dollar remains limited.
These upcoming days the macroeconomic calendar will be quite light, as the most relevant release will be revisions of data already released, the US Q1 GDP, foreseen at 3.1% vs. the previous estimate of 3.2%. Germany will release May preliminary inflation, and the market's forecast indicates a gloomy 1.6% YoY CPI. The US will also release core PCE inflation, the Fed's favorite measure, seen steady at 1.6%.
Central banks had nothing to say and would likely stay below the radar these upcoming days, but trade tensions will retain the spotlight. Risk sentiment will keep leaning the scale in dollar's favor.(fxstreet)
International & Financial Terms
- Technical Analysis: In finance, technical analysis is a security analysis discipline for forecasting the direction of prices through the study of past market data, primarily price and volume. Behavioral economics and quantitative analysis incorporate substantial aspects of technical analysis, which being an aspect of active management stands in contradiction to much of modern portfolio theory. According to the weak form efficient-market hypothesis, such forecasting methods are valueless, since prices follow a random walk or are otherwise essentially unpredictable.
- Pivot point: A pivot point is a price level of significance in technical analysis of a financial market that is used by traders as a predictive indicator of market movement. A pivot point is calculated as an average of significant prices (high, low, close) from the performance of a market in the prior trading period. If the market in the following period trades above the pivot point it is usually evaluated as a bullish sentiment, whereas trading below the pivot point is seen as bearish.
- Flag pattern: The flag pattern is encompassed by two parallel lines. These lines can be either flat or pointed in the opposite direction of the primary market trend. The pole is then formed by a line which represents the primary trend in the market. The pattern is seen as the market potentially just taking a “breather” after a big move before continuing its primary trend. The chart below illustrates.
International & Financial Terms
- FOMC: The Federal Open Market Committee (FOMC) consists of twelve members--the seven members of the Board of Governors of the Federal Reserve System; the president of the Federal Reserve Bank of New York; and four of the remaining eleven Reserve Bank presidents, who serve one-year terms on a rotating basis.
- Hawkish: warlike, militant
- Referendum: a general vote by the electorate on a single political question that has been referred to them for a direct decision.
- Undermine: damage or weaken (someone or something), especially gradually or insidiously.
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