No Material Progress in US-Mexico Talks, ECB Enters the Spotlight

EU and US Equities Continue to Gain, Asian Bourses Trade Mixed

The dollar rebounded yesterday and traded higher against all the other G10 currencies on Wednesday and during the Asian morning Thursday. The main losers were NOK, AUD and GBP, while the currencies against which the dollar gained the least were NZD and SEK and JPY.

S&P 500 — Technical Outlook

S&P 500 has been in a rally mode since Tuesday, when it hit support near Monday’s low, at around 2732, and rebounded. The index broke several resistance (now turned into support) barriers, and yesterday, it managed to overcome the downside resistance line drawn from the peak of May 3 rd. In our view, this suggests that the index has room to recover further, but we would like to see a clear break above 2840 before we get more confident on that front.

Will the ECB Push Back its Forward Guidance?

Today, all lights are likely to fall on the ECB monetary policy meeting. Apart from the decision, the statement, and the conference by President Draghi, we will also get new macroeconomic projections. At their latest gathering, officials reiterated that interest rates are likely to remain at present levels “at least through the end of 2019”, while at the conference, Draghi noted that the risks to the Euro area outlook “remain tilted to the downside”. He also added that policymakers will consider “whether the preservation of the favorable implications of negative interest rates for the economy requires the mitigation of their possible side effects, if any, on bank intermediation”.

EUR/NZD — Technical Outlook

EUR/NZD traded lower yesterday, after it hit resistance slightly above the 1.6980 level. That said the slide was stopped near the 1.6927 barrier, and then, the rate rebounded somewhat. The currency pair has been printing lower highs and lower lows since May 23 rd, while the dip below the 1.7035 zone completed a bearish trend reversal in our view. Thus, we hold the view that the near-term outlook is negative for now.

As for the Rest of Today’s Events

Besides the ECB policy meeting, we also have some economic data coming out today. Eurozone’s final GDP for Q1 and the bloc’s employment change for the quarter are scheduled to be released. The final growth print is expected to confirm the second estimate, while the employment change is anticipated to show the same quarterly pace of job gains as the previous one. Later in the day, the US trade deficit is anticipated to have narrowed somewhat, while the Unit Labor Costs index for Q1 is expected to have fallen at the same pace as in Q4 2018. We get April trade data from Canada as well, alongside the nation’s Ivey PMI for May.

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JFD is a leading Group of Companies offering financial and investment services and activities.