European Open Trading Volumes To Return to Europe NZD firm ahead of RBNZ

With parts of Europe to return to their desks after their 3-day weekends then trading activity (and therefore volumes) should rise today. Also take note that RBNZ hold their policy meeting overnight.  

Asian Indices:

• Australia's ASX 200 index rose by 44.9 points (0.64%) and currently trades at 7,090.80
• Japan's Nikkei 225 index has risen by 159.03 points (0.56%) and currently trades at 28,524.06
• Hong Kong's Hang Seng index has risen by 358.39 points (1.26%) and currently trades at 28,770.65

UK and Europe:

• UK's FTSE 100 futures are currently up 5.5 points (0.08%), the cash market is currently estimated to open at 7,057.09
• Euro STOXX 50 futures are currently up 4 points (0.1%), the cash market is currently estimated to open at 4,039.58
• Germany's DAX futures are currently down -12 points (-0.08%), the cash market is currently estimated to open at 15,425.51

Monday US Close:

• DJI futures are currently up 58 points (0.17%), the cash market is currently estimated to open at 34,451.98
• S&P 500 futures are currently up 36 points (0.26%), the cash market is currently estimated to open at 4,233.05
• Nasdaq 100 futures are currently up 8.25 points (0.2%), the cash market is currently estimated to open at 13,650

Trading volumes to return to European indices

DAX traders return to their desks after a three-day weekend and futures suggest it should reopen around Friday’s close. The Euro STOXX 600 rose a modest 0.14% yesterday with Travel & Leisure, Technology and Real Estate sectors leading the index whilst Utilities, Insurance and Basic Resources sectors acted as a headwind.

Equities across Asia were higher overnight after taking Wall Street’s lead. China’s CSI300 and Hong Kong’s Hang Seng futures were the strongest performers at 1.4% and 2.5% respectively. US and European futures are a touch higher and the FTSE 100 futures contract has opened up 9.5 points (1.13%).  

The FTSE 100 closed above its 20-day eMA for a third consecutive session and settled at 7051.59 with a 0.48% gain for the day. If prices are to falter early in today’s session, then we could be looking at a triangle formation on the daily chart with prices coiling up between the May high and May low. Yet if prices are to rally after the open then 7100 is the next major resistance level for bulls to conquer.

FTSE 350: Market Internals

FTSE 350: 7051.59 (0.48%) 24 May 2021

• 227 (64.67%) stocks advanced and 111 (31.62%) declined
• 18 stocks rose to a new 52-week high, 3 fell to new lows
• 84.9% of stocks closed above their 200-day average
• 17.09% of stocks closed above their 20-day average

Outperformers:

• + 7.80%   -  Rank Group PLC  (RNK.L) 
• + 5.91%   -  Premier Foods PLC  (PFD.L) 
• + 5.62%   -  Mitie Group PLC  (MTO.L) 

Underperformers:

• -5.53%   -  Trainline PLC  (TRNT.L) 
• -3.79%   -  Energean PLC  (ENOG.L) 
• -3.63%   -  Essentra PLC  (ESNT.L) 

NZD remains firm ahead of RBNZ meeting

The New Zealand dollar is the strongest currency this week so far (and second strongest overnight) ahead of tomorrow’s RBNZ meeting, where the central bank is expected to hold rates steady yet upgrade economic forecasts. With inflation expectations ripping higher it may force RBNZ to be less dovish, although if history tells us anything they are unlikely to be hawkish whilst most other central banks remain defiantly dovish.

• NZD/USD rose to a two-day high overnight and could be headed for 0.7250 if dollar weakness persists today.
• EUR/NZD has met resistance at its 200-day eMA, with three of the prior four days seeing failed attempts to close above it before printing a bearish inside candle yesterday.
• EUR/JPY is making an attempt to form a swing low at 132.73. If prices can hold above here then we might see another attempt to break above the September 2018 high today or tomorrow. Overall, our bias remains bullish above the 132.50 support zone.
• EUR/AUD initially moved in line with our bullish bias and reached our initial target just beneath the 1.5800 handle. Yet yesterday’s bearish pinbar suggests trend exhaustion, so we’d prefer to step aside for now until the picture becomes clearer.
• GBP/USD continues to grind higher whilst making hard work of it. As the February high remains unchallenged and prices sell off each time bulls try to push higher, we continue to suspect an interim top is trying to form below the Feb high.  That is not to say the short side looks appealing, but something to consider if bullish.

EUR/USD approaches the February high

Last Tuesday EUR/USD produced a bullish opening Marabuzo candle (elongated up day which opens at the low) and prices have held above that opening price since then. Yet prices are currently oscillating between the Marabuzo open and the February high which has made it an ideal pair for range trading strategies (for example, short at the highs, long as the lows of the range).

Still, it remains in an uptrend, so the bias is for an eventual break to new highs. And price action over the past few hours suggests it is building a level of support around 1.2250 and it will have another crack at the February high. Should a reversal pattern (or series of candles) form below resistance then range trading strategies are preferred. Yet a break to new highs would see our bullish bias revived and for trend-trading strategies to be our focus.

Copper continues to pare prior losses

Copper prices continued to rise overnight, currently 0.18% higher and now back above its 20-day eMA, despite China’s attempt to curb rising commodity prices with domestic firms. Our bias remains bullish above the February high (4.3755) but, if bullish momentum persists, its corrective low may have formed with yesterday’s bullish hammer.

Oil prices traded in a tight range just above yesterday’s high yet found resistance of the March 15^th high of 66.40. With the Iran nuclear deal looking less and less likely and bullish momentum picking up speed we could be headed towards new highs. A weaker US dollar would only help such a scenario.

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