- Intraday Comment
-
30.05.2016, 1pm
• The dollar traded mixed against its G10 counterparts during the European morning Monday. It was higher against GBP, JPY and NOK in that order, while it traded lower versus SEK, EUR, CHF and AUD. The greenback remained virtually unchanged against NZD and CAD.
• In Germany, most of the regional CPI rates for May remained unchanged from the previous month, suggesting that the nation’s preliminary CPI figure, due out later in the day, may also remain unchanged or rise slightly. In such an event, we could see increased speculation that Eurozone’s flash CPI rate for the same month due out tomorrow, may also fall short of estimates. This could hurt the euro a bit, at least at the release. Eurozone’s preliminary CPI rate is currently expected to rise to -0.1% yoy, from -0.2% yoy previously. Nevertheless, even if we were to see both these rates come in below expectations, we wouldn’t expect these to trigger any near-term policy responses by the ECB. We believe that the Governing Council may want to wait in order to monitor the effects of its previous measures before acting again.
• DAX futures traded slightly higher on Monday but the advance was stalled early, just below the crossroad of the 10360 (R1) resistance zone and the downslope resistance line taken from the highs the 30th of December. Given that the price is trading below that line, I would like to see a clear break above 10360 (R1) before I get confident on further advances. Something like that could open the way for the next resistance of 10500 (R2). Looking at our short-term oscillators, I would stay careful that a corrective move lower could be on the cards. The RSI lies within its overbought territory ready to move lower, while the MACD, shows signs of topping and could fall as well. Switching to the daily chart, given the nearness to the aforementioned trend line, I would prefer to adopt a “wait and see stance” for now and wait for a break above 10360 (R1) to trust this recent risk rally.
• Support: 10160 (S1), 10000 (S2), 9870 (S3)
• Resistance: 10360 (R1), 10500 (R2), 10700 (R3)
