May 6th 2024

Forex:
EurUsd:
The week started off on Monday without a gap. We didn’t see a lot of action on a relatively silent start to the week. The whole-day range of roughly 47 pips underlines the market’s inability to find something worth taking a direction. We started the week at 1.0686 and ran higher to 1.0733 in the Asia session. As soon as the European session started with Frankfurt coming online, we saw mild selling sweeping in and reaching a low of 1.069 later in the US session before running higher again into the close to 1.072.
Tuesday then was more action-packed, with the price running down to the 1.069 low again in Asia and early euro trading, then racing higher to take out Monday’s high coming in at 1.0735 and then really selling off again in the US session, coming down some 70 pips into the close at 1.0665 on the back of a strong US employment cost index for Q1 and month-end flows. Wednesday was a banking holiday in most of Europe. Price continued from the end of Tuesday and reached the weekly low of 1.065 in early Euro trading session. EurUsd, afterwards, bounced mildly higher into the ISM report towards 1.067 before going another 20 pips higher on the report, which faded, and we settled at 1.0675 again into the FOMC. That one was the real mid-week deal, seeing the price jumping higher to the “till-then” week high at 1.0733 again in the press conference before fading most of the move before the close down to 1.0686 again. Right before the close, we saw another jump in price on the back of the 2nd BoJ / MoF intervention, with EurUsd going into the close at 1.0714.
Thursday was a dud again. We reached a high of 1.0728 in early euro trading again, before going down into the weekly claims and reaching new daily lows after the release, coming in at 1.0675 and jumping into the close again to reach a new daily high at 1.073 and ending the day at 1.0725. Friday saw small changes into NFP going to 1.075 into the report, then spiking higher on the weak release to a new weekly high at 1.0813, reaching the 200 daily SMA in the process which came in at 1.0798 at the time. Price rejected those levels later on the strong prices paid sub-index of the ISM report, and we closed the day and week at 1.0764. Effectively, EurUsd was up from 1.0692 to 1.0764 (72 pips) with a low at 1.065 and a high at 1.0813 (163 pips).
GbpUsd:
Cable basically saw the exact same price action as Fiber, just a bit more volatile with some underlying GBP weakness, especially on Friday after the NFP report. Effectively, we started the week at 1.2475 (20ish pips gap down from Friday before) and ended the week at 1.2547 (72 pips) with a low on Wednesday morning as well at 1.2467 and a high on Friday after NFP at 1.2635, marking a weekly range of 168 pips. Price really rejected the 200 daily SMA all week long around 1.255 until it pierced through it on Friday’s NFP report, coming in at 1.25495 at that time, nearly reaching the 100 daily SMA at 1.2645 and rejecting those levels to end Friday only 10 pips higher on the back of the aforementioned strong prices paid sub-index of ISM, still closing above the 200 daily SMA.
UsdJpy:
That pair was definitely the highlight of the week in all markets. I already mentioned a little bit of price moves on that in the weekly macro data summary, but here it is in detail: Monday saw it opening at 157.8, which is a 50 pips gap down from Friday before. We then raced high in thin early Asia trading to take out the 160 level in a very volatile stop move before rejecting it quickly and settling just above 159. Ultimately, we saw hard selling around 159.5, which turned out to be a likely BoJ / MoF intervention at the end of the Asia trading session. Price fell to 155.2 in the process, then bouncing higher to 157.1 again in early Monday euro trading, before selling off again quite hard to a new daily low at 154.5. Another 200 pips bounce followed to top at 156.75 just to see sellers creeping in again and putting the pair down to 155 flat, just to end the day more than 100 pips higher again at 156.3. WHAT A DAY! 550 pips range and multiple 100 pips+ moves in between.
Tuesday then been a bit more relaxed, but price was basically a one-way going from the mentioned 156.3 level to the high of the day right at the close at 157.8 – another 150 pips day! Wednesday then been another sort-of relaxed day into FOMC. Price was topping out at 157.99 before selling off into the FOMC to 157.6. FOMC then saw UsdJpy going to 157 flat in the early press conference, before taking off again and fading most of the move back to 157.6. What followed was another BoJ / MoF intervention in thing late US trading, which took the pair to 154 and it looked like it’s settling down there, just 30 mins before the close. Turns out, it was not done yet! Another dip to 153 flat and a bounce back to 154.5 was the ultimate late-day move to end the day. WHAT A DAY AGAIN! 500 pips range and again multiple 100 pips+ moves in between.
Thursday offered some nice price action again, with a continued bounce in early Asia trading from 154.5 to a daily high of 156.35 in a pretty straight move, just to sell off in a pretty straight move to a low of 153 afterwards. The day ended at 153.7. Another 335 pips range! Friday was surprisingly “small” in range, even on the NFP. We had some initial mild selling to 153.2 into the report, then a dip to clear the BIG resistance and breakout level at 152, just to climb back and end the day and week at 152.8. The week saw an open at 157.75 and a close at 152.8 marking an incredible 500 pips in effective movement. The high came in at 160.13 and the low at 151.85, which is an insane 830 pips range!
Some notable actions in other FX majors:
AUD and NZD had a terrible start to the week but bounced really hard from early Wednesday, with AUDUSD breaking the 200 and 100-day SMAs last week higher, NZDUSD still stuck below the 200-day SMA. Kinda same action on the CAD, though not being able to break below the 1.3635 level for now, which still marks the breakout level higher for the year. Still way above the 200-day SMA. CHF had a notable boost on the 2nd intervention and was pretty strong from Wednesday on as well, but as well not able to break critical support levels on the USDCHF, still sitting above the 0.9 level and way above the 200-day SMA.
Equities:
S&P500:
The benchmark index had a volatile week too, starting around 5.100 and ending Monday around the same level without any major notable moves. Tuesday was a selloff day, going pretty flat into the US open at 5.110 before really kicking things, going to 5.025 right into the close (-1.7% on the day). Wednesday then was really volatile, going flatish into the FOMC around 5.020, jumping higher on Powell early on towards 5.100 and getting faded down all of it into the close and ending the day more or less flat at 5.020. Thursday finally saw bulls taking over, with a gap higher on the open at 5.050, retesting and taking out the weekly lows with a move to 5.010, just to race higher into the close at 5.065 and continuing that move post-close.
Friday opened higher at 5.125 after the NFP report jump started risk sentiment. The benchmark index closed the week marginally higher at 5.127, up some 28 pts. / 0.54%. The range comes in at 2.57% for the week. Dow Jones futures were up 377 points / +0.98% for the week, while the NQ futures were up 161.5 points / +0.91%, showing nearly similar results, but a weekly range of 2.9% and 3.82% respectively, showing the higher volatility in tech stocks last week.
Stoxx600 futures were trading down 1.4 points / -0.28% on the week with a small range of only 1.46% overall. Dax was not having a great week either, closing down some 165 points / -0.91% and a weekly range of 2.01%. FTSE 100 was trading up 24.5 points / +0.3% on the week with a range of 1.29%. Nikkei was practically flat, with a weekly range of 2.6%. Hang Seng was continuing the move higher, up 825 points / +4.67% for the week and a range of 5.19%. Commodities:
Gold:
In the absence of China for a 3-day holiday, we saw gold hitting the brakes in early week trading, going from $2,336 on Monday morning to a low of $2,281 on Wednesday, just to settle somewhere in between that range for the rest of the week. We ended the week right at $2,302, down $34 / -1.46% with a high at $2,346 and a low at $2,277, marking a range of $69.6 / 2.97%. Oil:
Oil had a pretty rough week, pretty much going straight down without big pullbacks. We started the week at $83.7 on CL futures and ended the week at $78.11, showing a $5.59 / -6.68% dip for the week. The range was only marginally higher than that move. Persisting outpricing of geopolitical risks in the Middle East as well as worsening macro data across the globe really weighed on the price last wee Natgas had a good week, with Henry-Hub futures going and settling above $2. Starting the week at $1.923 and ending it at $2.142 means an increase of $0.219 / +11.39%.
Copper ended the day pretty flat on the futures, the weekly range shows some 4.9%, with an early rise into the week to new highs not seen since April 2022, before turning down mid-week and bouncing back up into the end. Cocoa finally really hit the brakes! Starting the week at $10.594 on the futures, ending it at $8.147. That’s a decline of $2.447 / -23.09%! The weekly low comes in even worse at $7.000 flat, meaning an incredible 34% decline from start to low. Well done to all who followed my suggested OTM puts play with a strike at $8.000 when we were trading at $10.000-$11.000 just 2 weeks ago! Bonds:
The benchmark US 10y yields showed some flat trading around 4.65% until late Wednesday on the FOMC when they mildly sold off on Powell’s comments to 4.6% (5bp). On Friday, we saw the breakdown lower for roughly 20bp on NFP to a low of 4.46% before ending the week at 4.512%, still down some 15bp on the week. The short-end represented by US 2y yields is down a bit more, going from 4.991% starting the week to 4.82% on Friday close, marking a decline of 17.1bp. The long-end represented by 30y yields was relatively unbothered, down only 11bp from start to end with 4.778% and 4.668% respectively. Overall, bonds remain pressured with the 10y yield staying well above the 4.35% breakout level of the year. Same time, they bounced off the recent lows with the high yield of 4.74% on the 10y now nearly 25bp away.
Fed Pricing:
We saw End-Of-Year pricing at 38.8 chance of cutting down only 25bp on Monday, which came in at 31.5% on Friday. Same time, the chance for 50bp cuts rose from 30.1% to 37% and chance of cutting 75bp increased from 10.8% to 20.1%, really showing a good 25bp cut re-pricing on the dovish side of things.