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Daily Report: Sentiments Weighed by China Data, US Non-Farm Payroll WatchedRisk sentiment remains generally weak in Asia after China released disappointing manufacturing data. The official manufacturing PMI dropped sharply from 53.3 to 50.4 in May while the HSBC manufacturing PMI was also revised down to 48.4. Nonetheless, loss is so far limited as markets are speculating the the weak outlook in China's manufacturing will prompt officials add more stimulus to the economy. However, as China has already denied the change of a massive program like that in 2008, any further stimulus would likely be modest at best. |
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| Featured Technical Report | |
USD/CAD Daily OutlookDaily Pivots: (S1) 1.0270; (P) 1.0318; (R1) 1.0374; More. USD/CAD rises the as high as 1.0365 so far and the strong break of 1.0311 resistance confirmed resumption of rally from 0.9799. Intraday bias is back on the upside and current rise should now target 1.0522/0656 resistance zone next. On the downside, break of 1.0206 support is needed to signal short term topping. Otherwise, near term outlook will remain bullish even in case of retreat. |
| Special Report |
Direct Yen-Yuan Trading Marks a Step Forward to Yuan InternationalizationJapanese yen (yen) and the Chinese Renminbi (yuan) will be allowed for direct trading from June 1. This is the first time China allows a major foreign currency, other than the US dollar, to trade directly against the RMB. While some analysts do not view this as an important issue other than reducing transaction cost and lowering settle risks, we believe this is one of the various steps that the Chinese government has taken for internationalizing the RMB. Going forward, the government would adopt further policies to promote the use of the RMB, increase the flexibility of the foreign exchange market and relax constrains in the capital accounts so as to transform the RMB into a truly global currency, Ireland's Ability to Access Bond Markets Not Certain although Fiscal Pact Likely ApprovedIt is likely that Ireland will pass the European fiscal pact on the referendum on May 31 as the latest polls showed that 60% of the voters supported the deal. Unfortunately, the market anticipates that the country might not be able to tap public funding later this year as the government planned. That means, the debt-ridden peripheral country in the Eurozone, despite its efforts in meeting the fiscal target and the return to growth in 2011, may need further bailout from the EU, the IMF or other international sources besides the 67.5B euro borrowed. |
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European Session: Orders and Options WatchEUR: The single currency declined to as low as 1.2324 earlier today in Asia on selling by UK and French names, however, defensive bids (for protection of 1.2300 option barrier) limited euro's downside and price has recovered in European opening but offers from various parties are lined up at 1.2390-00 and also at 1.2425-30 with some stops placed above 1.2470 and 1.2500. On the downside, stops remain below said barrier and more barriers are located at 1.2250 and 1.2200 with buy orders expected above these levels. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Trade Idea: USD/CHF – Buy at 0.9615Although dollar has risen again after brief pullback to 0.9666 yesterday, loss of near term upward momentum should prevent sharp rise beyond 0.9770-75 and reckon 0.9795-00 would hold from here, risk from there has increased for a minor correction to take place later. Trade Idea: EUR/USD – Sell at 1.2460Although the single currency has fallen again this morning to as low as 1.2325, loss of near term downward momentum should prevent sharp fall below 1.2300 and reckon 1.2270-75 would hold from here, risk from there is seen for another corrective rebound later. Above the Kijun-Sen (now at 1.2376) would bring test of the Ichimoku cloud bottom (now at 1.2398) but renewed selling interests should emerge around the upper Kumo (now at 1.2466), bring another decline. Candlesticks Intraday Trade Ideas Update Schedule (GMT): Elliott Wave Daily Trade Ideas Update Schedule (GMT): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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