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| Action Insight Weekly Report | Markets Snapshot |
Dollar Jumped on Spain Worries, But Losing Steam on Revived QE3 Talk?Worries on Spain's banking system and weak global economic data somewhat took over the Greece exit concerns last week as the main risk aversion driving force. Spanish 10 year yield reached 6.7% and got itself closer and closer to the unsustainable 7% level which eventually led to bailout of Greece, Ireland and Portugal. European majors remained broadly pressured over the week. And indeed, latest CFTC data showed net euro shorts jumped to record high of 203k contracts in the week ended May 29, comparing to 195k contracts in the prior week. Weakness in European majors will likely continue. |
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| Featured Technical Report | |
USD/JPY Weekly OutlookUSD/JPY's fall from 84.17 accelerated to as low as 77.66 last week. Initial bias remains on the downside this week and deeper decline should be seen to 75.56/76.02 support zone. At this point, fall from 84.17 is not displaying a clear impulsive structure yet and thus we'll be cautious bottoming inside 75.56/76.02 support zone. On the upside, above 78.70 minor resistance will turn bias neutral and bring consolidation. But break of 80.29 resistance is needed to signal near term reversal. Otherwise, outlook will remain bearish even in case of recovery. |
| Special Reports |
BOC To Pause In June With Less Hawkish StatementThe Bank of Canada will likely deliver a much less hawkish statement after the meeting next Tuesday. The rapid deterioration in the global environment, especially the sovereign debt crisis in the Eurozone, is expected to affect he recovery outlook in Canada. Moreover, the slowdown in China should have negative impact on the export sector of Canada. We expect the central bank to maintain the policy rate at 1% as the urgency of tightening has greatly reduced. RBA To Cut Policy Rate By -50 Bps In JuneWe expected the RBA to cut the cash rate by another -25 bps in June, following a surprising reduction of -50 bps to 3.75% in May. Moderation in economic growth in China, Australia's major trading partner, and growing uncertainty in the Eurozone are expected to weaken confidence and economic developments in Australia. Governor Glenn Stevens' comments that “the obligation of the official sector to provide proper oversight to ensure' resilience has raised indicated further rate cut is increasingly likely. |
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The Week in Review and Outlook
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