European Open: Eyes on the euro and a potential 19-year low

Asian Indices:

Australia's ASX 200 index rose by 119.8 points (1.73%) and currently trades at 7,060.80
Japan's Nikkei 225 index has risen by 610.79 points (2.37%) and currently trades at 26,361.37
Hong Kong's Hang Seng index has risen by 387.02 points (2%) and currently trades at 19,767.36
China's A50 Index has risen by 97.65 points (0.74%) and currently trades at 13,251.35

UK and Europe:

UK's FTSE 100 futures are currently up 65 points (0.9%), the cash market is currently estimated to open at 7,298.34
Euro STOXX 50 futures are currently up 38 points (1.06%), the cash market is currently estimated to open at 3,651.43
Germany's DAX futures are currently up 139 points (1.01%), the cash market is currently estimated to open at 13,878.64

US Futures:

DJI futures are currently up 226 points (0.71%)
S&P 500 futures are currently up 152 points (1.27%)
Nasdaq 100 futures are currently up 34 points (0.87%)

Sentiment seemingly took a turn for the better overnight, although we’ll stop shot of calling it a risk-on rally. We had some pretty big moves yesterday, and when you see those big moves it's only natural to get some retracement or short-covering rally, especially since it's Friday heading into the weekend.

Perhaps equity traders took note that Powell reiterated that 75-bps hikes are not a base case, which allowed US futures, Asian indices and carry trades rally. The yen was the weakest currency after the BOJ’s governor reiterated their stance on ‘powerful monetary easing’. NZD, CAD and AUD were the strongest majors against the yen, with CAD also helped higher by rising oil prices overnight.

EUR/USD hovers below 1.0400 ahead of industrial production

EUR/USD fell to its lowest level since January 2017 yesterday. And it is no surprise to see it rebound as such historical levels rarely break upon their first attempt. The overnight pullback has met resistance at the weekly R3 pivot and 20-hour eMA around 1.0400, so perhaps it can try to carve out a swing high. However, the daily pivot point around 1.4026 is another level to consider as resistance for a corrective high.

The initial target would be yesterday’s low and of course the 1.0340 support level. A break of which brings 1.0316 into focus near the monthly S1 and weekly S3 pivots. A break above 1.0426 invalidates the bearish bias and opens up a run for 1.0470.

FTSE: Market Internals

FTSE 350: 4030.88 (-1.56%) 12 May 2022

102 (29.14%) stocks advanced and 238 (68.00%) declined
2 stocks rose to a new 52-week high, 64 fell to new lows
21.14% of stocks closed above their 200-day average
79.43% of stocks closed above their 50-day average
6.86% of stocks closed above their 20-day average

Outperformers:

+ 8.76% - Baltic Classifieds Group PLC (BCG.L)
+ 6.60% - JD Sports Fashion PLC (JD.L)
+ 5.57% - Coca Cola HBC AG (CCH.L)

Underperformers:

-9.28% - Hochschild Mining PLC (HOCM.L)
-8.96% - Chrysalis Investments Ltd (CHRY.L)
-8.90% - Fresnillo PLC (FRES.L)

Up Next (Times in GMT)

The Michigan University Consumer Survey is released at 15:00. It managed to rebound by 9.8% in April thanks to a sharp drop in gas prices, although it still remains just off multi-year lows. And with inflation (and inflation expectations) sitting around 40-year highs it is hard to see how we’ll see a material rally in consumer confidence over the coming months.

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