European Open: Futures higher, NZD/JPY eyes break of 83 post-RBNZ

Article By: ,  Market Analyst

Asian Indices:

  • Australia's ASX 200 index rose by 48.9 points (0.69%) and currently trades at 7,177.70
  • Japan's Nikkei 225 index has fallen by -3.89 points (-0.01%) and currently trades at 26,743.84
  • Hong Kong's Hang Seng index has risen by 128.88 points (0.64%) and currently trades at 20,240.98
  • China's A50 Index has risen by 8.97 points (0.07%) and currently trades at 13,159.66

 

UK and Europe:

  • UK's FTSE 100 futures are currently up 70 points (0.94%), the cash market is currently estimated to open at 7,554.35
  • Euro STOXX 50 futures are currently up 37 points (1.02%), the cash market is currently estimated to open at 3,684.56
  • Germany's DAX futures are currently up 137 points (0.98%), the cash market is currently estimated to open at 14,056.75

 

US Futures:

  • DJI futures are currently up 123 points (0.39%)
  • S&P 500 futures are currently up 105 points (0.89%)
  • Nasdaq 100 futures are currently up 23 points (0.58%)

 

Futures markets are higher against overnight for US and European markets. We saw the same thing yesterday, only for Wall Street to fall after the open – so we’ll keep that in mind before assuming any sort of rally today.

 

RBNZ hikes rates by 50-bps – a move which was widely expected. But the element of surprise came within their upwardly revised OCR forecast. Their statement was titled “Monetary conditions tighten by more and sooner” and their OCR is now projected to rise to 3.9% by September 2023, compared to 2.75% by April 2024 back in February.

 

Still, these are not entirely happy hikes as they’re aimed at taming inflation. Retail sales contracted in Q1 – and we’re yet to see the effects from the 100-bps hikes seen so far in Q2.  Business PMI contracted in once again in April, the fourth industry contraction in five. And whilst the NBNZ business outlook showed a mild rebound in April, it remains near levels of pessimism not seen since Q1 2020.

 

 

NZD/JPY considers a break above 83

Regardless, the wider interest differentials (in the favour of NZD) are now being priced in, which has sent EUR/NZD beneath yesterday’s low and invalidated out bullish bias. GBP/NZD has fallen to a 12-day low and ZD/USD has reclaimed 65c again.

We’re now keeping a potential eye on a breakout on NZD/JPY. Clearly it will stand a better chance during a bout of risk-on as the yen is susceptible to safe-haven flows. But its retracement from the April high found support around the 200-day eMA and 61.8% Fibonacci ratio. Yesterday’s low held above the 50%, and a break above 83 clears the 38.8% ratio, 50 and 20-day eMA’s and takes prices to a new cycle high.

 

FTSE: Market Internals

FTSE 350: 4160.97 (-0.39%) 24 May 2022

  • 66 (18.86%) stocks advanced and 275 (78.57%) declined
  • 3 stocks rose to a new 52-week high, 7 fell to new lows
  • 26.29% of stocks closed above their 200-day average
  • 50.29% of stocks closed above their 50-day average
  • 19.43% of stocks closed above their 20-day average

Outperformers:

  • + 3.57% - HSBC Holdings PLC (HSBA.L)
  • + 3.52% - SSP Group PLC (SSPG.L)
  • + 3.20% - Barclays PLC (BARC.L)

Underperformers:

  • -13.79% - Drax Group PLC (DRX.L)
  • -9.30% - WPP PLC (WPP.L)
  • -8.48% - Carnival PLC (CCL.L)

 

Up Next (Times in GMT)

 

 

How to trade with City Index

You can easily trade with City Index by using these four easy steps:

  1. Open an account, or log in if you’re already a customer 

    Open an account in the UK
    Open an account in Australia
    Open an account in Singapore

  2. Search for the company you want to trade in our award-winning platform 
  3. Choose your position and size, and your stop and limit levels 
  4. Place the trade

 

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

© City Index 2024