TURKEY: PKK Begins Weapons Handover After Ending Decades-Long Insurgency

• The ECB has published its annual report into the euro. President Lagarde’s foreword notes that:
  • “The euro continued to hold its position as the second most important currency globally” in 2024.
  • “Further shifts may be underway in the landscape of international currencies. The tariffs imposed by the US Administration have led to highly unusual cross-asset correlations. This could strengthen the global role of the euro and underscores the importance for European policymakers of creating the necessary conditions for this to occur.”
  • “The number one priority must be advancing the savings and investment union to fully leverage European financial markets. […] The planned issuance of bonds at the EU level – as Europe takes charge of its own defence – could make an important contribution to achieving these objectives.”
• The report goes on to note that “the share of gold in global foreign reserves at market prices, at 20%, surpassed the share of the euro (16%). Survey data suggest that two-thirds of central banks invested in gold for purposes of diversification, while two-fifths did so as protection against geopolitical risk.”
• Euro strength has received close attention from policy makers since its decoupling with factors such as rate differentials, something that first started with EU/German defence and infrastructure investment plans before kicking up a gear with US reciprocal tariff announcements in April.
• The holding of relatively high EUR/USD rates (currently 1.1436) appears to have given Governing Council members added confidence that a deposit rate of 2%, reached after last week’s 25bp cut for 200bp of easing for the cycle, leaves policy in a good place with implications of a pause ahead.  
• Lagarde has previously talked on the potential benefits of a growing global role. This from May 26: “Increasing the international role of the euro can have positive implications for the euro area. It would allow EU governments and businesses to borrow at a lower cost, helping boost our internal demand at a time when external demand is becoming less certain.”

FVN5 107.50 puts continue to trade, with ~5K given at 0-13+ over several clips after the previously covered buying at 0-14. Volume in the contract tops 12K on the session.

WTI futures have traded higher this week, extending the current bull cycle. The contract has cleared the 50-day EMA, signalling scope for an extension towards $67.14 next, a Fibonacci retracement. It is still possible that the recovery since early May is a correction. MA studies are in a bear-mode position, highlighting a dominant M/T downtrend. Support to watch lies at $59.74, the May 30 low. A break would highlight a potential bearish reversal. A bullish theme in Gold remains intact and the latest pullback appears corrective. Medium-term trend signals remain bullish - moving average studies are in a bull-mode position, highlighting a dominant uptrend. A resumption of gains would refocus attention on $3435.6 next, the May 7 high. A break of this hurdle would strengthen bullish conditions. On the downside, the next support to monitor is $3245.6, the 50-day EMA. 

• WTI Crude up $0.17 or +0.26% at $65.19
• Natural Gas up $0.03 or +0.74% at $3.558
• Gold spot up $21.61 or +0.65% at $3346.06
• Copper down $4.25 or -0.87% at $485.7
• Silver down $0.02 or -0.06% at $36.5246
• Platinum up $42.47 or +3.48% at $1262.98