EMERGING MARKETS: Trade Disruptions Seen In May, Thai, Mex Trade Talks With US
Jun-20 09:02
- Latest trade data appear to be showing some early signs of the impact of ongoing global trade tensions. In China, exports of rare earth magnets slumped further last month, with shipments to the US particularly weak, while in Malaysia exports unexpectedly declined in May, with all major categories down on the prior month. The latter followed strong growth in April however, ahead of the tariffs, so may be a correction at this point.
- In India, by contrast, which is well positioned to benefit from US-China tensions, local companies remain in talks with Apple over the manufacture of equipment to make iPhones in the country. This comes amid delays in sourcing the equipment from China.
- Meanwhile, Thai customs exports were surprisingly strong in May, likely due to the frontloading of shipments ahead of reciprocal tariffs on July 8. The country, which has one of the largest export shares to the US in the region, will present its trade proposals to the US today, with hopes of reducing the tariff rate to 10% from the proposed 36%.
- Also today, Mexico’s Economy Minister Ebrard will visit the US to discuss trade issues. Earlier this week, President Sheinbaum said she had spoken with President Trump and proposed a broad agreement on security, immigration and trade.
- Amid progress on these issues and a relatively constructive dialogue between the two countries in recent weeks, MXN has outperformed most peers, rallying almost 10% from its April lows against the dollar to 10-month highs. The trend condition in USDMXN remains bearish, and potential is still seen for an extension towards 18.7774, the 50.0% retracement of the Apr 9 ‘24 - Feb 3 bull leg.
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COMMODITIES: WTI Futures Trade to Fresh Short-Term Cycle High
May-21 08:49
- WTI futures have traded to a fresh short-term cycle high today and maintain a bullish theme. However, the recovery since Apr 9, still appears corrective. Key resistance to watch is $62.87, the 50-day EMA. It has been pierced, a clear break of it would highlight a stronger reversal. This would open $65.82, the Apr 4 high. For bears a reversal lower would refocus attention on $54.33, the Apr 9 low and bear trigger.
- Gold has recovered from its recent lows and is trading higher today. The climb signals the end of the corrective phase between Apr 22 - May 15. Medium-term trend signals remain bullish - moving average studies are in a bull-mode position highlighting a dominant uptrend. A continuation would open $3435 next, the May 7 high. Key support and the bear trigger has been defined at $3121.0, the May 15 low.
EQUITIES: Bullish Trend Condition in E-Mini S&P Remains Intact
May-21 08:49
- A bullish theme in Eurostoxx 50 futures remains intact and price is trading at its recent highs. The contract is extending the recent breach of 5263.01, 76.4% of the Mar 3 - Apr 7 bear leg, and maintains the sequence of higher highs and higher lows. Sights are on 5516.00, the Mar 3 high and the key bull trigger. Key support to watch lies at 5201.23, the 50-day EMA. Clearance of this level would signal a possible reversal.
- A bullish trend condition in S&P E-Minis remains intact and the contract is trading closer to its recent highs. An important resistance at 5837.25, the Mar 25 high and a bull trigger, has been cleared. This has strengthened the current bullish theme, and paves the way for a continuation near-term. Sights are on the 6000.00 handle next. Initial firm support to watch lies at 5703.54, the 50-day EMA.
UK DMO UPDATE: Gilt Auction Bidding Window Extended
May-21 08:46
The DMO announced that "due to the ongoing market-wide Bloomberg system issues, the bidding window for this morning's auction of the 4% 2031 is being extended. We expect the close time of the auction bidding window to be 11:30am, subject to Bloomberg systems issues being resolved. The UK Debt Management Office will share further details as soon as possible"
