Bitcoin broke past the $34,000-$38,000 range that could be seen as an area supporting price, and spiked to a low of $25,366 on 12th May. Bitcoin regained its composure and remained range bound between $28,000-$31,000 for the rest of the month. Global headlines continue to report rising inflation, and more central banks have announced higher benchmark rates or are looking to announce their raised interest rates.
JPMorgan is reported to estimate bitcoin’s fair value at $38,000, and will replace real estate assets and hedge funds as preferred alternative asset classes with digital assets. The pricing of those traditional asset classes tends to lag, whereas digital asset markets have or have the ability to form venues that allow more accessible price discovery mechanisms.
The two largest investment banks in Japan, Nomura and Sumitomo Mitsui Trust, announced this month that they will be launching new companies allowing institutional clients the ability to custody digital assets like bitcoin. Nomura’s digital asset company will be a subsidiary, while Sumitomo Mitsui Trust will form a joint venture company with cryptocurrency exchange, Bitbank. The joint venture company will be called Japan Digital Asset Trust.
Despite the fall in bitcoin prices, the newly appointed chief financial officer of MicroStrategy, Andrew Kang, reiterated the company’s commitment to holding bitcoin for the long term with no plans to sell. MicroStrategy is reported to have 129,218 bitcoin worth around $4 billion, which is more than double of the second largest public company listed in the United States, Tesla, holding 48,000 bitcoin worth around $1.5 billion.
DAILY TREND: DOWN
Source: ICE Connect
After dropping heavily at the start of the month, bitcoin traded sideways intra-month under $31,000 and jumped at month end to break and hold that level. The $34,000-$36,000 prior support area could be the new resistance area being targeted next.
XBT closed the month at $31,692 with a -17.8% change.
UPCOMING HIGH IMPACT EVENTS
Spring 2024 bitcoin halving event
US Dollar -
The U.S. Dollar Index ® (USDX) reached a high of 105.07 on 13th May, the strongest the USDX had traded in almost 20 years, since December 2002. After U.S. Dollar Index ® met resistance at these highs the USDX closed the month at 101.77 down 1.41%.
Nonfarm Payrolls data released on 6th May showed 428,000 new jobs were created during April beating expectations of 391,000. The USDX closed at 103.69 with a gain of 0.08%.
Consumer Price Index (CPI) data for all items released on 11th May showed a slight pull back as inflation data dropped from the 41-year March high (8.5%) recording a gain of 8.3% before seasonal adjustments for the 12-month period ending April. Prices for all items less food and energy recorded a 6.2% increase over the last 12 months, again a slight drop from March data (6.5%), which was the highest level posted in 40 years. The USDX closed the day at 103.87 with a loss of 0.08%.
FOMC minutes released on 25th May highlighted the concerns around inflation being near the 40 year highs and with interest rates being one of the measures taken to help combat inflation, further rate rises are likely. The minutes confirmed the 0.5% interest rate hike announced earlier in the month, which was the single biggest rate increase seen in 22 years.
The U.S. Dollar Index ® started May trading on a positive footing with the bulls regaining control after the drop on the last day of April trading which ended a 6-day bull run. Even with disappointing ISM Manufacturing PMI data released for April at 55.4 that showed a decline (as numbers published came out below expectations of 57.6 and the prior month at 57.1) did not have much of an impact on the market. The demand for the U.S. Dollar drove the U.S. Dollar Index ® higher to close the 2nd May with a gain of 0.52% at 103.77 above the prior days high.
After a bearish start to trading on 3rd May, where the U.S. Dollar Index ® dropped to a low of 103.06 the market found some demand as the buyers stepped in driving the U.S. Dollar Index ® upwards to recover some of the day’s earlier losses. The U.S. Dollar Index ® closed the day down by 0.10% at 103.50.
This demand was only temporary as the bears came back out in force during trading on 4th May, aided by the negative news as ADP Employment Change for April announced 247,000 new jobs created, woefully below expectations where private employment was anticipated to expand by 395,000 and also marginally below March revised figures of 249,000 (revised significantly down from 455,000). The negative news continued to flow as ISM Services PMI data released for April at 57.1, a decline on the prior month's announcement at 58.3 and below expectations of 58.5.
The Federal Open Market Committee also met on 4th May to review overall economic activity. Insights showed whilst the Fed are open to pursue aggressive interest rate moves there is an appreciation that economic activity has dampened slightly. On the positive side job gains continued along with unemployment rates falling. Concerns raised with the latest COVID related lockdowns in China and the impact this will create with further supply chain disruptions adding to economic pressure. Inflation clearly remains one of the Feds priorities to bring in line over the longer term using appropriate monetary policy. The interest rate decision to increase by 50 basis points to 1.0% was the largest increase in interest rates in 22 years as the Fed try to bring inflation down from these 40-year highs.
As inflation remains one of the key priorities, to help gauge future inflation expectations ICE Benchmark Administration has launched the ICE U.S. Dollar Information Expectation Index Family. A useful tool to help answer some of the key questions that will affect how the monetary policy will unfold within the coming quarters. The chart below provides the historical Index settings over the past year:
Further information can be found on the ICE U.S. Dollar Inflation Expectations Index Family: https://www.ice.com/iba/usd-inflation-indexes
The U.S. Dollar Index ® reached a high of 103.67 the market dropped to close within the first 30-minutes down 0.59%. Overall, the U.S. Dollar Index ® closed down for the day at 102.59 reporting a loss of 0.86% after taking a small bounce from the daily 10 SMA that it had not closed below since the end of March.
As inflation remains one of the key priorities, to help gauge future inflation expectations ICE Benchmark Administration has launched the ICE U.S. Dollar Information Expectation Index Family. A useful tool to help answer some of the key questions that will affect how the monetary policy will unfold within the coming quarters.
The U.S. Dollar Index ® quickly recovered during trading on 5th May as the bulls were firmly in control to close the day at 103.80 posting the largest single day gain for the month at 1.20% with a high of 103.97. This high just fell short of a monthly area of resistance created back in 2002 with a wide range of 104.12 – 109.75.
During early trading on 6th May the bulls continued to gain ground although these gains reversed as U.S. Dollar Index ® dropped significantly throughout the early U.S. session. Nonfarm payrolls data released on 6th May showed 428,000 new jobs created during April, this exceeded expectations of 391,000 and the numbers released for March at 398,000. Whilst the news showed a continued increase in new jobs created, the U.S. Dollar bulls lacked the appetite to step at the time. The U.S. Dollar Index ® recovered towards the end of the trading day to close at 103.69 with a gain of 0.08%.
The U.S. Dollar Index ® closed the first week of May at 103.69, with a gain of 0.45%.
Monday 9th May trading the U.S. Dollar bulls continued to make gains, however the U.S. Dollar struggled to gain significant ground and after the U.S. Dollar Index ® broke above the prior day high sellers returned driving prices lower. The U.S. Dollar Index ® closed trading at 103.69, no change for the day.
On 10th May the bulls gained the upper hand and the U.S. Dollar Index ® rallied although was unable to reach the prior days high and ended the trading day an inside day at 103.94 with a gain of 0.21%. During trading on 11th May the bears managed to overcome the bulls and the U.S. Dollar Index ® closed the trading day at 103.96 with a small loss of 0.08%. The U.S. Dollar Index ® had been locked in a range for the past four days with the overhead resistance from the monthly resistance area at 104.12 – 109.75.bearing down whilst the bullish sentiment for the U.S. Dollar struggled to gain significant traction after a strong April performance.
On 12th May, the U.S. Dollar bulls managed to regain control and the U.S. Dollar Index ® continued to trade higher into the wider monthly resistance area of 104.12 – 109.75 posting a strong gain for the day up 0.79% with a close of 104.90. Here the sellers were waiting and the U.S. Dollar bears took control during the U.S. trading session on the 13th May and after putting in a high at 105.07 (the highest the U.S. Dollar Index ® had traded since 2002) the U.S. Dollar Index ® traded lower throughout the remainder of the day. The U.S. Dollar Index closed trading at 104.62 with a loss of 0.20%.
After a steady start to the trading week, the U.S. Dollar Index ® closed the second week of trading at 104.62 with a gain of 0.90.
It was in the resistance area of 104.12 – 109.75, tested on 13th May that the bearish momentum began to gather pace from throughout trading on 16th May. With little in the way of support, the U.S. Dollar Index ® closed trading at down at 104.20 with a loss of 0.43%. The bearish sentiment continued throughout trading on 17th May and even positive Retail Sales data published for April was not enough to entice the U.S. Dollar bulls back. The Retail Sales data showed a month-on-month increase at 0.9% compared to the estimated 0.7% growth albeit below March revised numbers at 1.4% (revised from 0.5%). The U.S. Dollar Index ® closed trading for the day at 103.41 recording a loss of 0.74%. This was the third day of consecutive losses.
There was some brief respite for the U.S. Dollar Index ® on 18th May as buyers stepped in as the market tested the daily 20 SMA and took a bounce. The U.S. Dollar Index ® subsequently closed the day at 103.86 with a gain of 0.50%. This bullish move was only temporary as the bears returned on the 19th May and the market was unable to reach the prior days high, falling short at 103.94, before it headed lower. U.S. Dollar Index ® posted a loss of 1.08% for the day at 102.75 closing below the daily 20 SMA for the first time since March 2022. This was the largest daily loss for the month and the biggest daily fall since 9th March 2022. The bulls returned on the last trading day of the week on 20th May and tried to recover some of the losses made previously however the damage was done and there was too much ground to recover. U.S. Dollar Index ® closed up for the day at 103.17 with a gain of 0.22%.
Overall, the U.S. Dollar Index ® closed the week with a loss of 1.41% putting an end to the consecutive weekly higher closes seen over the past six weeks to record the largest weekly drop since early February 2022.
This bearish momentum continued into the following week and as trading opened on the 23rd May the U.S. Dollar Index ® was unable to gain any positive ground. The market again fell heavily throughout the day to record a loss of 0.90% and closed at 102.10 after testing the lower boundary of the daily Bollinger Bands. The U.S. Dollar Index ® continued to fall during trading on the 24th May and although the Bollinger Bands provided some support this was not enough and the U.S. Dollar Index ® closed below the lower boundary for the first time since 13th January 2022.
Trading on 25th May was more positive as the bulls returned and the U.S. Dollar Index ® lifted from the lower banding and started to rally. Even below estimated Durable Goods Orders for April, which published below expectations at 0.4% against 0.6%, did not dampen the market and the U.S. Dollar Index ® rose to a high of 102.45 for the day. FOMC minutes came out later in the U.S. session and whilst the information generally was public, the initial reaction saw U.S. Dollar Index ® fall although it recovered a short while later. The minutes highlighted the concerns around inflation being near the 40 year highs (although CPI data recorded a slight drop in April) and interest rates would be one of the measures taken to help combat inflation.
As inflation is set to play a key role in interest rate decisions throughout 2022, the ICE U.S. Dollar Information Expectation Index Family is a great tool to help plan for the future.
The FOMC minutes also confirmed the 0.5% interest rate hike announced earlier in the month, which was the single biggest increase seen in 22 years and further rate increases are anticipated. The Committee will also be going ahead with the reduction in the Federal Reserve’s Balance Sheet as planned on 1st June. U.S. Dollar Index ® closed the day with a gain of 0.31% at 102.08.
Inflation is set to play a key role in interest rate decisions throughout 2022 the ICE U.S. Dollar Information Expectation Index Family is a great tool to help plan for the future.
On 26th May, the bears returned and the U.S. Dollar Index ® closed down with a loss of 0.24% at 101.86, the negative sentiment was exacerbated as GDP data published showed a negative rate as a preliminary indication for Quarter 1. This disappointing news was below the prior announcement of -1.4% and expectations of -1.3%. Trading on 27th May was mixed and the U.S. Dollar Index ® closed marginally down for the day at 101.70 with a loss of 0.05%.
Overall, the U.S. Dollar Index ® ended the week with a loss of 1.28% at 101.70. This is the second consecutive weekly drop and the largest drop over a two-week period seen since July 2020.
Monday 30th was Memorial Day in the US and although there were, no major announcements the U.S. Dollar Index ® traded to close down for the third consecutive day at 101.30 recording a loss of 0.36%.
On the final day of trading, the U.S. Dollar Index ® found some support and the bulls helped to lift price from the lows to close the day up at 101.77 a gain 0.34%.
After a bearish turn mid-May, the uptrend that the U.S. Dollar Index ® had been trading in broke on the daily timeframe with potentially a new downtrend beginning to form. The U.S. Dollar Index ® in the weekly timeframe remains in an uptrend. The U.S. Dollar Index ® closed the month of May at 101.77 with a loss of 1.41% the largest monthly loss since April 2021.
UPCOMING HIGH IMPACT EVENTS
Wed 1 Jun ISM Manufacturing PMI (May)
Thr 2 Jun ADP Employment Change (May)
Fri 3 Jun Nonfarm Payrolls (May)
Fri 3 Jun ISM Services PMI (May)
Fri 10 Jun CPI (May)
Fri 10 Jun Michigan Consumer Sentiment (Jun) PREL
Wed 15 Jun Retail Sales (May)
Wed 15 Jun Fed Interest Rate Decision
Wed 15 Jun Fed’s Monetary Policy Statement
Wed 15 Jun FOMC Economic Projections
Wed 15 Jun FOMC Press Conference
Thr 23 Jun Bank Stress Test Result
Tue 28 Jun Durable Goods Order (May)
Tue 28 Jun Gross Domestic Product Annualized (Q1)
Tue 28 Jun Nondefense Capital Goods Orders ex. Aircraft (May)
South Korean Won -
The South Korean Won closed May at 1242.26 KRW against the U.S. Dollar after trading to a high of 1290.87, the weakest the South Korean Won had traded against the U.S. Dollar since July 2009.
S&P Global Manufacturing PMI data for April was released on 2nd May at 52.1 exceeding expectations of 51.0 and the prior month data release at 51.2.
Consumer Price Index (CPI) data for all items released on 3rd May showed inflation continued to rise with an increase of 4.8 for 12-month ending April, above expectations of 4.3% and 12-month ending March at 4.1%. All items less food and energy also showed an increase with data 12-month ending April published at 3.1% against 12-month ending March at 2.9%.
Industrial Production data published on 31st May for April year-on-year at a rate of 3.3%. This showed a continued decline as the data released came out below March output figures of 3.7% and February of 6.3%.
DAILY TREND: DOWN
Source: ICE Connect
During the first day of May trading the USDKRW started to recover some of the losses made after dropping heavily on 29th April. The pair closed the day at 1266.70 with a gain of 0.30%. Negative trade balance out for April ($-2.66B against estimated $-1.059B) exacerbated the South Korean Won weakness.
Trading on 3rd and 4th May saw fortunes reverse as positive economic data released in South Korea. S&P Global Manufacturing PMI data exceeded expectations and month on month CPI data levelled off (0.7% recorded in April and March) although 12-month figures rose. The USDKRW closed at 1260.35 and 1251.52 respectively as it broke and closed below the daily 10 SMA that acted as support throughout the majority of April. The drop in the pair indicates the strengthening of the South Korean Won as the quote currency.
U.S. Dollar bulls returned on 5th May and the pair had the largest one-day rally in May closing up at 1269.46, a gain of 1.43%. The bulls met resistance on the last trading day of the week as price retested April highs (1276.31 28th April 2022) and the pair closed at 1269.98. A gain of 0.56% for the first week of trading.
U.S. Dollar bulls were back in force during the second week of trading as the pair traded towards the April high where the USDKRW again met resistance and sellers stepped in. The strengthening of the South Korean Won was helped by positive Current Account balance data for South Korea (March data released a balance at 6.73B, above expectations of 3.99B) the demand for the South Korean Won (quote currency) weighing the pair down and the USDKRW was unable to close above the high. On 11th May, the U.S. Dollar bulls drove price higher and the USDKRW closed the day at 1279.27, a gain of 0.29% breaking the April 2022 high.
The bulls continued the upward momentum on 12th May and price rallied to reach a high at 1292.35, before pulling back slightly as it reached the upper Bollinger Band (2 SD) to close the day with a gain of 0.91% at 1290.87. This was a significant move as the USDKRW posted the highest value the pair had traded since July 2009, meaning the weakest the South Korean Won had been against the U.S. Dollar. The U.S. Dollar bears drove the pair lower on 13th May as the pair dropped throughout the day this aligned with the U.S. Dollar Index ® approaching an area of resistance. The USDKRW closed the week at 1278.44, a gain of 0.74%.
16th May the USDKRW had a strong performance during the Asian session that reversed during the European and U.S. session. U.S. Dollar bulls managed to hang on and the pair closed with a slight gain of 0.13% at 1280.16. The bears took charge throughout the day on 17th until price reached the mid-point of the Bollinger Band where there was some demand and the buyers pushed price marginally higher to close above the day low. The following day the bulls took charge however the pair met some resistance as it tested the daily 10 SMA (which previously acted as support) and the pair pulled back slightly to close the day at 1275.33, a gain of 0.68%. The USDKRW challenged the daily 10 SMA multiple times throughout the remainder of the week but failed to close back above. The USDKRW ended the week 1273.87 with a loss of 0.36%.
On 23rd May, trading the bears were firmly in control and the USDKRW recorded the largest one-day loss for the month so far when the USDKRW closed down 1.23% at 1258.16. This was largest one-day gain for the South Korean Won (quote currency). The pair struggled on 24th May but the bulls finally drove prices higher and the pair closed up for two consecutive trading days although the retest of the daily 10 SMA proved to be too much. The bears returned overwhelming the bulls and the USDKRW dropped throughout the remainder of the week to close at 1251.09, a loss of 1.79%.
The bearish tone continued on 30th May and the pair posted the largest one-day loss for the month down 1.26%. Breaking through a daily support area at 1247.13 – 1239.32 and the lower Bollinger Band on the daily chart.
On the final trading day in May USDKRW closed at 1242.26 a gain of 0.56%.
The weekly uptrend continues even with the significant pull back during May. However, the daily uptrend has ended with the daily 10 SMA acting as resistance in a newly formed downtrend.
The USDKRW closed the month at 1242.26 with a loss of 1.64%. The largest monthly gain for the South Korean Won against the U.S. Dollar since December 2020.
UPCOMING HIGH IMPACT EVENTS
No major events listed
Singapore Dollar -
The Singapore Dollar closed the month down at $1.3697 against the U.S. Dollar after the USDSGD climbed to reach a new 23-month high at $1.3986 before testing a strong area of resistance sending the pair lower.
April PMI Manufacturing data released on 4th May came out at 50.3 which was above expectations of 50.2 and a slight increase compared to the prior month release at 50.1.
Consumer Price Index (CPI) data released on 23rd May showed inflation had a levelled off with CPI - all items 12-month ending April at 5.4% equaling the data released in March and slightly below expectations of 5.5%.
Data released on 26th May showed Industrial Production reported an improvement in manufacturing output for April year-on-year with an increase of 6.2% compared to 12-month ending March at 5.1% (revised from 3.4%). A significant improvement in month-on-month data recorded for April as output climbed back into positive territory at 2.2% compared to the prior revised release for March month-on-month at negative 11.2%.
DAILY TREND: SIDEWAYS
Source: ICE Connect
A bullish start to the first day of trading in May as the USDSGD rallied with the U.S. Dollar bulls in control. Towards the end of the trading day, the USDSGD pierced the upper boundary of the daily Bollinger Bands where the market met resistance and showed some weakness. Overall, the USDSGD closed up 0.23% at 1.3856. The weakness seen towards the end of 2nd May trading gathered momentum during the second day where the USDSGD closed down at 1.3840 posting a small loss of 0.11% for the 3rd May.
4th May positive PMI data released in Singapore coupled with negative news out from the U.S. helped the Singapore Dollar gain value (quote in the pair) as the USDSGD dropped 0.73% to close down at 1.3736. The pair dropped into a small pocket of support evident on the 4-hour chart 1.3733 – 1.3700 where buyers were waiting. The market rebounded throughout the 5th May to close higher at 1.3830 with a gain of 0.66%.
The bullish move continued into trading on 6th May until the USDSGD reached an area of daily resistance at 1.3886 – 1.3937 enveloped by a wider weekly area at 1.3872 – 1.3993. Sellers were waiting, adding downward pressure as the pair dropped from a daily high at 1.3905 to close the day and week at 1.3854. The first week of trading the USDSGD made a gain of 0.22%.
The bulls were eager to reaffirm their position and drove prices higher during 9th May trading until the pair retested a daily resistance area where sellers were waiting and the pair pulled back. The USDSGD ultimately closed the day at 1.3904 with a gain of 0.44%.
The bears tried to regain control in this area at 1.3886 – 1.3937, but the bulls fought back as the USDSGD continued to defend the lows driving prices back up to print a marginal gain of 0.05% on the 10th May and a marginal loss of 0.14% on 11th May.
On 12th May with the bulls firmly in control, the USDSGD traded through the daily area and deep into the weekly resistance area 1.3872 -1.3993 to reach a high of 1.3986. The weakest level the Singapore Dollar (quote currency) had traded against the U.S. Dollar since June 2020. The 13th May more sellers joined and the pair began to drop as the bears regained control to close the last day of trading for the week at 1.3925 with a loss of 0.26% on the day.
Overall, the second week of trading the USDSGD made a gain of 0.59%.
The downside momentum continued during trading on the 16th and 17th May as the USDSGD closed lower on both days until it reached the daily 20 SMA where buyers stepped in and the market took a bounce. The 18th May the USDSGD recovered the losses made on the prior day to close up 0.45% at 1.3904. However, this bullish move to the upside was temporary as the bears returned and the pair closed lower on 19th May at 1.3802 down 0.78%, the largest daily fall this year. A significant move where the pair closed below the daily 20 SMA for the first time since mid-April. The pair struggled to find a clear direction on the last trading day of the week and closed with a gain of 0.01%
The USDSGD closed the week at 1.3800 with a loss of 1.01%, the largest weekly drop since August 2021.
The following trading week the bearish momentum continued and the USDSGD posted a further loss on Monday 23rd as the pair retested the small pocket of support at 1.3733 – 1.3700 which held earlier in the month. On the retest, there were less willing buyers and the pair dropped deeper into the area on 24th May until it found a footing coinciding with the lower daily Bollinger Band where the USDSGD took a bounce on 25th May to close the day at 1.3744 with a gain of 0.23%.
The bears returned with some momentum on 26th May and drove pair lower and back into the support area, this bearish outlook continued throughout the trading day on 27th May and the USDSGD eventually closed below the support area.
Overall, the USDSGD closed the week at 1.3687 down 0.85%.
The bearish momentum continued into the following trading week and on Monday 30th May the USDSGD closed down 0.27% at 1.3666. The pair recovered on the final day of trading posting a gain of 0.23% to close at 1.3697.
During the month, we saw a break of the daily uptrend and we await clear direction, although weakness is evident on a daily chart that a new downtrend is forming. The weekly uptrend remains. After significant weakness seen in the USDSGD during the final two weeks of May trading the USDSGD closed May at 1.3697 with a loss of 0.92% for the month.
UPCOMING HIGH IMPACT EVENTS
No major events listed
Chinese Yuan -
The Chinese Yuan Renminbi closed May at 6.6748 CNY against the U.S. Dollar after recovering some of the early losses the Yuan had against the U.S. Dollar during the month as the pair reached a 20-month high of 6.8376.
Consumer Price Index (CPI) data released on 11th May showed CPI is growing at a rate of 2.1% April year-on-year, slightly higher than expected (1.8%) and that of 12-month ending March data at 1.5.
Disappointing Industrial Output published on 16th May by the National Bureau of Statistics of China showed a significant fall in production for April year-on-year down to negative 2.9% significantly below March published figures at 5% and expectations of 0.7%.
The NBS Manufacturing PMI data for May released on 31st May showed an improvement at 49.6 (as expected) compared to April release 47.4. Non-Manufacturing PMI data showed a significant improvement on April data announcing 47.8 against 41.9 albeit below expectations of 50.7.
DAILY TREND: SIDEWAYS
Source: ICE Connect
The USDCNH closed the first day of trading with a gain of 0.48% at 6.6727 after the bulls’ regained control subsequent to the heavy drop on the last day of April trading. The bullish momentum on 2nd May again caused the pair to pierce through the upper boundary of the daily Bollinger Bands that the pair had been trading around for the previous nine days. This time finding more resistance at these extremes creating an initial pull back.
The USDCNH dropped for the following two consecutive trading days as the bears regained control, to print a drop of 0.85% overall during this period. It was on the 4th May the USDCNH dropped into a small pocket of support at 6.6281 – 6.6053 on a 2-hour chart, created as a throwback when price broke above 25th April high. The buyers were waiting and the pair rallied from this area on 5th May to close with a gain of 0.98% at 6.6803.
The upward momentum continued into the final trading day of the week as the USDCNH closed the day up 0.40% with a daily and weekly close of 6.7079 to post a gain of 1.01% for the week.
The bulls continued to gain ground on Monday 9th May where trading on the USDCNH closed up with a gain of 0.56% at 6.7551, just falling short of the upper Bollinger Bands on a daily chart. The following two trading days were inside days and closed printing a small loss on 10th May at 0.19%, to recover with a small gain on 11th May of 0.24%.
The bulls reaffirmed their position on the 12th May and the pair rallied to close up at 6.8245 with a gain of 0.98% reaching a weekly resistance area at 6.8106 – 6.8646 and the pair began to struggle. The USDCNH reached a high of 6.8376 on 13th May where bears took over and the pair dropped to close the day down at 6.7908, a loss of 0.50%.
The USDCNH closed the week at 6.7908, with a gain of 1.09%. A gain for a sixth consecutive week resulting in the continued weakening of the Yuan against the U.S. Dollar.
On Monday 16th May the bears continued to drive prices lower and although there was some bullish pressure the bears stood their ground. Even negative data from China (industrial production year-on-year declining significantly from 5% March to -2.9% April year-on-year and poor retail sales data for April at -11.1% against -3.5% year-on-year March) did not distract the U.S. Dollar bears. The USDCNH closed at 6.7939 with a tiny 3-pip loss, ultimately no change for the day 0.00%.
The bearish sentiment continued into 17th May and the USDCNH closed down at 6.7420 with a loss of 0.77% representing strengthening of the Yuan against the U.S. Dollar. After a brief pause on 18th May where the bulls put up a challenge to close the day positive, the pair continued to drop.
The USDCNH closed the week at 6.6910, with a loss of 1.52%. A resulting in the continued strengthening of the Yuan against the U.S. Dollar. The largest weekly drop seen in the USDCNH since November 2020.
This bearish momentum continued into the following week of trading as the pair closed down for the third consecutive day on 23rd May trading after dropping into a daily area of support at 6.6700 – 6.6119. The pair struggled to lift from this area on 24th May and closed marginally down at 6.6561 a loss of 0.02%.
The U.S. Dollar buyers finally returned and the bulls drove the USDCNH higher throughout the majority of trading on 25th May to close at 6.7085, a gain of 0.79%. The bullish sentiment continued into the following trading day and the pair closed higher at 6.7626, a gain of 0.84%.
The bears returned in the final trading session of the week after the USDCNH tested a pocket of resistance on a 4-hour chart at 6.7716 – 6.8190 driving prices lower to close with a loss of 0.67% for the day. The USDCNH closed the week at 6.7172 with a gain of 0.33%.
The bearish momentum continued the following week of trading until prices dropped into a daily area of support at 6.6700 – 6.6119 which was tested a few days earlier. Buyers were waiting and the USDCNH took a bounce, closing at 6.6748 with a modest gain of 0.09%.
The final trading day of May trading the U.S. Dollar bulls continued to drive the pair higher although it struggled to gain momentum, closing up 0.27% at 6.6926.
USDCNH has reverted to a sideways range although weakness is evident. The pair remains in an uptrend on a weekly chart. The USDCNH closed the month of May at 6.6748 up 0.51%.
UPCOMING HIGH IMPACT EVENTS
Fri 10 Jun CPI (May)
Wed 15 Jun Retail Sales (May)
Mon 20 Jun PBOC Interest Rate Decision
Thr 30 Jun NBS–Manufacturing & Non–Manufacturing PMI (Jun)
Asia Tech -
The ICE Asia Tech 30 Index (ATI) broke the March and April lows, trading to a new low at 3,283.83. The Nasdaq Composite saw further weakness along with most equity indices in May. ATI saw a jump in price late in the month and closed modestly higher by 2.2%.
May proved mixed for Chinese component stocks, with Meituan, NetEase and Baidu having performed well, with gains of 20.3%, 16.1% and 9.1% respectively. However, Xiaomi was down again for another month by 11.9%, joined by Alibaba Group Holding, which fell by 12.3%, and Bilibili, down by 15.6%.
Taiwan semiconductor components were slightly weaker with United Microelectronics Corp. falling 2.9% and Taiwan Semiconductor Manufacturing down 4.9%. Delta Electronics was lower by 10.1% and on a positive note, Hon Hai Precision Industry rose 8.1%.
Japanese index component Z Holdings fell strongly by 17.2% followed by NTT Data, down 15.8%. Both Canon and Fujitsu supported the index this month rising by 8.2% and 8.0% respectively.
Korean component stocks all fell in May with Kakao shedding 19.8%, and Naver Corp dropping 14.2%. SK Hynix was not as weak, falling 6.9%, and modest losses by Samsung Electronic and Samsung SDI by 2.5% and 2.0% respectively.
DAILY TREND: DOWN
Source: ICE Connect
ATI created a new low in May at $3,234 despite a strong finish to April reaching the $3,600 level. The first half of May experienced consecutive down days, turning mid-month to set a lower high intra-month around $3,550, and then a higher low at $3,400, (the lows at which March and April had held). This could be seen as a reverse head and shoulders pattern, which is bullish given the last three days of the month, saw prices end consecutively stronger, and closed above the two prior highs set in May.
ATI closed the month at $3,690 with a +2.2% change.
Index Composition: 37% China, 23% Japan, 23% Taiwan and 17% South Korea
UPCOMING HIGH IMPACT EVENTS
Fri 10 Jun China CPI (May)
Wed 15 Jun Retail Sales (May)
Mon 20 Jun PBOC Interest Rate Decision
Thr 30 Jun China Non-Manufacturing PMI (Jun)
Oil -
Brent crude oil continued to trade above the $95-$100 range in May, spiked to $120.00 on the last day of the month before it settled to close the month at $115.60, 10.6% higher versus April.
The OPEC+ meeting on Thursday 2nd June expected a 432,000 barrels per day production increase for July. The European ban on 90% of Russian oil caused oil prices to jump and is expected to be implemented by the end of the year. OPEC is discussing the suspension of Russia from OPEC+ and could allow Saudi Arabia and the United Arab Emirates to increase production to make up for the shortfall and utilize spare production capacity.
The technical committee of OPEC+ is reported to be trimming their demand forecast by 200,000 barrels per day as continued risks of COVID-19 and geopolitical concerns are expected to continue to weigh on demand for oil.
DAILY TREND: SIDEWAYS
Source: ICE Connect
Brent held below the range $112-$115, which had held since late March as the Russian-Ukrainian conflict continues to add pressure to oil prices pushing them higher.
Sanctions on Russian oil exports are starting to bite, and exemptions to Russian production target commitments under OPEC+ agreements could tighten the penalties already being felt by Russia in global attempts for a cessation in hostilities.
Brent closed the month at $115.60 with a significant +10.6% change.
UPCOMING HIGH IMPACT EVENTS
Thr 2 Jun OPEC+ policy meeting to decide on whether to increase supply of oil in July by 432,000 barrels per day similar to prior months or by some other amount.
Key Figures -
Source: ICE Connect, ~30 Days
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