European Open: Quiet Overnight Trade, USD/CAD Breaks Out of Basing Pattern

It was a quieter start to the week than usual with exchanges in China, Hong Kong and Australia closed for public holidays. The pending FOMC meeting is also suppressing volatility.

Asian Indices:

  • Australia's ASX 200 index was close due to a public holiday in New South Wales
  • Japan's Nikkei 225 index has risen by 167.04 points (0.58%) and currently trades at 29,115.63
  • Hong Kong's Hang Seng index has risen by 103.25 points (0.36%) and currently trades at 28,842.13

UK and Europe:

  • UK's FTSE 100 futures are currently up 21.5 points (0.3%), the cash market is currently estimated to open at 7,155.56
  • Euro STOXX 50 futures are currently up 13 points (0.31%), the cash market is currently estimated to open at 4,139.70
  • Germany's DAX futures are currently up 32 points (0.2%), the cash market is currently estimated to open at 15,725.27

US Futures:

  • DJI futures are currently up 13.4 points (0.04%)
  • S&P 500 futures are currently up 27.75 points (0.2%)
  • Nasdaq 100 futures are currently up 4.5 points (0.11%)

Learn how to trade indices


Future point to a higher open for European indices

View today’s video: Platinum Shorts Rise, Bears Circle Gold and MS

It was a strong close for European indices last week and futures market suggest that strength is to continue. FTSE 100 futures are currently up by 0.3%, which is not bad considering the UK is set to have its lockdown extended by four weeks. Let’s see how the cash market reacts after the open.

The FTSE 100 enjoyed its bet week in over a month, led higher by mining and financial stocks last week. Metal miners rose 1.8%, insurance stocks rallied 1.3% and precious metal miners were up by 0.7%. Still, we expected to see metal mining stocks come under pressure today as gold prices rolled over from 1900 on Friday and broke a key trendline support level overnight in Asian trade.

FTSE 100 S/R Levels

  • R3: 7164
  • R2: 7150
  • R1: 7138 – 7140.70
  • S1: 7129
  • S2: 7117 - 7123
  • S3: 7100
  • S4: 7081.22


FTSE 350: Market Internals

FTSE 350: 7134.06 (0.65%) 11 June 2021

  • 256 (72.93%) stocks advanced and 77 (21.94%) declined
  • 20 stocks rose to a new 52-week high, 2 fell to new lows
  • 85.75% of stocks closed above their 200-day average
  • 19.94% of stocks closed above their 20-day average

Outperformers:

  • + 8.81%   -  Sanne Group PLC  (SNNS.L) 
  • + 5.44%   -  Trainline PLC  (TRNT.L) 
  • + 5.24%   -  Chrysalis Investments Ltd  (CHRY.L) 

Underperformers:

  • -3.46%   -  Workspace Group PLC  (WKP.L) 
  • -3.19%   -  Volution Group PLC  (FAN.L) 
  • -3.15%   -  Restaurant Group PLC  (RTN.L) 


Tight ranges for forex pairs, USD/CAD in focus

With the exception of NZD, major currencies remained in tight ranges of less than 0.1%. The New Zealand dollar is currently the strongest currency, rising 0.2% against the greenback.

AUD/JPY is currently the strongest cross, with prices remaining above trendline support mentioned in today’s Asian open report. As mentioned we need to see a risk-off catalyst to drive it lower, but its inability to hold above 85.0 has not gone unnoticed.

GBP/JPY is yet to resume its uptrend with a break above 155.32, but it has found support at its 20-day eMA so, as things stand, we continue to suspect the corrective low has been seen at 154.13.




USD/CAD has fallen over 18% since its March high, and retracements have been few and far between. But after holding above 1.2000 for several weeks, bullish volatility finally returned to break prices to out of its 4-week sideways range. In fact, prices appear to have formed a rounding bottom pattern which suggests a target sits just below 1.2300.

Prices gapped higher at the open and have retraced to its breakout level and a potential bullish flag is forming. Such levels aren’t always perfect so we can allow for some noise around it but, hopefully, prices will continue to coil in a tight range / flag pattern before its next leg higher. The initial target is the 1.2200 high, although the 38.2% Fibonacci ratio sits just above 1.2250 should prices continue higher, ahead of the eventual 1.2290 / 1.2300 target.

If prices instead close back beneath the breakout level today it warns of a bull-trap and the analysis will be reassessed.


Learn how to trade forex


Metals feel the weight of a strong US dollar

Gold prices continued lower during overnight trade, falling a further 0.62% and breaking the 1869.60 swing low after its -1.14% loss on Friday. It’s now broken its March trendline and our bias remains bearish beneath the trendline, although we’d like to see 880 hold as resistance if it is to move to 1850 sooner than later.

Price action on silver remains choppy and indecisive as ever. Friday’s break above $28 on Friday was short-lived, with its reversal failing to test the Feb 23rd high and closing the day with a bearish pinbar. This is now the third bearish pinbar that has formed around the Fed 23rd high since its May high. Silver is currently trading -0.37% lower and at a two-day low.


Up Next (Times in BST)


You can view all the scheduled events for today using our economic calendar, and keep up to date with the latest market news and analysis here.

More from Commodities

Disclaimer

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 cityindex.com.sg for the complete Risk Disclosure Statement.