General Market Comment 20.06.19

U.S. indices closed higher lifted by shares in the Health Care Equipment & Services (+1.07%), Pharmaceuticals, Biotechnology & Life Sciences (+0.86%) and Software & Services (+0.82%) sectors. The U.S. Federal Reserve held interest rates at 2.25% – 2.50% unchanged (as expected), though stating that uncertainties on the outlook have increased and “will act as appropriate”. Also, the central bank’s economic projection showed that there were 8 out of 17 members forecasting lower rates by the end of 2019. The S&P 500 (2,929.46) stays above its 20d moving average (2,844.32 – positive slope) and its 50d moving average (2,875.26 – positive slope).

European markets are expected to start on a positive note.

Foreign Exchange

The US dollar was under pressure against all of its major pairs on Wednesday. On the economic data front, MBA Mortgage applications decreased by 3.4% for week ending June 14, compared with 26.8% in the previous week. Separately, the FOMC held rates at 2.5% (estimated 2.5%). Although rates remained the same there was a dovish tone from Powell and in addition, many other FOMC members are calling for a rate cut before the end of the year.

The Euro was bullish against all of its major pairs with the exception of the CHF and GBP. In Europe, the PPI in Germany declined by 0.1% in May 2019 vs 0.1% expected and +0.5% in April 2019. The UK CPI rose by 0.3% MoM in May as expected (+0.6% in April 2019). Finally, the UK PPI advanced 0.3% in May vs +0.2% expected and +0.3% in the previous month.

The Australian dollar was bearish against all of its major pairs with the exception of the USD.

Commodities

After the close of Wall Street, WTI Crude Future (JUL 19) was about flat to $54.22. The contract was below its 20D MA (@ $54.68) and below its 50D MA (@ $59.9). The US Department of Energy reported that, for the week ended 14 June, crude oil inventories fell 3106k barrels compared to the previous week.

Gold was up $13.6 to $1360.3. The precious metal was above its 20D MA (@ $1319) and above its 50D MA (@ $1297). The 14d RSI above 70 (75.27) indicates gold was overbought.

Copper Future (SEP 19) on Comex was about flat to 269.75c/lb. The contract was above its 20D MA (@ 266.41c) and below its 50D MA (@ 277.43c). In Europe, the London Metal Exchange reported its copper inventories decreased 2375 tons to 248375 tons.