CIBC

Key Headlines

  • Risk is off, no one cared about JPM, it was all about Snapchat and the other social media platforms.
  • FX traders paid close attention to US equity futures and then the UST yields.
  • No fresh chicken for Singapore! Malaysian government announced it will halt exports of 3.6mio chickens a month from June 1.

FX Flows

US equity futures weak at the open, NQM2 is down 1.65% after Snapchat cut its revenue and profit forecasts below the low end of its guidance. Other social media platforms shares are also lower in after-hours trading. Snap’s CEO told employees that the firm plans to slow hiring this year to 500.

Most commodity futures were weak during Asia morning. Which also placed some pressure on the commodity currencies.

Market had expected New Zealand Q1 Retail Sales Ex-Inflation to gain 0.3% over the quarter but was disappointed with -0.5% and also lower revision to +8.3% from +8.6%. NZ$ did slip a little but not immediate, from 0.6459 to 0.6450. Was fairly quiet until US$ strengthened across the board. Further pressure after » Dairy Companies Association of New Zealand said 11-month milk collection fell 3.9% over the year.

Australia May flash PMIs were softer than previous month. Manufacturing slipped to 55.3 from 58.8, S&P Global said output was affected by issues of Covid-19 disruptions and poor weather conditions. However, manufacturing demand remained robust. The firm said overall business sentiment remained positive. AU$ a tick lower, barely any damage. AU$ slipped further on weak US equity futures, thanks to Snap.

Nice job in $YEN, Tokyo banks bid the pair higher for the usual Tokyo fix, then reversed back to 127.70. We didn’t stay down there for long. Investors turned their attention to the US Treasuries, yields went up and that took $YEN along as well. We understand that the Japanese retail guys are long and likely to fade the move up. The large strikes above have expired, this should smooth the move up and first resistance 128.50.

EUR$ peaked at 1.0694, one reporter noted leveraged names reducing short after market broke 1.0620. We are likely to run into some resistance around 1.0700, nothing much thereafter unless we break 1.0755 then stop buy orders kick in. Despite the ECB hawks yesterday, Asia didn’t pay much attention. It was more about the risk sentiment and EUR$ drifted lower.

Over in UK, railway unions will hold a vote today to walk out of every Tube station on Monday June 6. This will cripple the London Underground when millions of people return to work after the Queen’s jubilee weekend. PM Johnson’s photograph of him drinking with aides at a lockdown-breaking party in No 10 is all over the British media. I wonder what he will say to that? I guess nothing. GBP$ ended the morning lower, in line with the rest.

Weak commodity prices, WTI July contracts ended the morning session lower, $CAD returned to 1.28-handle. Overall, low activity. Only interesting option strike is 1.2870 for $605mio. Later today we shall have the May economic mood index, previously 54.3.