* Current consolidation range expected to give way next week
* Heavy data schedule all around; Monday holidays in US, UK, and Europe
* USD correction higher versus Europe continues to stall
* Bank of Canada rate announcement on Tuesday morning

I, for one, will be very happy to see the month of May finish up next week. Another week of mostly consolidative trading saw the dollar eke out a minor gain on the week, continuing with recent patterns of new highs against the JPY and minor gains against European currencies. The troubling aspect in terms of the USD’s recovery, which I mentioned last week, is how minimal the correction has been in light of interest rate changes and stock market gains. The 10 year US Treasury/Bund yield spread widened back out in favor of the USD by about 8-9 bps during the week, as US yields hit their highest levels since the end of January, but appear to have been soundly rejected from the 4.90% level. US equity gains, as seen in the DJIA, also look to be stalling, with several days over 13,500 unable to provoke fresh gains.  Full text »

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* G7/8 meeting unlikely to produce any currency pronouncements (outside of the Yuan)
* JPY crosses remain favored, JPY weakness to be reinforced by G7 apathy
* Equity markets are stratospheric and at risk
* Eurozone confidence indicators, Bank of England minutes are key data

The dollar has finished another choppy week of consolidation, closing roughly unchanged vs. the Euro and about 1 yen higher against the JPY. Carry trades continue to be the main source of reliable trade opportunities, with JPY crosses persistently testing important psychological levels, such as 164.00 in EUR/JPY and 240.00 in GBP/JPY. US Treasury yields jumped about 10 bps higher as the bond market continued to cover bets on a near-term US rate cut. The data out of the US this week was the proverbial glass half full/empty, allowing traders to draw from it what they wanted. Overall, the market appears to have abandoned its extreme pessimism over the US economic outlook, but in my opinion, just at the moment when the US economy is displaying signs of a soft patch directly ahead.   Full text »

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Gann Angles: Time and Price Analysis W.D. Gann (1878-1955) developed the use of what he called “Geometric Angles”, now commonly referred to as Gann Angles, used to determine trend direction and strength, support and resistance, as well as probabilities of price reversal. Gann was fascinated by the relation of time (T) and price (P). Gann drew his angles from all significant price pivot point highs and lows. He used just one pivot point to draw an angle that rose (or fell) at predetermined and

National Futures Association (NFA) has been designated by the Commodity Futures Trading Commission (CFTC) as a registered futures association. Its mission is to provide innovative regulatory programs and services that ensure futures industry integrity, protect market participants and help its members meet their regulatory responsibilities. Some of the terms included in this glossary may have complex legal or technical meanings which are beyond the scope of the booklet. However, this glossary

* Groundhog Day consolidation continues
* USD fighting back against European currencies
* Equity volatility may be signaling a near-term top
* BOJ MPC meeting unlikely to see rates changed

The dollar bounced back for most of last week, but its recovery already looks to be stalling before it ever really got going. The fundamentals don’t appear to have played as great a role as market positioning did. Speculative EUR & GBP longs, in particular, were disappointed as rate hikes (BOE) and signals of impending rate hikes (ECB) were seen as a cue to take profit and sell. The FOMC statement was essentially unchanged and this reflects the ongoing policy holding-pattern of the US Fed. The fact that yields have backed up since the statement is more indicative of speculators covering bets on a near-term US rate cut than on any prospect of higher US rates. On the whole, we continue to hammer out a very choppy consolidation range in the major dollar pairs, and this looks set to continue. However, while the US dollar index remains above 82.00 (EUR/USD roughly below 1.3570) the bias is for further dollar-positive correction potential.   Full text »

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* FOMC, ECB to stay on hold; BOE expected to hike
* Eurozone finance ministers gather
* US PPI and retail sales on Friday
* June G7 summit briefing on Friday

Next week should see the dollar resume weakening in light of mostly bullish events for the Euro and GBP and likely bearish events for the USD. The ECB is expected to hold rates steady when it announces its decision on Thursday, but to also indicate that another 1/4 point rate hike is coming at the June meeting. The BOE is unanimously expected by analysts to raise rates 1/4% to 5.50% at their meeting on Thursday. The Fed, in contrast, is expected to leave US rates steady at 5.25%, though they may tweak the statement language and restore the ‘additional firming may yet be necessary’ language.   Full text »

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