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GBPJPY Gartley - Still a Valid Structure?

A bullish Gartley could be forming if we can hold below point C and drop down to the 169.00 area for the completion of the pattern and form our PRZ zone.

Watching the price action yesterday it felt like there was little to stop the rally, however overnight the dynamic has changed so as it stands the structure is still there.

From here we MUST stay under point C to stand a chance of forming a Bullish Gartley correctly.

Still all to play for at the moment though - watch this space!

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Economic Calendar​

• Major index futures in Europe indicate a slightly higher opening​
• HIgher-than-expected Q1 GDP readings in Japan​
• US housing data in the spotlight​

Wednesday's stock market session in Europe is expected to extend mixed sentiments from the previous session. The dollar is slightly appreciating against major currencies, supported by positive US data, particularly in retail sales. Comments from Fed members yesterday emphasized the priority of fighting inflation.

The main index in Japan is rising on the back of positive GDP data. Japan's economy grew at its fastest pace in three quarters, with Q1 GDP growth at 1.6% on an annual basis, surpassing expectations of 0.7%. Goldman Sachs sees promising prospects for the Japanese market due to corporate reforms and easy monetary policy.

There are no significant macroeconomic events in today's calendar apart from US housing data. At 01:30 PM BST, we will receive data on housing permits and housing starts. Additionally, investors may seek hints about the ECB's future monetary policy in speeches by central bank members, scheduled for this morning.
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Economic Calendar:​

• 10:00 AM BST - EU, Harmonized Inflation in the Eurozone:​
• Expected: 7.0% YoY, Previous: 6.9% YoY​

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01:30 PM BST - US, Housing Market Data:​

• Permits: Expected: 1,435k, Previous: 1,413k​
• Starts: Expected: 1,400k, Previous: 1,420k​

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Central Bank Speeches:​

• 08:15 AM BST - ECB, De Guindos​
• 08:30 AM BST - ECB, Panetta​
• 09:00 AM BST - ECB, Centeno​
• 10:15 AM BST - UK, Bailey​
• 04:15 PM BST - ECB, De Guindos (again)​

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Crude Oil​

Crude oil price shows some slight bullish bias now, affected by grand support (62.3 - 62.7) current positivity, and it might test the key resistance (82.29 - 85.31) .55 before turning back to decline again.

H4: Noting that the EMA50 meets this resistance to add more strength to it.

Until now, the bearish trend scenario still valid and active as long as (69.56) area remains intact, waiting to visit (72.7 - 73.7) area as a next main target, noting that breaching 73.7 will lead the price to recover and achieve gains that start at 76.7 direct.

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AUDJPY

Australian jobs market data for April was released during the Asian trading session today and turned out to be a big disappointment. Employment declined by 4.3k in the previous month while the median estimate among economists was for a 24.5k jobs gain. This has led to a jump in unemployment rate from 3.5 to 3.7% (exp. 3.5%). Moreover, the composition of the employment drop is worrying as it was driven by full-time jobs, which fell 27.1k, while part-time jobs increased by 22.8k.

Report was clearly AUD-negative as it showed weakening of the labor market and could be an important factor for the Reserve Bank of Australia when deciding on rates. Major financial institutions are split in their expectations - some, like for example Goldman Sachs, expect one more 25 bp rate hike from RBA in this cycle while others, like for example Commonwealth Bank of Australia, say that RBA is done with hiking already. Money markets are currently pricing in RBA staying on hold at its next meeting on June 6, 2023.

Australian jobs data released trigger a pullback on AUD market. Taking a look at AUDJPY chart at D1 interval, we can see that the pair managed to climb above 200-session moving average (purple line) and attempted to move above the resistance zone ranging below 91.50 mark. However, today's pullback puts this breakout under question. If we see a daily close below the 200-session moving average, the pair may be set for a correction. However, one should remember that the overall trend is upward with the pair trading in a bullish price channel.​

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EURUSD​

Philadelphia FED Manufacturing Index for May:
Actual: -10.4 Expected: -19.8, Previously: -31.3

Weekly Jobless Claims Data
Actual: 242k, Expected: 255k, Previously: 264k

US Dollar appreciates right after the publication of jobless claims data and the release of the FED Philly Index. EURUSD downward trend indicates growing strengths of the US currency.

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USDJPY​

• Wall Street indices rallied for another day. S&P 500 gained 0.94%, Dow Jones gained 0.34% and Nasdaq surged 1.51%. Russell 2000 added 0.58%​
• US President Biden said that negotiator teams are making a steady progress on debt ceiling​
• Meanwhile, US Vice President Harriss and White House economic adviser Brainard warned that US debt default could trigger a recession​
• Indices from Asia-Pacific traded mixed today - Nikkei and Kospi gained 0.8%, S&P/ASX 200 moved 0.6% higher, Nifty 50 dropped 0.2% and indices from China traded mostly lower​
• European index futures point to a higher opening of the European cash session today​
• DAX futures (DE30) briefly traded above 16,300 pts and painted fresh record highs earlier today​
• G7 leaders will discuss new sanctions on Russian diamond trade as well as on countries that help Russia circumvent sanctions​
• Reuters reports that Chinese state banks have intervened on the market to support falling yuan​
• Japanese CPI inflation accelerated from 3.2 to 3.5% YoY in April (exp. 3.5% YoY). Core CPI inflation (ex-food) accelerated from 3.1 to 3.4% YoY (exp. 3.4%). So-called core-core CPI inflation (ex-food and energy) accelerated from 3.8 to 4.1% YoY (exp. 3.4% YoY)​
• New Zealand's trade balance for April reached NZ$427 million (exp. -NZ$235 million)​
• Cryptocurrencies are trading mixed - Bitcoin drops 0.3%, Dogecoin trades 0.1% lower, Ripple adds 0.4% and Litecoin rallies 1.5%​
• Energy commodities trade mixed - oil gains 0.7-0.8% while US natural gas prices drop 0.6%​
• Precious metals trade higher - gold gains 0.2%, platinum adds 0.3% while silver and palladium gain 0.6% each​
• AUD and JPY are the best performing major currencies while EUR and GBP lag the most​

Japanese yen is one of the best performing G10 currencies today following a beat in CPI data for April. USDJPY is pulling back and looking towards a test of a recently-broken resistance zone at 138.​

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NATGAS​

NATGAS drops 1.5% today but weather forecasts suggest potential for more gains

NATGAS rallied yesterday, supported by:​

• Smaller-than-expected natural gas inventory build reported by EIA. Inventories rose 99 bcf while the market expected 110 bcf increase. Gain, however, was in-line with 5-year average​
• New weather forecast for summer period from NOAA was released and it show potential for a very high temperatures in key states in terms of demand for air conditioning​
• Moreover, some factors that could also trigger upward pressure surfaced recently:​

• Gas output in Canada is dropping hard. Drilling activity in Canada started to decline much earlier than in the United States. This suggests that US output may also drop significantly in coming weeks given recent declines in the number of active gas rigs​
• Comparative inventories are at cyclical highs, what may be seen as a contrarian signal​
• Freeport LNG terminal exports up to 2.3 billion cubic feet of gas per day, reaching new record levels​
• Of course, one should keep in mind that contract rollover will occur next week (currently around +$0.12 per MMBTu). Given current NATGAS prices, it would result in a test of the $2.70 per MMBTu area. Prices jumped around $0.15 per MMBTu following the latest rollover but launched another downward impulse later on. One cannot rule out the situation of sellers returning to the market after the contract rolls over and prices at near-term contract are once again attractive for bears. On the other hand, seasonal patterns suggest that NATGAS may be set to rebound after reaching local low in mid-June.​

Natural gas inventories increase in line with seasonal patterns. Comparative inventories are at extremely high levels (inverted axis), signaling a potential local low on natural gas prices. Nevertheless, prices traded sideways for as much as 6 months after similar situations back in 2017 and 2020.

NATGAS pulls back from the $2.6 per MMBTu area. Range of the largest correction in the current upward impulse suggests a possibility of price dropping to around $2.4 per MMBTu. On the other hand, such a correction may not occur ahead of contract rollover (May 23, 2023). Seasonal patterns suggest a potential for range trading until June 3, followed by small correction and significant gains starting from around June 18 when demand for air conditioning increases due to the beginning of summer period.​

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Economic Calendar​

• European indices set for flat opening​
• ECB and Fed speakers dominate calendar​
• FOMC minutes later into the week​

Futures markets point to a more or less flat opening of the European cash session today. German DE30 is trading near all-time highs reached on Friday while S&P 500 futures (US500) hover near 4,200 pts area. Energy commodities, base metals and precious metals are pulling back. NZD and EUR are the best performing G10 currencies while AUD and CAD lag the most.

Economic calendar for today is very light when it comes to macro data. There won't be any data releases apart from Polish data pack for April. However, a number of speeches from Fed and ECB members is scheduled so EUR and USD may see some volatility. Things get more interesting later into the week with RBNZ decision and flash PMIs for May on Tuesday, FOMC minutes on Wednesday, CBRT rate decision on Thursday and US PCE data on Friday.​

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META.US

The European Union, on behalf of the Irish Data Protection Commission, has imposed a record €1.2bn ($1.3bn) fine on Meta Platforms (META.US), managed by Mark Zuckerberg, for data privacy breaches. The European body also set a categorical ban on sending user data. Within the next five months, the company is to suspend all future transfers of personal data to the US and US security services and six months to stop unlawful processing, including storage, of EU users' personal data.

The decision itself, however, does not directly cover the Instagram and WhatsApp platforms.The move by the control authorities in this case was itself foreseeable, however, in view of the fact that Meta, the US and the European Union have already had disputes in the past on the data line. The current decision and, in particular, the implemented preparatory period for the cessation of data transfer to the US, gives space for the US and the Union to modify their policies regarding the sharing of user data. Discussions on this matter are already underway and are expected to be implemented operationally in the coming months.

Meta Platforms is expected to appeal the fine.

Following the fine, Meta's shares are losing more than 1.2% before the open.​

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EURUSD​

Flash PMI indices for May from France and Germany were released at 8:15 am BST and 8:30 am BST, respectively. Data was expected to show a small improvement in the manufacturing sector as well as deterioration in the services sector.

Indeed, it was the case with French data with manufacturing index climbing in-line with expectations and services index dropping more than expected. However, things looked different in case of German data as manufacturing index there disappointed and dropped instead of improving while services gauge unexpectedly jumped. In both countries manufacturing sector remained below 50 points threshold, indicating a recession, while services sector remain above 50 points threshold, indicating an expansion.

EUR and European indices dropped in a knee-jerk move after the French release, with EURUSD dropping deeper below 1.08 mark. While equity indices managed to recover from those losses later on, they faced another wave of selling following German data. Meanwhile, EUR attempted to recover after German data and moved back towards the 1.08 mark.​

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