The weakness in the US dollar has continued through June as several key economic indicators hint at a cooling US data docket as we approach the end of the second quarter.
The Dollar Index, a measure of the value of the US dollar against a basket of major currencies, sunk to seven-month lows at 96.53 sparked by a sluggish May US non-farm payroll report.
May’s payroll data was abysmal to say the least. Only 138,000 new jobs were added, well below the expectations of 185,000. April’s figure was revised downwards to 174,000 from a previous reported 211,000. The unemployment rate ticked lower to 4.3 per cent, the lowest level since May 2001, however, this was amid a shrinking labour force, which showed the overall participation rate contracted to 62.7 per cent versus a previous reading of 62.9 per cent. After the report, the dollar sank further and broke below our initial support levels of 97, where it is now consolidating.
The payroll report was preceded by a second-round US GDP reading, which showed first-quarter growth at 1.2 per cent (up from an initial reading of 0.7 per cent, but well below the fourth-quarter reading of 2.1 per cent) while second-round consumer spending readings during the first quarter improved to 0.6 per cent, up from a previous initial reading of 0.3 per cent.
Despite the slew of weaker than expected US figures, markets are now pricing in a 95.8 per cent chance the Federal Open Market Committee (FOMC) will conduct its second round of hikes at their next rate decision taking place on June 13/14.
While we expect the dollar to hold at current levels above 96.5, we expect our initial upside resistance at 97.9 to hold up through the FOMC meeting next week. While volatility will be at a premium towards the end of next week in US asset classes, we can expect marginal strength in the dollar following the rate confirmation, but it would not be enough to trigger a fresh buying rally in the green back. The theme of improving US data will continue to lend support into dollar-denominated assets, but it will be the awaited implementation of the US president Donald Trump’s tax plan that would spark a fresh dollar rally.
However, this week, all market focus will turn to Thursday, which sees the European Central Bank rate decision meeting and, across the channel, the British elections. Both will be high-risk events that will shift sentiment and establish trends in the euro and the British pound through the summer months. If we start with the former, the ECB president Mario Draghi has had the luxury of an improving euro-zone data docket, which has seen hawkish sentiment rise and this has taken the Dubai Gold & Commodities Exchange (DGCX) euro-US$ contract to seven-month highs at 1.1293.
It has not been all smooth sailing for euro bulls however as Mr Draghi in comments to European policy makers on May 30 stated that “overall, we remain firmly convinced that an extraordinary amount of monetary support is still necessary”. The comments caught the markets by surprise and saw the DGCX euro contract touch our initial support level 1.106 from which it bounced back to move to those seven-month highs.
While we do not expect to see any shift in European rates, nor modifications to the existing European quantitative easing programme tomorrow, Mr Draghi’s outlook and comments will be closely scrutinised. Expect heightened levels of volatility in euro crosses, and it would prove prudent for the announcement to pass before building euro positions. Expect to see euro-US$ to find initial support at 1.1195 and first resistance at 1.136 through the week ahead.
And finally, Britain heads to the polls this Thursday. The British pound has been volatile in the lead up to the election, ranging between 1.28 and 1.295 on DGCX. Recent polls have shown a deteriorating Conservative Party lead, which has shaken pound bulls in the lead up to the election. The prime minister Theresa May’s inability to garner a majority would be viewed as a major roadblock in the upcoming Brexit negotiations and, with the most recent polls indicating that her lead has shrunk significantly over the rival Labour Party going into the election, expect the uncertainty and risk off mood to continue to pressure the pound. If Mrs May’s Conservatives fail to garner a 330 majority in parliament, £-US$ could well make a strong downside test in the channel between 1.275 to 1.28, a breach of which would expose 1.25 in the weeks ahead. A majority Conservative government would see optimism return to the pound, which would see £-US$ re-test 1.3050 levels.
Considering these two high-risk events, perhaps the most conservative strategy through the summer months would be building long positions in euro-£ between 0.865 and 0.87 with upward targets towards 0.88 followed by 0.9 levels.
Gaurav Kashyap is a market strategist at EGM Futures.
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COMPANY%20PROFILE
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Other IPL batting records
Most sixes: 292 – Chris Gayle
Most fours: 491 – Gautam Gambhir
Highest individual score: 175 not out – Chris Gayle (for Royal Challengers Bangalore against Pune Warriors in 2013)
Highest strike-rate: 177.29 – Andre Russell
Highest strike-rate in an innings: 422.22 – Chris Morris (for Delhi Daredevils against Rising Pune Supergiant in 2017)
Highest average: 52.16 – Vijay Shankar
Most centuries: 6 – Chris Gayle
Most fifties: 36 – Gautam Gambhir
Fastest hundred (balls faced): 30 – Chris Gayle (for Royal Challengers Bangalore against Pune Warriors in 2013)
Fastest fifty (balls faced): 14 – Lokesh Rahul (for Kings XI Punjab against Delhi Daredevils in 2018)
JERSEY INFO
Red Jersey
General Classification: worn daily, starting from Stage 2, by the leader of the General Classification by time.
Green Jersey
Points Classification: worn daily, starting from Stage 2, by the fastest sprinter, who has obtained the best positions in each stage and intermediate sprints.
White Jersey
Young Rider Classification: worn daily, starting from Stage 2, by the best young rider born after January 1, 1995 in the overall classification by time (U25).
Black Jersey
Intermediate Sprint Classification: worn daily, starting from Stage 2, by the rider who has gained the most Intermediate Sprint Points.
if you go
The flights
Etihad, Emirates and Singapore Airlines fly direct from the UAE to Singapore from Dh2,265 return including taxes. The flight takes about 7 hours.
The hotel
Rooms at the M Social Singapore cost from SG $179 (Dh488) per night including taxes.
The tour
Makan Makan Walking group tours costs from SG $90 (Dh245) per person for about three hours. Tailor-made tours can be arranged. For details go to www.woknstroll.com.sg
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Company%20Profile
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Three-day coronation
Royal purification
The entire coronation ceremony extends over three days from May 4-6, but Saturday is the one to watch. At the time of 10:09am the royal purification ceremony begins. Wearing a white robe, the king will enter a pavilion at the Grand Palace, where he will be doused in sacred water from five rivers and four ponds in Thailand. In the distant past water was collected from specific rivers in India, reflecting the influential blend of Hindu and Buddhist cosmology on the coronation. Hindu Brahmins and the country's most senior Buddhist monks will be present. Coronation practices can be traced back thousands of years to ancient India.
The crown
Not long after royal purification rites, the king proceeds to the Baisal Daksin Throne Hall where he receives sacred water from eight directions. Symbolically that means he has received legitimacy from all directions of the kingdom. He ascends the Bhadrapitha Throne, where in regal robes he sits under a Nine-Tiered Umbrella of State. Brahmins will hand the monarch the royal regalia, including a wooden sceptre inlaid with gold, a precious stone-encrusted sword believed to have been found in a lake in northern Cambodia, slippers, and a whisk made from yak's hair.
The Great Crown of Victory is the centrepiece. Tiered, gold and weighing 7.3 kilograms, it has a diamond from India at the top. Vajiralongkorn will personally place the crown on his own head and then issues his first royal command.
The audience
On Saturday afternoon, the newly-crowned king is set to grant a "grand audience" to members of the royal family, the privy council, the cabinet and senior officials. Two hours later the king will visit the Temple of the Emerald Buddha, the most sacred space in Thailand, which on normal days is thronged with tourists. He then symbolically moves into the Royal Residence.
The procession
The main element of Sunday's ceremonies, streets across Bangkok's historic heart have been blocked off in preparation for this moment. The king will sit on a royal palanquin carried by soldiers dressed in colourful traditional garb. A 21-gun salute will start the procession. Some 200,000 people are expected to line the seven-kilometre route around the city.
Meet the people
On the last day of the ceremony Rama X will appear on the balcony of Suddhaisavarya Prasad Hall in the Grand Palace at 4:30pm "to receive the good wishes of the people". An hour later, diplomats will be given an audience at the Grand Palace. This is the only time during the ceremony that representatives of foreign governments will greet the king.
Our legal advisor
Ahmad El Sayed is Senior Associate at Charles Russell Speechlys, a law firm headquartered in London with offices in the UK, Europe, the Middle East and Hong Kong.
Experience: Commercial litigator who has assisted clients with overseas judgments before UAE courts. His specialties are cases related to banking, real estate, shareholder disputes, company liquidations and criminal matters as well as employment related litigation.
Education: Sagesse University, Beirut, Lebanon, in 2005.
You Were Never Really Here
Director: Lynne Ramsay
Starring: Joaquim Phoenix, Ekaterina Samsonov
Four stars
The Bio
Hometown: Bogota, Colombia
Favourite place to relax in UAE: the desert around Al Mleiha in Sharjah or the eastern mangroves in Abu Dhabi
The one book everyone should read: 100 Years of Solitude by Gabriel Garcia Marquez. It will make your mind fly
Favourite documentary: Chasing Coral by Jeff Orlowski. It's a good reality check about one of the most valued ecosystems for humanity
The%20specs
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COMPANY%20PROFILE
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Company Profile
Name: Thndr
Started: 2019
Co-founders: Ahmad Hammouda and Seif Amr
Sector: FinTech
Headquarters: Egypt
UAE base: Hub71, Abu Dhabi
Current number of staff: More than 150
Funds raised: $22 million
Company%20Profile
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2018 ICC World Twenty20 Asian Western Regional Qualifier
The top three teams progress to the Asia Qualifier
Final: UAE beat Qatar by nine wickets
Third-place play-off: Kuwait beat Saudi Arabia by five runs
Table
1 UAE 5 5 0 10
2 Qatar 5 4 1 8
3 Saudi 5 3 2 6
4 Kuwait 5 2 3 4
5 Bahrain 5 1 4 2
6 Maldives 5 0 5 0
RESULTS
6.30pm: Handicap (rated 100 ) US$175,000 1,200m
Winner: Baccarat, William Buick (jockey), Charlie Appleby (trainer)
7.05pm: Handicap (78-94) $60,000 1,800m
Winner: Baroot, Christophe Soumillon, Mike de Kock
7.40pm: Firebreak Stakes Group 3 $200,000 1,600m
Winner: Heavy Metal, Mickael Barzalona, Salem bin Ghadayer
8.15pm: Handicap (95-108) $125,000 1,200m
Winner: Yalta, Mickael Barzalona, Salem bin Ghadayer
8.50pm: Balanchine Group 2 $200,000 1,800m
Winner: Promising Run, Pat Cosgrave, Saeed bin Suroor
9.25pm: Handicap (95-105) $125,000 1,800m
Winner: Blair House, James Doyle, Charlie Appleby
10pm: Handicap (95-105) $125,000 1,400m
Winner: Oh This Is Us, Tom Marquand, Richard Hannon
Israel Palestine on Swedish TV 1958-1989
Director: Goran Hugo Olsson
Rating: 5/5
The specs
Engine: 3.0-litre 6-cyl turbo
Power: 435hp at 5,900rpm
Torque: 520Nm at 1,800-5,500rpm
Transmission: 9-speed auto
Price: from Dh498,542
On sale: now
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
Real Madrid 1
Ronaldo (87')
Athletic Bilbao 1
Williams (14')