The Bastille has resisted: Europe doesn't trade in stability

The American share indexes are consolidated near maxima, and European update historical values. France has made the European choice: Macron became the youngest president with 65,1% result. The EU has raised the divorce price with Great Britain to €100 billion.

There was a breaking of Macron headquarters mail on Friday evening, the documents claiming about the presence of certain offshore accounts have been published, but this information hasn't managed to affect the opinion of the electorate. Madam Le Pen recognized defeat already and has promised to return in 2022. She managed to almost double result of the father which in 2002 has gathered only 17,9% for ultra-right in the second tour with Jacques Chirac. Now, if to be guided by the cost of options, it is possible to assume that current week euro needs only to grow − traders have to go a bull, at least, in the medium term.

Macron's victory almost guarantees modification of European Central Bank tactics at a meeting on June 8 that will lead to partial fixing of carry-transactions for euro. Surely, Draghi will try to slow down turning euroQE until elections in Italy at the beginning of 2018, and only the strong growth of inflation in the EU countries can prevent Mario, and it is improbable taking into account the current prices of oil.

There are no doubts almost that the OPEC agreement will be prolonged: not only Saudi Arabia and rank-and-file members of the cartel, but also Russia agree to it now. Nevertheless, it doesn't guarantee growth of the oil price, and in the long term, the OPEC+ agreement have no special value at all. You shouldn't forget about those who don't take part in agreement − the slate companies of the USA which steadily increase volumes of production and have hedged a considerable share of the deliveries. Standard Chartered notes that the market reacts to increase in oil production in the USA more briskly, than on its reduction by the OPEC countries, therefore, the first process can quite become long-term, and the second – temporary.

The current week the speculative pressure upon the oil prices will remain thanks to statistics of China, reports of EIA and OPEC, regular data on the oil market, as all of them are expected negative.

The situation around North Korea was stabilized, the U.S. Government has received financing till October and nevertheless has adopted the bill of health care reform, and FRS has convinced investors of intention to toughen credit policy. Employment indicators in the USA were a little better than expectations. You shouldn't consider the unexpected decrease in the unemployment rate as very good news, it is rather – neutral. Probably, the great number of the dollar bears who have stopped its growth, was also hooked on it. It is possible that achievement of round levels on key currency pairs will be their purpose.

FRS accompanying announcement was colored in neutral tones, but in general labor market confirms the readiness of the American economy for an increase in a rate next month. Though by the time of the publication of this protocol data on the growth of inflation for April will already appear and fears concerning achievement of FRS inflation goals will be leveled. Response to NFP couldn't be considered adequate − the attention of the market is connected to elections in France. The dollar will remain further under pressure if FRS members comments in respect to June toughening seem to the market reserved.

Restrictions of the EU on activities of London as a clearing operations market on financial transactions with the assets nominated in euro can become the main problem of Britain. After Brexit, such financial institutions as the London clearing chamber LCH (about 75% of all volume of transactions in euro) will be out of the legislative system of the EU.

It will be a serious blow to the status of the international financial center, and at the most difficult moment. The clearing companies located in London City will be forced either to leave Britain and to transfer the operations to continental Europe or to pass under the jurisdiction of the European regulatory authorities, having agreed to control and supervision from the EU. A transfer of such operations out of Britain borders will lead to a loss by London up to 83 thousand jobs within the next 7 years.

Carney repeatedly declared guarantees that «the appropriate share» of clearing operations with euro will still be carried out in London, nevertheless, an active transfer of large banks working platforms out of Britain borders proceeds.

Fundamental data on Great Britain remain steady. The forthcoming publication of trade balance should be considered only in the context of BOE rhetoric. The forthcoming meeting, most likely, will leave policy without changes, and the updated forecasts of the regulator for rates of economic growth and inflation can be decisive for pound. By the way, the Prime minister May will be forbidden to participate in discussions of leaders of the European Union concerning Brexit, and the final sum of a penalty for an exit will be determined only at the end of negotiations. Conservatives still consider that the most stringent scenario of an exit won't be made.

It is considered that the main stresses of the current year are passed, however, the mood of investors can sharply change for other reasons. The decrease in the raw markets doesn't cause optimism any more, and the summer «thin» market allows speculators to play by the rules against fundamental factors. Discussion of Trump`s protectionism, risks of renewal of trade agreements, the prospects of a boundary tax in the USA, monetary and currency policy will be the main subjects of Ministers of Finance and heads of the Central Bank of the G7 and G20 countries summits on May 11-13. There is a coordination of formats of the further relations with the USA with the achievement of the final wordings at the summits of the G7 on May 26 and the G20 on July 7.

The inflation of the consumer's prices and retails of the USA will be the current week main data, to Europe it is necessary to monitor final reading on the growth of inflation in April in Germany and GDP growth in Germany in 1 quarter. China will please the markets with the publication of trade balance on Monday, data on inflation will be released on Wednesday. Positive data will add optimism and can lead to a turn the raw market up.

Technical Analysis EUR/USD

EUR/USD forex

Technical Analysis USD/JPY

USD/JPY forex

Author: Navsher Bartash,
ForexChief Currency strategist