Japan Stocks Skyrocket to 33-Year High; Commodity Currencies Display Strength

Forex

Summary:

In a remarkable rally during Asian session, Japanese stocks surged sharply, with Nikkei index smashing through the 32k mark, reaching a high not seen in 33 years.

In a remarkable rally during Asian session, Japanese stocks surged sharply, with Nikkei index smashing through the 32k mark, reaching a high not seen in 33 years. This surge followed the bullish trend seen in U.S. markets last week, further buoyed by robust services data emanating from Japan and China. However, it's important to note that outside Japan, stock markets are experiencing a more sluggish performance.

Turning our attention to the currency markets, commodity currencies are exhibiting notable strength, with U.S. Dollar performing well, albeit lagging slightly behind Australian Dollar and New Zealand Dollar. Both Australian Dollar and Canadian Dollar are looking forward to potential hawkish holds by their respective central banks – RBA and BoC – later in the week.

Interestingly, Dollar continues to show a decoupling from risk sentiment, displaying strength even as risk appetite seems to be strongly on the "on"side. European currencies, along with Japanese Yen, are generally underperforming.

The week ahead promises to be exciting, with crucial monetary policy decisions from RBA and BoC that could influence the path of commodity currencies and, by extension, global currency dynamics.

Technically, EUR/AUD would be a focus in the next 24-hours with RBA a feature. Based on current downside momentum, fall from 1.6513 is possibly resuming whole decline from 1.6785. Deeper fall is in favor as long as 1.6296 minor resistance holds. Break of 1.6134 will confirm this bearish case and target 100% projection of 1.6785 to 1.6134 from 1.6513 at 1.5862. Japan Stocks Skyrocket to 33-Year High; Commodity Currencies Display Strength_1

Japan Stocks Skyrocket to 33-Year High; Commodity Currencies Display Strength_1

In Asia, Nikkei closed up 2.12% at 32192.32. Hong Kong HSI is up 0.33%. China Shanghai SSE is down -0.04%. Singapore Strait Times is up 0.63%. Japan 10-year JGB yield is up 0.0175 at 0.433.

Oil prices surge as Saudi Arabia pledges additional production cut

Oil prices shot up in response to an announcement from Saudi Arabia, the world's leading exporter, to slash production by an additional 1 million barrels per day starting in July. This voluntary reduction from the Saudis comes on the heels of an agreement by OPEC and their allies, including Russia, to curtail supply into 2024.

Collectively referred to as OPEC+, this group accounts for approximately 40% of the world's crude oil production. The group currently has cuts of 3.66 million barrels per day in place, which translates to about 3.6% of global demand.

The latest move by Saudi Arabia may take many by surprise, given that the most recent adjustments to quotas were implemented just a month ago. Consequently, the oil market is poised to tighten even further in the second half of 2023.\

Technically speaking, however, WTI crude oil is just extending near term range trading. It's currently struggling to break through 55 D EMA decisively. Rejection by 55 D EMA would set the stage for another fall through 64.19 low to resume the medium term down trend sooner rather than later. Even though sustained break of 55 D EMA could bring stronger rebound, 83.46 will still represent a significant medium term resistance to overcome. Japan Stocks Skyrocket to 33-Year High; Commodity Currencies Display Strength_3

Japan Stocks Skyrocket to 33-Year High; Commodity Currencies Display Strength_3

Japan PMI services finalized at record 55.9, overall growth accelerated in Q2

Japan PMI Services was finalized at 55.9 in May, up from April's 55.4, setting another fresh series record. PMI Composite was finalized at 54.3, up from April's 52.9, the second strongest reading since record began in 2007, after October 2013.

Usamah Bhatti, Economist at S&P Global Market Intelligence, said: "The record expansion in activity among service providers, coupled with a renewed increase in manufacturing production contributed to a stronger increase in overall private sector activity.

"The rate of expansion was solid and the second-strongest in the history of the series (behind October 2013). The upturn was led by the dominant services sector, although there was a renewed sense of optimism for private sector activity given the expansions in manufacturing output and new orders.

"Latest data also provides the indication economic growth has accelerated in the second quarter of the year, following the 1.3% year-on- year increase in growth in the first quarter of 2023, according to the latest official statistics."

China Caixi PMI services rose to 57.1, overall economy lacks internal drive

China Caixin PMI Services rose from 56.4 to 57.1 in May, above expectation of 55.2. The rate of expansion was the second-steepest seen over the past two-and-a-half years. PMI Composite rose from 53.6 to 55.6, highest since end of 2020.

Wang Zhe, Senior Economist at Caixin Insight Group said: "In general, it remains a prominent feature of the Chinese economy that the services sector is stronger than manufacturing. In May, the Caixin China services PMI showed that services activity was picking up overall, but employment expansion and market optimism weakened. In the manufacturing sector, employment deteriorated, prices plunged, and manufacturers also became less optimistic toward the outlook, according to the Caixin China manufacturing PMI.

"This divergence highlights that economic growth is lacking internal drive and market entities lack sufficient confidence, underscoring the importance of expanding and restoring demand. Currently, stabilizing employment, increasing income and bolstering expectations through proactive fiscal policy should be prioritized given a dire job market and mounting deflationary pressure.

RBA and BoC interest rate decisions in Focus

RBA and BoC are set to announce their interest rates decisions this week, with both banks expected to maintain the status quo at 3.85% and 4.50% respectively.

BoC's decision to pause started in March and June meeting will be the third consecutive time the central bank has chosen to stand pat. However, expectations of a BoC rate hike are mounting in the wake of recent data showing robust GDP growth and persistent inflation. While June seems too early for the central bank to make a move, any hawkish undertones in the statement indicating openness for action in Q3 could buoy Canadian dollar.

As for RBA, markets are pricing in around 1/3 chance of a hike this week. So a hold is the more likely outcome even though the central bank has recent history of surprising the markets. The perception is that current interest rate level is not restrictive enough to bring down inflation to target within a reasonable timeframe. Therefore, further tightening is expected in the future. If RBA aims to set market expectations for a quarter-point hike per quarter, the next move will likely be in August.

On the data front, Eurozone Sentix investor confidence; Australia GDP, China Caixin PMI services CPI and PPI, as well as Canada employment are worth watching too.

Here are some highlights for the week:

· Monday: Australia MI inflation gauge; China Caixin PMI Services; Germany trade balance; Swiss CPI; Eurozone PMI services final, Sentix investor confidence, PPI; U.S. ISM services, factory orders.

· Tuesday: Japan average cash earnings, household spending,; RBA rate decision; Germany factor orders, UK PMI construction, Eurozone retail sales; Canada building permits, Ivey PMI.

· Wednesday: Australia GDP; China trade balance; Swiss unemployment rate, foreign currency reserves; German industrial production; Italy retail sales; Canada trade balance, BoC rate decision; U.S. trade balance.

· Thursday: Japan GDP final, current account; Australia trade balance; Eurozone GDP revision; U.S. jobless claims.

· Friday: China CPI, PPI; Italy industrial production; Canada employment.

USD/JPY Daily Outlook

Intraday bias in USD/JPY stays neutral as consolidation from 140.90 is extending. Further rally is expected as long as 138.22 minor support holds. On the upside, break of 140.90 will resume larger rise from 127.20 to 142.48 fibonacci level. However, considering bearish divergence condition in 4 hour MACD, break of 138.22 will confirm short term topping, and turn bias back to the downside for 55 D EMA (now at 136.27). Japan Stocks Skyrocket to 33-Year High; Commodity Currencies Display Strength_5

Japan Stocks Skyrocket to 33-Year High; Commodity Currencies Display Strength_5

In the bigger picture, rise from 127.20 is seen as the second leg of the corrective pattern from 151.93 high. Stronger rally would be seen to 61.8% retracement of 151.93 to 127.20 at 136.34. Sustained break there will pave the way back to retest 151.93. On the downside, however, break of 133.73 support will argue that the pattern could have started the third leg through 127.20 low.

Source: ActionForex.com

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Alex

Forex

A strong U.S. economy is giving an unexpected boost to the dollar, frustrating bearish investors betting on its decline.

The dollar is up 2.5% from its recent low against a basket of currencies and stands near its highest level since March.

The nascent rally has defied expectations for the currency to resume a decline from last year's multi-decade highs: Net futures bets against the dollar stood at $12.34 billion in the week to May 30 after hitting a two-year low earlier in the month, according to data from the Commodity Futures Trading Commission. Fund managers in the latest BofA Global Research survey named shorting the dollar as the market's third "most crowded" trade.

Dollar Bears Bide Their Time as U.S. Economic Strength Persists_1

The dollar is "in a very messy transition from bull market to a bear market," said Aaron Hurd, senior portfolio manager, currency, at State Street Global Advisors. "That transition period is going to be fairly frustrating."

Hurd expects the dollar to remain buoyant over the very short term, but decline steadily over the next few years.

Bears argue that the dollar has plenty of room to fall, as the currency remains some 15% above its post-pandemic low and the Federal Reserve is widely expected to soon end the interest rate increases that have helped support the greenback.

But the bears' view has been stymied by a run of strong U.S. data that suggests the economy remains resilient despite the barrage of Fed hikes aimed at slowing growth and containing inflation. Most investors believe the dollar will likely remain elevated until U.S. data turns decidedly weaker, allowing the Fed to cut rates.

The latest evidence of the economy's strength came Friday, when the U.S. reported greater-than-expected employment gains for May. Other recent data points, including consumer spending and new home sales, have also weighed against the view that the Fed will cut rates anytime soon.

Traders on Friday were betting that the fed funds rate - which currently stands between 5% and 5.25% - would finish 2023 at 4.988%, compared with expectations in early May to end the year at 4.188%. Higher rates tend to boost the dollar's appeal.

"The dollar strength is entirely related to the fact that U.S. data is actually pretty good," said Alvise Marino, a strategist at Credit Suisse.

Credit Suisse strategists recently bet on the dollar's gaining against the euro, according to a note. The greenback rose about 3% against the euro in May.

Dollar Bears Bide Their Time as U.S. Economic Strength Persists_2

A stronger dollar can be a headwind for risk assets as it helps tighten credit conditions while weighing on the profits of U.S. exporters and multinationals.

Another potentially complicating factor for dollar bears is a flood of U.S. government bond issuance expected in the remainder of the year, with the U.S. Treasury expected to begin refilling its coffers now that the debt limit has been raised.

One view holds that such a large amount of Treasuries will drain liquidity from the market, potentially creating demand for dollars, said Bipan Rai, North America head of FX strategy at CIBC.

Still, many believe it's only a matter of time until the dollar resumes a downtrend that saw it lose as much as 11.5% from its September highs.

UBS Global Wealth Management ranks the dollar as its "least preferred" currency, saying the Fed is likely to cut rates late this year or early in 2024, reducing its yield advantage over the euro and other currencies.

Dollar Bears Bide Their Time as U.S. Economic Strength Persists_3

Federal Reserve officials indicated last week that the central bank was likely to skip an interest rate hike at its upcoming meeting, on June 13-14, while leaving the door open to a future rise in borrowing costs. In Europe, European Central Bank (ECB) President Christine Lagarde said further policy tightening was necessary, a trend that would undermine the dollar's yield advantage.

"Once the Fed stops hiking, the market will focus more intently on the timing of the first rate cut and that is likely to undermine the dollar," said Brian Rose, senior economist at UBS Global Wealth Management.

Rai, of CIBC, believes the dollar's lingering strength will give way to weakness as it becomes clearer later this year that the Fed will hold off from further rate hikes while the ECB may have more work to do.

"From a macro sense, I still believe the dollar needs to decline," he said. "But that story might need to wait until the second half of this year."

Source: Devdiscourse

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Thomas

Russia-Ukraine Conflict

Russia said on Monday its forces had thwarted a major Ukrainian offensive at five points along the front in the southern Ukrainian region of Donetsk and killed hundreds of pro-Kyiv troops.

It was not immediately clear whether or not the reported attack represented the start of a Ukrainian counteroffensive which Kyiv has been promising for months to recapture territory taken by Russian forces after the invasion of February 2022.

Russia's defence ministry said Ukraine had attacked with six mechanised and two tank battalions in southern Donetsk, where Moscow has long suspected Ukraine would seek to drive a wedge through Russian-controlled territory.

"On the morning of June 4, the enemy launched a large-scale offensive in five sectors of the front in the South Donetsk direction," the defence ministry said in a statement posted on Telegram at 1:30 a.m. Moscow time (2230 GMT).

"The enemy's goal was to break through our defences in the most vulnerable, in its opinion, sector of the front," it said. "The enemy did not achieve its tasks, it had no success."

Reuters was unable to immediately verify the Russian statement and the Ukrainian defence ministry and military did not immediately respond to written requests for comment.

The daily report from Ukraine's General Staff said only that there were 29 combat clashes in the Donetsk and Luhansk regions.

Ukrainian Defence Minister Oleksii Reznikov published a cryptic message on Twitter on Sunday, quoting Depeche Mode's track "Enjoy the Silence".

"Words are very unnecessary They can only do harm," his tweet said.

Ukraine last week published a flashy video depicting troops preparing for battle and reciting a rousing blessing, which was later aired as a recruiting clip.

Russia's defence ministry released video of what it said showed several Ukrainian armoured vehicles in a field blowing up after being hit.

Russian forces killed 250 Ukrainian troops as well as destroying 16 tanks, three infantry fighting vehicles and 21 armoured combat vehicles, the ministry said.

Russian Chief of the General Staff Valery Gerasimov, who is in charge of Moscow's military operation in Ukraine, was in the area of the Ukrainian attack, the ministry said.

Some prominent Russian military bloggers, including Semyon Pegov, who blogs under the name War Gonzo, reported heavy fighting early on Monday in areas controlled by Russia. Pegov said that Ukrainian forces are attacking near Velyka Novosilka in the Donetsk region.

"There is a tough fight going on."

Other Russian military bloggers reported also heavy fighting on Monday morning near Bakhmut, nearby Soledar and Vuhledar in the Donetsk region. Reuters could not independently verify the reports.

Counter-offensive?

For months, Ukraine has been preparing for a counter-offensive against Russian forces which officials in Kyiv and CIA Director William Burns have said will pierce Russian President Vladimir Putin's hubris.

Ukrainian President Volodymyr Zelenskiy told the Wall Street Journal in an interview published on Saturday that he was ready to launch the counteroffensive but tempered a forecast of success with a warning that it could take some time and come at a heavy cost.

"I don't know how long it will take," he told The Journal. "To be honest, it can go a variety of ways, completely different. But we are going to do it, and we are ready."

After seeking tens of billions of dollars of Western weapons to fight Russian forces, the success or failure of the counter-offensive is likely to influence the shape of future Western diplomatic and military support for Ukraine.

Ukraine has in recent weeks sought to weaken Russian positions but its specific plans have been shrouded in secrecy as it seeks to strike yet another blow against the much larger military of Russia.

Moscow was last month struck by drones which Russia said was a Ukrainian terrorist attack while pro-Ukrainian forces have repeatedly crossed into Russia proper in recent days in the Belgorod region.

After a two-month lull, Russia has launched hundreds of drones and missiles on Ukraine since early May, chiefly on Kyiv, with Ukraine saying the targets were its military and critical infrastructure facilities.

War In Ukraine

Putin sent troops into Ukraine on February 24 last year in what the Kremlin expected to be swift operation but its forces suffered a series of defeats and had to move back and regroup in swathes of eastern Ukraine.

Russia now controls at least 18% of what is internationally recognised to be Ukrainian territory, and has claimed four regions of Ukraine as Russian territory.

For months, tens of thousands of Russian troops have been digging in along a front line which stretches for around 600 miles (1,000km), bracing for a Ukrainian attack which is expected to try to cut Russia's so-called land bridge to the Crimean peninsula, which Russia annexed in 2014.

Ukraine says it will not rest until it has ejected every last Russian soldier from its territory, and casts the invasion as an imperial-style land grab by Russia, the world's biggest nuclear power.

Russia says the war is escalating and says the West is fighting what amounts to a hybrid war against Russia which is aimed at sowing discord and ultimately carving up Russia's vast natural resources.

The West says it wants Ukraine to defeat Russia but denies that it wants to destroy Russia. U.S. President Joe Biden said last year that a direct confrontation between NATO and Russia would mean World War Three.

Source: Reuters

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Devin

Forex

While U.S. markets finished the week on a high, after another bumper jobs report and a positive week across the board, markets in Europe, while finishing the week on a high, struggled to match the exuberance of investors on the other side of the Atlantic.

The Nasdaq 100 once again led the way, finishing higher for the sixth week in a row, while the S&P500 closed at its highest levels since August last year. European markets on the other hand, while finishing the week strongly higher, had a more mixed weekly performance.

The reason was a jobs report that painted a picture of a resilient U.S. economy that continues to add jobs at a solid pace, as for the 14th month in a row the number of jobs added comfortably beat economic forecasts. 339k new jobs were added in May, with a 92k upward revision to the previous 2 months, although the unemployment rate ticked up to 3.7%, a number that wasn't matched by an uptick in the participation rate. Wage growth slowed modestly to 4.3% but not by enough to suggest that the labour market is loosening. Every labour market data item the market was exposed to last week showed that U.S. businesses are still hiring, and vacancy rates are showing little sign of slowing.

This in turn presents the Federal Reserve with a problem, having so clearly suggested they might pause or skip a rate hike at this month's meeting, a lot of the economic data suggests that rate hikes thus far have had little effect. U.S. 2-year yields reacted accordingly, closing almost 16bps higher on the day, even though they still finished the week lower.

With the latest U.S. inflation numbers due out the day before next week's Fed meeting, U.S. policymakers will have a challenging job to spin the idea of holding rates while at the same time keeping the option open for a July rate move. It may well be easier to hike in June and leave one's options open for July. The messaging would undoubtedly be simpler, however the splits on the FOMC are already showing and there are differences of opinion starting to emerge on what comes next.

2-year rates did finish last week down from their peaks of the previous week, however the way they closed off their lows suggest that bond markets remain unconvinced that they will come down quicker than the rate at which they have risen over the past few weeks.

The U.S. dollar also finished the day higher on Friday in anticipation that rates would stay higher for longer, albeit modestly lower on the week.

What was clear from last week's economic data was the dire state of the manufacturing sector globally, stuck permanently in contraction with little prospect of a rebound in the short term.

The services sector on the other hand has been much more buoyant, a fact that should be borne out by today's services PMIs from Spain, Italy, France Germany, the UK and U.S., and which are expected to show resilience to the tune of 57, 57, 52.8, 57.8, 55.1 and 55.1 respectively, all performing strongly despite higher costs, although all are expected to be weaker than their April numbers.

If anything, Friday's jobs report had something for the bulls and the bears, and while European markets underperformed last week, there is a feeling that central banks are quite close to the end game when it comes to rate hikes, and that while rates shot up at the end of last week, they are holding below their recent peaks.

Inflation does appear to be coming down on the headline level, as are producer prices at a faster rate and these tend to be leading indicators, even with core prices being sticky. That would suggest that core prices will come down, albeit at a much slower rate than originally thought.

Today's EU PPI numbers for April ought to add further insight into that trend, with an expectation that on a month-on-month basis we could see the -1.6% decline in March accelerate in April to a -3.1% fall.

With China PPI also in negative territory to the tune of -3.6% year on year for the same month, the global economy could be about to undergo a wider wave of disinflation.

The wider question is whether the Saudi's attempts to underpin the oil price with further production cuts, which were announced over the weekend, make the current situation worse and push Brent crude prices back above $80 a barrel at a time when consumer sentiment remains incredibly fragile.

More question marks remain over the Chinese economy after whispers last week that the authorities there were looking at measures to support its property market, which saw a rebound in metals prices.

EUR/USD – the failure at the 1.0780 area has seen the euro slip back, with support back at the recent lows at 1.0635. We need to see a break of this range with broader resistance at the 1.0820/30 level.

GBP/USD – slipped back from the 1.2540 area last week, but remains in a broader uptrend with support at the 1.2300 area and trend line resistance from the 2021 highs at 1.2630. This, along with the May highs at 1.2680 is a key barrier for a move towards the 1.3000 area.

EUR/GBP – found support at the 0.8560 level last week, just above the December 2022 lows at 0.8558. A break of 0.8550 targets 0.8480. The 0.8620 area now becomes resistance with major resistance behind that at the 0.8720 area.

USD/JPY – last week's decline from the 140.95 area found support at the 138.40 area, and rallied back to the 140.00 level. While above the 137.00 area the risk remains for a move towards 142.50.

Source: CMC

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Warren Takunda

Cryptocurrency

Traders' Opinions

In a shocking turn of events, a group of Dogecoin investors has filed a lawsuit against renowned entrepreneur Elon Musk, alleging insider trading and market manipulation of the popular cryptocurrency, Dogecoin (DOGE). The investors claim that Musk, through a series of calculated actions, leveraged his influence to artificially boost the price of DOGE for personal gain.

According to the lawsuit, Musk utilized various means to manipulate DOGE's price, including his active presence on Twitter, his appearance on Saturday Night Live (SNL), and other attention-grabbing publicity stunts. The investors assert that Musk strategically utilized his vast online following to promote DOGE, thereby inflating its value, only to sell off significant amounts of the cryptocurrency for substantial profits.

The allegations point to an incident in April when Musk changed his Twitter profile picture to DOGE's logo. This seemingly innocuous act allegedly caused a significant surge in DOGE's price, leading to a 30% increase. The investors claim that during this price spike, Musk offloaded approximately $124 million worth of DOGE from wallets under his control or those of Tesla, the electric vehicle company he heads.

Moreover, the lawsuit argues that Dogecoin should be considered a security under the regulatory framework established by the U.S. Securities and Exchange Commission (SEC). By promoting and manipulating DOGE's value, Musk is accused of violating federal securities laws, which could have far-reaching consequences for both the entrepreneur and the cryptocurrency market as a whole.

In response to the allegations, Musk and Tesla have vehemently denied any wrongdoing, dismissing the lawsuit as a "fanciful work of fiction." They maintain that Musk's involvement with DOGE has been lighthearted and intended for entertainment purposes rather than financial gain.

This legal battle between Dogecoin investors and Elon Musk has drawn significant attention, underscoring the growing need for regulatory clarity in the cryptocurrency space. The outcome of this case may set important precedents regarding the responsibilities and limitations of influential figures in shaping the value of digital assets.

While the lawsuit continues to unfold, the allegations against Elon Musk serve as a reminder that even in the world of decentralized cryptocurrencies, accountability and transparency remain essential for investor confidence and the overall stability of the market.

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Owen Li

Commodity

Chicago-traded soybean futures last week closed below $13 per bushel for the first time in a year-and-a-half, though speculators are still hanging on to the net long position they have maintained since April 2020.

Meanwhile, an unusually dry end to May across the U.S. Corn Belt and the possible continuation of that pattern into mid-June sparked funds' biggest weekly round of short covering in CBOT corn in nearly three years.

Most-active CBOT soybean futures tumbled 2% in the week ended May 30, seemingly cementing funds into bearish territory. May 30 featured most-active beans' first settle below $13 per bushel since December 2021, and November soybeans lost nearly 3% during the four-day trading week.

As of May 30, money managers' net long in CBOT soybeans stood at just 529 futures and options contracts versus 4,147 the week before. Exiting longs were more prominent, but funds also covered soybean shorts, the first such instance in eight weeks.

Funds Cling to CBOT Soybean Long and Heavily Cover Corn Shorts_1

Most-active CBOT corn futures rose nearly 3% and new-crop December futures gained 1.6% in the week ended May 30, motivated by unfavorable U.S. weather. Money managers slashed their net corn short by nearly 47,000 contracts to 51,065 futures and options contracts.

That was entirely on short covering, the largest such round since August 2020, though speculators started padding their short positions only in late February.

Funds Cling to CBOT Soybean Long and Heavily Cover Corn Shorts_2

Both soybean meal and soybean oil futures shed more than 3% in the week ended May 30, though funds were notable sellers only in meal. Money managers cut their net long in CBOT soybean meal futures and options to 59,676 contracts, the lightest in a year. That compares with 73,789 a week earlier.

Soybean oil had been gaining throughout that week but plunged on May 30 along with other global vegoils and crude oil on broad economic concerns.

Money managers expanded their net short in CBOT soybean oil futures and options by 572 contracts to 37,449 as of May 30, their most bearish oil view since July 2019. They have been net sellers of the vegoil in 22 of the last 28 weeks.

Most-active CBOT wheat futures fell 5% in the week ended May 30, finishing it off with the first settle below $6 per bushel since December 2020. Money managers extended their net short to 126,998 futures and options contracts, the largest since January 2018, up more than 8,200 on the week.

They also cut nearly 7,000 contracts from their net long in Kansas City wheat futures and options, which fell to 9,628 contracts. Funds increased their net short in Minneapolis wheat to 7,703 contracts from 6,402 a week earlier.

The 2.5-year low in CBOT wheat combined with China's waterlogged crop and strength in corn lifted most-active wheat futures 4.7% between Wednesday and Friday. Most-active corn on Friday hit the highest levels since April 26, rising 2.5% over the three sessions and possibly erasing more fund shorts.

December corn rose 3% over that period as forecasts still showed dryness for parts of the U.S. Corn Belt through at least next week. November beans were up 2.6% and most-active beans rose more than 4%, meaning funds are likely still long.

Most-active soymeal added 1.3% between Wednesday and Friday, but soyoil surged over 7%.

In the livestock sector, benchmark CME lean hog futures set contract lows on May 26, though both August live cattle and feeder cattle set contract highs on Friday.

Money managers as of May 30 held a record net short in lean hogs of 31,110 futures and options contracts, up from 24,129 a week earlier. They held a net long in live cattle of 107,835 contracts as of May 30, up from 101,990 in the prior week and their most bullish since early March.

Funds' record net long in live cattle is 154,550 contracts from April 2019.

Source: Market Screener

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Warren Takunda

Traders' Opinions

After the recent resolution of the debt ceiling issue in the United States, the upcoming week is expected to be relatively calm on the domestic front. However, global investors will have their eyes on several key economic indicators and monetary policy meetings taking place around the world. Additionally, inflation rates and trade data from major economies will provide further insights into the current state of the global economy. In the coming week, keep an eye out for:

United States

In the United States, the primary focus will be on the release of the ISM Services PMI, factory orders, and trade data. The ISM survey for May is anticipated to reveal an expansion in the service sector, indicating a strengthening in overall economic activity. Investors will be particularly interested in the gauge that measures price pressures, as concerns about service-led inflation persist. Additionally, the trade deficit is expected to widen due to a decline in exports and an increase in imports, while factory orders are forecasted to rise for the second consecutive month.

Canada

The Bank of Canada is scheduled to announce its monetary policy decision, and market expectations suggest no change in the key interest rate, which is projected to remain at 4.5%. In addition, important economic data to watch includes Canada's foreign trade and Ivey PMI. Mexico's CPI data and consumer morale, as well as Brazil's inflation rate and services PMI, will also be closely monitored.

Euro Area

In the Euro Area, a downward revision to a modest 0.1% Q1 GDP growth figure is expected, indicating a second consecutive quarter of economic stagnation. However, retail sales in the Eurozone are anticipated to rebound, and Germany's industrial activity is set to recover following a significant drop, aided by a rebound in factory orders. Other releases to watch for include Germany's balance of trade, as well as the inflation rates of Switzerland, Turkey, and Russia. The UK's Halifax house price index and updated Services PMI will also provide insights into the British economy. A benchmark reference rate of 6.75% is expected to be maintained by the National Bank of Poland.

China

In China, attention will be on the trade balance and inflation rate for May, offering further insight into the country's economic recovery post-COVID. Recent data has cast doubt on previous recovery expectations, making these releases crucial for assessing the current state of the Chinese economy.

India

The Reserve Bank of India is anticipated to keep its interest rate unchanged for a second consecutive meeting, signaling a cautious approach to monetary policy. The release of industrial and manufacturing output data for April by MOSPI will provide additional clarity on the country's economic performance.

Other Countries

Australia's Reserve Bank is expected to maintain its cash rate following last month's unexpected hike. Australia's GDP growth figures for Q1 and the trade balance for April will shed light on the country's economic trajectory. Inflation rates for May will be released by South Korea, the Philippines, and Indonesia, providing an indication of price pressures in these respective economies.

Overall, the week ahead will be defined by macroeconomic data releases and central bank decisions. Investors will closely monitor the performance of major economies and analyze the potential impact on global financial markets. With concerns about inflation lingering, the data will be crucial in shaping future monetary policy decisions and investment strategies.

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