Politics French President Emmanuel Macron defended his mandate in the second round of the presidential election with 58.55% of the vote. His opponent Marine Le Pen obtained 41.45%. Turnout was just under 72%. The liberal green Freedom Movement won the parliamentary elections in Slovenia with 34.3% of the vote. The Slovenian Democratic Party of incumbent Prime Minister Janez Jansa came in second with 23.8%. The ruling group has already acknowledged the defeat, and Jansa, who heads the government of the country with 2.1 million inhabitants, will soon finish his term. The Russian gas company Gazprom has completely stopped gas supplies to Poland and Bulgaria. It justified its decision by saying that local gas companies PGNiG and Bulgargaz refused to pay for gas in rubles, as Moscow demands. Projections for Europe without Russian gas point to a problem by the end of January 2023 (according to Bruegel). In the event of a complete supply shutdown, EU countries would have to reduce annual consumption by 10 to 15%. At that time, even record high supplies from other countries would not be enough and gas storage facilities in Europe would be emptied at the turn of January and February 2023. The European Central Bank has left its position (in April) on monetary policy essentially unchanged. The current data reinforces expectations that net asset purchases under the APP programme should end in the third quarter and that further monetary policy developments will depend on current data and assessments of the outlook. Economy In the first quarter of 2022, seasonally adjusted GDP increased by 0.4% in the EU, compared with the previous quarter. In the fourth quarter of 2021, GDP had grown by 0.5%. Compared with the same quarter of the previous year, seasonally adjusted GDP increased by 5.2% in the EU in the first quarter of 2022. Portugal (+2.6%) recorded the highest increase compared to the previous quarter, followed by Austria (+2.5%). Declines were recorded in Sweden (-0.4%) and in Italy (-0.2%). The year-on-year growth rates were positive for all countries. The year-on-year inflation rate in the EU rose to a record 7.8% in March from 6.2% in February. The highest inflation in the EU was recorded in Lithuania, where consumer prices increased by 15.6% year-on-year. Estonia came in second place with inflation at 14.8%. Malta, on the other hand, had the lowest inflation at 4.5%. It was followed by France and Portugal. In the fourth quarter of 2021, the seasonally adjusted general government deficit to GDP ratio stood at 3.5% in the EU. The deficit to GDP ratio decreased due to stronger increases in total revenue compared to total expenditure as well as due to a higher GDP in comparison with the third quarter of 2021. In the EU, the deficit to GDP ratio remained stable compared with the third quarter of 2021. In the fourth quarter of 2021, most Member States continued to record a government deficit. In the second half of 2021, average household electricity prices in the EU increased sharply compared with the same period of 2020 (€21.3 per 100 kWh), standing at €23.7 per 100 kWh. Average gas prices in the EU also increased compared with the same period of 2020 (€7.0 per 100 kWh) to €7.8 per 100 kWh in the second half of 2021. Household electricity prices rose in 25 EU Member States in the second half of 2021, compared with the second half of 2020. The largest increase (in national currencies) was registered in Estonia (+50%) and in Sweden (+49%). Between the second half of 2020 and 2nd half of 2021, gas prices increased in 20 of the 24 EU Member States. The largest increases in household gas prices (in national currencies), were observed in Bulgaria (+103%) and in Greece (+96%). In the EU, household real consumption per capita decreased by 0.5% in the fourth quarter of 2021, after an increase of 4.2% in the previous quarter. At the same time, household real income per capita decreased by 1.8% in the fourth quarter of 2021, after an increase of 0.4% in the third quarter of 2021. Download The Full EU News Monthly

The euro rose against key currencies as investors focused on the widening gap between German and Italian bonds. The spread between the 10-year bonds of the two countries rose to 2.007%, which was its highest level since May 2020. This means that investors have a preference for safer German government bonds. It also signals that there are expectations that the European Central Bank will start hiking interest rates in its July meeting. The hawkish state of the ECB comes at a time when there are worries about stagflation in the region as inflation rises to over 7%. Global stocks continued crashing on Friday as the mood in the market deteriorated following the hawkish Federal Reserve decision. In the United States, futures tied to the Dow Jones declined by 170 points while those linked to the Nasdaq 100 fell by 150 points. The two indices declined by 1,100 and 600 points on Thursday. The same trend happened in Europe where the DAX, CAC, and Stoxx dropped by more than 1.50%. The worry is that major central banks like the Fed, BOE and the ECB will accelerate their tightening process soon. Also, while most companies have reported strong revenue growth, their margins have dropped. The US dollar continued its strong rally as investors reacted to the latest non-farm payroll data. Data by the Bureau of Labor Statistics (BLS) showed that the economy added more than 428k jobs in April. This increase was better than the median estimate of 391k. Further numbers revealed that the unemployment remained at 3.6% while wages continued growing. Elsewhere, in Canada, the economy added just 15k jobs in April while its unemployment rate declined to 5.2%. XBR/USD The XBRUSD pair continued rising after the OPEC+ meeting. It managed to move above 112 for the first time in weeks. It has moved above the 25-day moving averages while the DeMarker indicator has moved above the overbought level. The pair has moved above the descending trendline that is shown in orange. Therefore, the pair will likely keep rising as bulls target the key resistance level at 114.17. EUR/USD The EURUSD pair tilted upwards as EU bond spreads widened. The pair rose to a high of 1.0582, which was higher than this week’s low of 1.0480. It has moved between the middle and upper side of the Bollinger Bands. Also, it has risen above the 25-day moving average while the Relative Strength Index has been rising and has managed to move above 50. The pair will likely retest the resistance at 1.0650. ETH/USD The ETHUSD pair made a strong bearish breakout in the past few days. It managed to move below the important support level at 2,700. It also declined below the envelopes and moving average indicators. Further, the pair’s MACD has moved below the neutral level while the Relative Strength Index (RSI) has moved slightly below the overbought level. Therefore, the pair will likely keep falling as bears target the next key support at 2,500.

GBP/CAD traded lower yesterday after the BoE hiked interest rates but warned over recession risks to the UK economy. The dip brought the rate below the 1.5925 barrier, marked by the low of April 28th, a move that confirmed a forthcoming lower low on both the 4-hour and daily charts. This, combined with the fact that we can draw a downside resistance line from the high of February 22nd, paints a positive near-term picture. Today, the rate rebounded somewhat after nearly hitting again support at 1.5775, and thus, we cannot rule out some further recovery, even back above 1.5925. However, as long as the pair stays below the aforementioned downside line, we will see decent chances for the bears to jump back into the action, perhaps from near the high of May 4th, at 1.6105. A possible slide from there could result in another test near the 1.5775 zone, the break of which would confirm another forthcoming lower low and perhaps set the stage for declines towards the low of August 1st, 2013, at 1.5583. Shifting attention to our short-term oscillators, we see that the RSI rebounded and exited its below-30 zone, while the MACD, although below both its zero and trigger lines, shows signs of bottoming. Both indicators detect slowing negative speed, which adds more credence to the view that some further recovery may be on the cards before the next leg south. On the upside, we would like to see a clear recovery back above 1.6203 before we start examining a bullish-reversal case. This would not only confirm a forthcoming higher high on the daily chart, but also the break above the downside resistance line drawn from the high of February 22nd. The bulls could then get encouraged to test the 1.6290 hurdle, the break of which could carry extensions towards the 1.6435 or 1.6504 areas, marked as resistances by the highs of April 22nd and 14th, respectively.

EUR/NZD is trading in an ascending channel on the four-hour chart after the 50-exponential moving average crossed over the 200 EMA. Moreover, the positive slope of divergent moving averages indicates a strengthening bullish Momentum in the short term. In addition, the candlestick bars suggest that Euro buyers have taken control of the European morning trading session by accelerating upward bias. Currently, they are attempting to push the price towards the channel ceiling around 1.65 after defeating the 1.63980 resistance level. If this barrier can halt the rally, we may see a price consolidation for some time. With a sustained move above this level, the 1.65873 mark could come under the spotlight. Otherwise, if sellers take cues from the price at the ascending channel resistance, the pair could return to the support area between 1.63539 and 1.63980. If this area is broken, the probability of falling to the 50-EMA will increase. However, as long as the price floor of 1.60736 remains intact, the uptrend will continue. Short-term momentum oscillators indicate that buyers are dominating the market. The RSI is approaching 70 in the buying area. Despite falling from a three-day peak, the Momentum is still above the -100 line. Positive MACD bars are also rising above the signal line. However, a divergence between price and oscillator occurred on May 2 compared to April 25, suggesting a probable waiting period for buyers.

1)    US CPI (Apr) – 11/05 – having seen the US Federal Reserve raise rates by 50bps this week, attention now turns to next month's expected 50bps rate rise, especially if US inflation shows little sign of slowing down when this week’s April numbers are released. This seems likely given Powell’s recent comments about inflation being too high. In March US CPI rose by 8.5%, slightly above expectations, while core prices rose by 6.5%, slightly below expectations, in a sign that inflation pressures could well be close to easing. These expectations proved to be short-lived after PPI in March rose to 11.2% and another record high while core prices rose to 9.2%. With ISM prices paid data still looking frothy, any signs of a peak in headline inflation still seems some way off, with US 10-year yields rising to 3%. This week’s CPI numbers could go some way to determining whether we’ve started to see a pause in inflationary pressures, or whether we get a further lift in inflation expectations. The Federal Reserve has already said it will go for successive 50bps rate hikes at the next two meetings, as well as announcing the process of balance sheet reduction, starting next month at $47.5bn a month, increasing to $95bn a month by September. Expectations are for headline CPI to slip back to 8.1%, core prices to 6.1% and headline PPI to fall to 10.7%.   2)    UK Q1 GDP – 12/05 – after a solid January, the UK economy appears to have hit a bit of a speed bump in February and March if recent retail sales and consumer confidence numbers are any guide. Year on year to March retail sales growth slumped from 7.2% to 0.9%, as consumer confidence slid to its lowest levels since October 2020. Manufacturing and construction appear to have held up much better in Q1, although like everyone they are facing huge increases in costs. Having finished last year with an expansion of 1.3%, it's quite likely we’ll see a slowdown for Q1, although we probably won’t see a contraction. On the monthly numbers we’ve seen a 0.8% expansion in January and a 0.1% expansion in February. March is likely to see a contraction which could well drag the quarterly number down sharply, although market expectations are for a 1% expansion. This seems somewhat optimistic.   3)    ITV Q1 22 – 11/05 – the last few months haven’t been kind ones for the ITV share price. In March, the shares plunged over 30% and have struggled to recover since then. The announcement of a $180m investment into yet another streaming service ITVX for Q4, on top of its investment in BritBox and ITV Hub has understandably got investors asking questions as to what their long-term strategy is. Reports that they might be interested in bidding for Channel 4 has been equally lukewarm. It has been suggested that the acquisition of Channel 4 could be a net positive for ITV, however it doesn’t change the story when it comes to its disjointed approach on its streaming services. For a start they need to decide on a specific model, this ad-hoc chopping and changing speaks to a management who can’t make up their mind about what type of streaming model they want to pursue. If they can arrive at a settled approach, it might give investors more confidence that they can achieve their target of digital revenues of at least £750m by 2026. Last year ITV saw revenues of £3.45bn, a decent improvement on the previous year, although 2020 was impacted by a sharp fall in advertising revenue. Expectations for this year are for revenues to improve to £3.56bn, with Q1 advertising demand expected to rise 16%, and April expected to rise 10%, although the rest of Q2 will be impacted by tough comparatives due to Euro 2020 last year.          4)    BT Group FY 22 – 12/05 – initial reaction to BT’s Q3 results was disappointing with the shares initially falling to 3-month lows. This was despite the numbers being better than expected. Q3 adjusted EBITDA came in at £1.96bn, pushing 9m EBITDA up to £5.71bn. Total revenues for the year rose to £15.67bn, 2% lower than a year ago. BT said its 5G build is on track and that FTTP rollout is now at 6.5m properties, with 662k over the recent quarter at a rate of over 50k per week. The main reason for the initial decline may well have been down to disappointment that they wouldn’t be selling BT Sport to DAZN for £580m, and that they were in discussions with Discovery to create a sports joint venture. The venture would be a 50/50 split between BT Sport and Eurosport UK. The full year outlook for full...

The Fed signaled that it will avoid shock-and-awe rate increases, putting more emphasis on avoiding a recession rather than vanquishing inflation. Another round of US inflation data is on tap next week and the Fed might finally get some good news, as the yearly CPI rate may have peaked. Is this the beginning of the end for the dollar’s supremacy? Maybe not.