May 2022

ICE Futures Singapore Monthly Report

Gain a deeper understanding of emerging market trends, risks and opportunities with bitcoin, FX, equity and energy markets analysis. The Research Team at Traddictiv shares their views in this monthly report, including statistics for active or passive traders and hedgers.

MACRO COMMENTARY

Bitcoin broke past the $34,000-$38,000 range that could be seen as an area supporting price, and spiked to a low of $25,366 on 12th May. Bitcoin regained its composure and remained range bound between $28,000-$31,000 for the rest of the month. Global headlines continue to report rising inflation, and more central banks have announced higher benchmark rates or are looking to announce their raised interest rates.

  • JPMorgan is reported to estimate bitcoin’s fair value at $38,000, and will replace real estate assets and hedge funds as preferred alternative asset classes with digital assets. The pricing of those traditional asset classes tends to lag, whereas digital asset markets have or have the ability to form venues that allow more accessible price discovery mechanisms. 
  • The two largest investment banks in Japan, Nomura and Sumitomo Mitsui Trust, announced this month that they will be launching new companies allowing institutional clients the ability to custody digital assets like bitcoin. Nomura’s digital asset company will be a subsidiary, while Sumitomo Mitsui Trust will form a joint venture company with cryptocurrency exchange, Bitbank. The joint venture company will be called Japan Digital Asset Trust.
  • Despite the fall in bitcoin prices, the newly appointed chief financial officer of MicroStrategy, Andrew Kang, reiterated the company’s commitment to holding bitcoin for the long term with no plans to sell. MicroStrategy is reported to have 129,218 bitcoin worth around $4 billion, which is more than double of the second largest public company listed in the United States, Tesla, holding 48,000 bitcoin worth around $1.5 billion.

The U.S. Dollar Index® (USDX) reached a high of 105.07 on 13th May, the strongest the USDX had traded in almost 20 years, since December 2002. After U.S. Dollar Index® met resistance at these highs the USDX closed the month at 101.77 down 1.41%.

  • Nonfarm Payrolls data released on 6th May showed 428,000 new jobs were created during April beating expectations of 391,000. The USDX closed at 103.69 with a gain of 0.08%.
  • Consumer Price Index (CPI) data for all items released on 11th May showed a slight pull back as inflation data dropped from the 41-year March high (8.5%) recording a gain of 8.3% before seasonal adjustments for the 12-month period ending April. Prices for all items less food and energy recorded a 6.2% increase over the last 12 months, again a slight drop from March data (6.5%), which was the highest level posted in 40 years. The USDX closed the day at 103.87 with a loss of 0.08%.
  • FOMC minutes released on 25th May highlighted the concerns around inflation being near the 40 year highs and with interest rates being one of the measures taken to help combat inflation, further rate rises are possible. The minutes confirmed the 0.5% interest rate hike announced earlier in the month, which was the single biggest rate increase seen in 22 years.

The South Korean Won closed May at 1242.26 KRW against the U.S. Dollar after trading to a high of 1290.87, the weakest the South Korean Won had traded against the U.S. Dollar since July 2009.

  • S&P Global Manufacturing PMI data for April was released on 2nd May at 52.1 exceeding expectations of 51.0 and the prior month data release at 51.2.
  • Consumer Price Index (CPI) data for all items released on 3rd May showed inflation continued to rise with an increase of 4.8 for 12-month ending April, above expectations of 4.3% and 12-month ending March at 4.1%. All items less food and energy also showed an increase with data 12-month ending April published at 3.1% against 12-month ending March at 2.9%.
  • Industrial Production data published on 31st May for April year-on-year at a rate of 3.3%. This showed a continued decline as the data released came out below March output figures of 3.7% and February of 6.3%.
The Singapore Dollar closed the month down at $1.3697 against the U.S. Dollar after the USDSGD climbed to reach a new 23-month high at $1.3986 before testing a strong area of resistance sending the pair lower.

  • April PMI Manufacturing data released on 4th May came out at 50.3 which was above expectations of 50.2 and a slight increase compared to the prior month release at 50.1.
  • Consumer Price Index (CPI) data released on 23rd May showed inflation had a levelled off with CPI - all items 12-month ending April at 5.4% equaling the data released in March and slightly below expectations of 5.5%.
  • Data released on 26th May showed Industrial Production reported an improvement in manufacturing output for April year-on-year with an increase of 6.2% compared to 12-month ending March at 5.1% (revised from 3.4%). A significant improvement in month-on-month data recorded for April as output climbed back into positive territory at 2.2% compared to the prior revised release for March month-on-month at negative 11.2%.
The Chinese Yuan Renminbi closed May at 6.6748 CNY against the U.S. Dollar after recovering some of the early losses the Yuan had against the U.S. Dollar during the month as the pair reached a 20-month high of 6.8376.

  • Consumer Price Index (CPI) data released on 11th May showed CPI is growing at a rate of 2.1% April year-on-year, slightly higher than expected (1.8%) and that of 12-month ending March data at 1.5.
  • Disappointing Industrial Output published on 16th May by the National Bureau of Statistics of China showed a significant fall in production for April year-on-year down to negative 2.9% significantly below March published figures at 5% and expectations of 0.7%.
  • The NBS Manufacturing PMI data for May released on 31st May showed an improvement at 49.6 (as expected) compared to April release 47.4. Non-Manufacturing PMI data showed a significant improvement on April data announcing 47.8 against 41.9 albeit below expectations of 50.7.

The ICE Asia Tech 30 Index (ATI) broke the March and April lows, trading to a new low at 3,283.83. The Nasdaq Composite saw further weakness along with most equity indices in May. ATI saw a jump in price late in the month and closed modestly higher by 2.2%.

  • May proved mixed for Chinese component stocks, with Meituan, NetEase and Baidu having performed well, with gains of 20.3%, 16.1% and 9.1% respectively. However, Xiaomi was down again for another month by 11.9%, joined by Alibaba Group Holding, which fell by 12.3%, and Bilibili, down by 15.6%.
  • Taiwan semiconductor components were slightly weaker with United Microelectronics Corp. falling 2.9% and Taiwan Semiconductor Manufacturing down 4.9%. Delta Electronics was lower by 10.1% and on a positive note, Hon Hai Precision Industry rose 8.1%.
  • Japanese index component Z Holdings fell strongly by 17.2% followed by NTT Data, down 15.8%. Both Canon and Fujitsu supported the index this month rising by 8.2% and 8.0% respectively.
  • Korean component stocks all fell in May with Kakao shedding 19.8%, and Naver Corp dropping 14.2%. SK Hynix was not as weak, falling 6.9%, and modest losses by Samsung Electronic and Samsung SDI by 2.5% and 2.0% respectively.

Brent crude oil continued to trade above the $95-$100 range in May, spiked to $120.00 on the last day of the month before it settled to close the month at $115.60, 10.6% higher versus April.

  • The OPEC+ meeting on Thursday 2nd June expected a 432,000 barrels per day production increase for July. The European ban on 90% of Russian oil caused oil prices to jump and is expected to be implemented by the end of the year. OPEC is discussing the suspension of Russia from OPEC+ and could allow Saudi Arabia and the United Arab Emirates to increase production to make up for the shortfall and utilize spare production capacity.
  • The technical committee of OPEC+ is reported to be trimming their demand forecast by 200,000 barrels per day as continued risks of COVID-19 and geopolitical concerns are expected to continue to weigh on demand for oil.

MONTHLY CHANGE
Source: Source: ICE Connect, ~30 Days

Important information: The information herein is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation.
MARKET FOCUS
SOUTH KOREAN WON - USDKRW | SWD
DAILY TREND: DOWN (USDKRW)
The USDKRW continued the upward momentum on the first day of April trading with the U.S. Dollar bulls in control after the pair reached a daily support area on 30th March at 1208.72 – 1202.29. The weakness of the South Korean Won (quote) compounded as Manufacturing PMI data released at 51.2 showed a slowdown, falling significantly short of expectations and the prior release. The first day of the month trading closed at 1219.73 up 0.38%.

Monday 4th April trading reversed the gains made from the first day of trading as the USDKRW dropped by 0.49% closing at 1213.75, a significant strengthening of the South Korean Won. Fortunes reversed again on the following day as the U.S. Dollar bulls regained control, driving the market higher to close 1218.22 with a gain of 0.30%. This gain was short lived as the bears came back and challenged on 6th April that resulted in the USDKRW closing with 0% change for the day.

The U.S. Dollar bulls reaffirmed their position as the USDKRW closed higher during the following two consecutive trading days to end the first full week of trading at 1229.19 with a gain of 0.78%.

This strong bullish move continued into the second week of trading where the USDKRW closed on 11th April with a gain of 0.41%. The USDKRW continued the upward move until the pair reversed after falling short of a daily area of resistance at 1240.26 – 1247.05 and the pair pulled back. The bears regained control and USDKRW dropped for two consecutive trading days on 12th and 13th April losing 0.97% of its value, giving South Korean Won strength against the U.S. Dollar before the pair found some support at the daily 10 SMA.

The bulls returned on 14th April and the market rallied throughout the day closing up 0.58% at 1230.58. The week ended with the bears clawing their way back throughout the final trading session of the week as the USDKRW dropped to close the second week of trading at 1228.20 with a slight loss of 0.08%.

The following trading week the USDKRW continued to rally as the bulls regained control, Monday trading closed up 0.50% at 1234.28. This move up was extended into Tuesday trading although as it reached an area of daily resistance at 1240.26 – 1247.05 selling pressure was evident and the USDKRW pulled back slightly to close the day at 1239.53 a gain of 0.43%. The market dropped heavily from this resistance area on 20th April 1233.71 to close the day with a loss of 0.47%.

The USDKRW bulls came back with force closing higher during the next two consecutive trading days although the pair struggled to break through the upper boundary of the resistance area. The USDKRW closed the week at 1244.79, up 1.35%.

The USDKRW rally continued into the following week, Monday trading closed up 0.40% at 1249.55 breaking through to close above the daily area of resistance at 1240.26 – 1247.05. This move up continued into Tuesday where the USDKRW printed the largest daily gain of the month at 0.89% to close at 1260.67. The rally extended during trading on the 27th and 28th April with an overall gain over the four days of 2.20%. The high of 28th April at 1276.31 on the USDKRW was the weakest point the South Korean Won had traded against the U.S. Dollar since March 2020. The last day of trading on 29th April the USDKRW bears appeared and the pair dropped significantly to close with the biggest one-day loss of 0.72%. The USDKRW closed at 1262.91 with a gain of 1.46% for the week.

The weekly uptrend continued with the weekly 20 SMA acting as support. The daily uptrend resumed with the daily 10 SMA acting as support.

The USDKRW closed April at 1262.91 with a gain of 3.93%. The largest monthly gain for the U.S. Dollar against South Korean Won since October 2016.
SINGAPORE DOLLAR - USDSGD | SGD
DAILY TREND: SIDEWAYS (USDSGD)
The USDSGD started the month trading within a sideways range with the outer boundaries of the range at 1.3512 for support and 1.3689 as resistance. The first day of April trading closed up 0.13% at 1.3562 with the U.S. Dollar bulls in control.

Trading began on Monday 4th April with the bears taking control and after a strong challenge, the USDSGD closed the day marginally lower at 1.3564 with a loss of 0.03%.

The bulls came out with more force on 5th April and the pair rallied strongly. The lack of appetite for the Singapore Dollar aided by poor Retail Sales figures (both monthly and annual data) falling significantly below expectations. The USDSGD closed the day at 1.3586 with a gain of 0.16% signifying Singapore Dollar weakness (quote).

This bullish move on the USDSGD continued for the remainder of the week as the U.S. Dollar continued to gain strength against the Singapore Dollar. After a challenging start on Monday 4th April, the USDSGD ended the week with four consecutive higher daily closes.

The USDSGD closed the first full week of trading at 1.3636 with a gain of 0.54%.

The momentum to the upside continued during trading on the 11th April until the USDSGD reached a daily resistance area at 1.3656 – 1.3689 which had proved to be a challenge on the initial retest in March where the pair dropped heavily. This retest was not to disappoint as the area of resistance still had an abundance of sellers and the USDSGD dropped from this area again, the pair lost some of the gains made earlier in the day but still closed up for the day at 1.3647, with a gain of 0.24%. 12th April trading the USDSGD retested this area once more but this time more sellers joined and the market dropped to close the day at 1.3637 down 0.07%. This bearish momentum continued throughout the next two consecutive trading days as the U.S. Dollar lost value against the Singapore Dollar.

On 14th April, the USDSGD had dropped to reach the outer support boundary of the range to breach by 1 pip to a low of 1.3511 before rebounding upwards as the bulls returned. The day closed down but the bulls had made some ground as the USDSGD closed at 1.3561 with a loss of 0.46%. The bulls continued to drive prices higher the following trading day although the bears challenged back and the market settled to close at 1.3562 a slight gain of 0.04%.

The USDSGD closed the second week at 1.3562 with a loss of 0.39%.

The following trading week the bullish momentum continued with the USDSGD printing positive closes on 18th and 19th April where the pair eventually retested the area of resistance at 1.3656 – 1.3689.

On the 20th April the pair pushed higher breaching the upper boundary posting a high of 1.3698 before pulling back as sellers stepped in. The bears took control and the pair dropped to close the day down by 0.36% at 1.3626.

Early trading on 21st April saw the pair continue to trade lower until support was found from the daily 20 SMA. Buyers stepped in and the USDSGD began to rise and closed the day at 1.3644, a gain of 0.13%. This bullish momentum continued into the following trading day where the USDSGD closed with a gain of 0.46% at 1.3708 firmly above the resistance area and upper boundary of the range the USDSGD had been trading within.

The USDSGD closed the trading week at 1.3708 with a gain of 1.01%.

This move to the upside continued into the following week with four consecutive positive closes coinciding with the strength seen on the U.S. Dollar Index ®. As the demand for the U.S. Dollar increases, the Singapore Dollar being the quote currency weakens in the pairing. The final trading day of the month the USDSGD traded lower with the U.S. Dollar bears returning. The USDSGD closed down 0.22% at 1.3835.

Overall, the USDSGD closed the week at 1.3835 up 1.04%.

After breaking above the range, the USDSGD had been trading in throughout March to mid-April the daily and weekly uptrend resumed.

The USDSGD closed April at 1.3835 with a gain of 2.14% for the month, the largest monthly U.S. Dollar gain since November 2016.





UPCOMING HIGH IMPACT EVENTS
CHINESE YUAN RENMINBI - USDCNH | CNH
DAILY TREND: SIDEWAYS (USDCNH)
The USDCNH closed the first day of trading with a gain of 0.48% at 6.6727 after the bulls’ regained control subsequent to the heavy drop on the last day of April trading. The bullish momentum on 2nd May again caused the pair to pierce through the upper boundary of the daily Bollinger Bands that the pair had been trading around for the previous nine days. This time finding more resistance at these extremes creating an initial pull back.

The USDCNH dropped for the following two consecutive trading days as the bears regained control, to print a drop of 0.85% overall during this period. It was on the 4th May the USDCNH dropped into a small pocket of support at 6.6281 – 6.6053 on a 2-hour chart, created as a throwback when price broke above 25th April high. The buyers were waiting and the pair rallied from this area on 5th May to close with a gain of 0.98% at 6.6803.

The upward momentum continued into the final trading day of the week as the USDCNH closed the day up 0.40% with a daily and weekly close of 6.7079 to post a gain of 1.01% for the week.

The bulls continued to gain ground on Monday 9th May where trading on the USDCNH closed up with a gain of 0.56% at 6.7551, just falling short of the upper Bollinger Bands on a daily chart. The following two trading days were inside days and closed printing a small loss on 10th May at 0.19%, to recover with a small gain on 11th May of 0.24%.

The bulls reaffirmed their position on the 12th May and the pair rallied to close up at 6.8245 with a gain of 0.98% reaching a weekly resistance area at 6.8106 – 6.8646 and the pair began to struggle. The USDCNH reached a high of 6.8376 on 13th May where bears took over and the pair dropped to close the day down at 6.7908, a loss of 0.50%.

The USDCNH closed the week at 6.7908, with a gain of 1.09%. A gain for a sixth consecutive week resulting in the continued weakening of the Yuan against the U.S. Dollar.

On Monday 16th May the bears continued to drive prices lower and although there was some bullish pressure the bears stood their ground. Even negative data from China (industrial production year-on-year declining significantly from 5% March to -2.9% April year-on-year and poor retail sales data for April at -11.1% against -3.5% year-on-year March) did not distract the U.S. Dollar bears. The USDCNH closed at 6.7939 with a tiny 3-pip loss, ultimately no change for the day 0.00%.

The bearish sentiment continued into 17th May and the USDCNH closed down at 6.7420 with a loss of 0.77% representing strengthening of the Yuan against the U.S. Dollar. After a brief pause on 18th May where the bulls put up a challenge to close the day positive, the pair continued to drop.

The USDCNH closed the week at 6.6910, with a loss of 1.52%. A resulting in the continued strengthening of the Yuan against the U.S. Dollar. The largest weekly drop seen in the USDCNH since November 2020.

This bearish momentum continued into the following week of trading as the pair closed down for the third consecutive day on 23rd May trading after dropping into a daily area of support at 6.6700 – 6.6119. The pair struggled to lift from this area on 24th May and closed marginally down at 6.6561 a loss of 0.02%.

The U.S. Dollar buyers finally returned and the bulls drove the USDCNH higher throughout the majority of trading on 25th May to close at 6.7085, a gain of 0.79%. The bullish sentiment continued into the following trading day and the pair closed higher at 6.7626, a gain of 0.84%.

The bears returned in the final trading session of the week after the USDCNH tested a pocket of resistance on a 4-hour chart at 6.7716 – 6.8190 driving prices lower to close with a loss of 0.67% for the day. The USDCNH closed the week at 6.7172 with a gain of 0.33%.

The bearish momentum continued the following week of trading until prices dropped into a daily area of support at 6.6700 – 6.6119 which was tested a few days earlier. Buyers were waiting and the USDCNH took a bounce, closing at 6.6748 with a modest gain of 0.09%.

The final trading day of May trading the U.S. Dollar bulls continued to drive the pair higher although it struggled to gain momentum, closing up 0.27% at 6.6926.

USDCNH had reverted to a sideways range although weakness was evident. The pair remained in an uptrend on a weekly chart.
The USDCNH closed the month of May at 6.6748 up 0.51%.
  • No major events listed




Source: ICE Connect, FXStreet Economic Calendar
  • No major events listed
  • Fri 10 Jun CPI (May)
  • Wed 15 Jun Retail Sales (May)
  • Mon 20 Jun PBOC Interest Rate Decision
  • Thr 30 Jun NBS–Manufacturing & Non–Manufacturing PMI (Jun)

U.S. DOLLAR INDEX® FOCUS (DAILY TREND: SIDEWAYS)
INDEX WEIGHTING: EUR 57.6% | JPY 13.6% | GBP 11.9% | CAD 9.1% | SEK 4.2% | CHF 3.6%

The U.S. Dollar Index® started May trading on a positive footing with the bulls regaining control after the drop on the last day of April trading which ended a 6-day bull run. Even with disappointing ISM Manufacturing PMI data released for April at 55.4 that showed a decline (as numbers published came out below expectations of 57.6 and the prior month at 57.1) did not have much of an impact on the market. The demand for the U.S. Dollar drove the U.S. Dollar Index® higher to close the 2nd May with a gain of 0.52% at 103.77 above the prior days high.

After a bearish start to trading on 3rd May, where the U.S. Dollar Index® dropped to a low of 103.06 the market found some demand as the buyers stepped in driving the U.S. Dollar Index® upwards to recover some of the day’s earlier losses. The U.S. Dollar Index ® closed the day down by 0.10% at 103.50. 

This demand was only temporary as the bears came back out in force during trading on 4th May, aided by the negative news as ADP Employment Change for April announced 247,000 new jobs created, woefully below expectations where private employment was anticipated to expand by 395,000 and also marginally below March revised figures of 249,000 (revised significantly down from 455,000). The negative news continued to flow as ISM Services PMI data released for April at 57.1, a decline on the prior month's announcement at 58.3 and below expectations of 58.5.

The Federal Open Market Committee also met on 4th May to review overall economic activity. Insights showed whilst the Fed are open to pursue aggressive interest rate moves there is an appreciation that economic activity has dampened slightly. On the positive side job gains continued along with unemployment rates falling. Concerns raised with the latest COVID related lockdowns in China and the impact this will create with further supply chain disruptions adding to economic pressure. Inflation clearly remained one of the Feds priorities to bring in line over the longer term using appropriate monetary policy. The interest rate decision to increase by 50 basis points to 1.0% was the largest increase in interest rates in 22 years as the Fed try to bring inflation down from these 40-year highs.

The U.S. Dollar Index® reached a high of 103.67 the market dropped to close within the first 30-minutes down 0.59%. Overall, the U.S. Dollar Index ® closed down for the day at 102.59 reporting a loss of 0.86% after taking a small bounce from the daily 10 SMA that it had not closed below since the end of March.

As inflation remains one of the key priorities, to help gauge future inflation expectations ICE Benchmark Administration has launched the ICE U.S. Dollar Information Expectation Index Family. A useful tool to help answer some of the key questions that will affect how the monetary policy will unfold within the coming quarters.

The U.S. Dollar Index® quickly recovered during trading on 5th May as the bulls were firmly in control to close the day at 103.80 posting the largest single day gain for the month at 1.20% with a high of 103.97. This high just fell short of a monthly area of resistance created back in 2002 with a wide range of 104.12 – 109.75.

During early trading on 6th May the bulls continued to gain ground although these gains reversed as U.S. Dollar Index® dropped significantly throughout the early U.S. session. Nonfarm payrolls data released on 6th May showed 428,000 new jobs created during April, this exceeded expectations of 391,000 and the numbers released for March at 398,000. Whilst the news showed a continued increase in new jobs created, the U.S. Dollar bulls lacked the appetite to step at the time. The U.S. Dollar Index® recovered towards the end of the trading day to close at 103.69 with a gain of 0.08%.

The U.S. Dollar Index® closed the first week of May at 103.69, with a gain of 0.45%.

Monday 9th May trading the U.S. Dollar bulls continued to make gains, however the U.S. Dollar struggled to gain significant ground and after the U.S. Dollar Index® broke above the prior day high sellers returned driving prices lower. The U.S. Dollar Index® closed trading at 103.69, no change for the day.

On 10th May the bulls gained the upper hand and the U.S. Dollar Index® rallied although was unable to reach the prior days high and ended the trading day an inside day at 103.94 with a gain of 0.21%. During trading on 11th May the bears managed to overcome the bulls and the U.S. Dollar Index® closed the trading day at 103.96 with a small loss of 0.08%. The U.S. Dollar Index® had been locked in a range for the past four days with the overhead resistance from the monthly resistance area at 104.12 – 109.75.bearing down whilst the bullish sentiment for the U.S. Dollar struggled to gain significant traction after a strong April performance.

On 12th May, the U.S. Dollar bulls managed to regain control and the U.S. Dollar Index® continued to trade higher into the wider monthly resistance area of 104.12 – 109.75 posting a strong gain for the day up 0.79% with a close of 104.90. Here the sellers were waiting and the U.S. Dollar bears took control during the U.S. trading session on the 13th May and after putting in a high at 105.07 (the highest the U.S. Dollar Index® had traded since 2002) the U.S. Dollar Index® traded lower throughout the remainder of the day. The U.S. Dollar Index closed trading at 104.62 with a loss of 0.20%.

After a steady start to the trading week, the U.S. Dollar Index® closed the second week of trading at 104.62 with a gain of 0.90.

It was in the resistance area of 104.12 – 109.75, tested on 13th May that the bearish momentum began to gather pace from throughout trading on 16th May. With little in the way of support, the U.S. Dollar Index ® closed trading at down at 104.20 with a loss of 0.43%. The bearish sentiment continued throughout trading on 17th May and even positive Retail Sales data published for April was not enough to entice the U.S. Dollar bulls back. The Retail Sales data showed a month-on-month increase at 0.9% compared to the estimated 0.7% growth albeit below March revised numbers at 1.4% (revised from 0.5%). The U.S. Dollar Index ® closed trading for the day at 103.41 recording a loss of 0.74%. This was the third day of consecutive losses.

There was some brief respite for the U.S. Dollar Index® on 18th May as buyers stepped in as the market tested the daily 20 SMA and took a bounce. The U.S. Dollar Index® subsequently closed the day at 103.86 with a gain of 0.50%. This bullish move was only temporary as the bears returned on the 19th May and the market was unable to reach the prior days high, falling short at 103.94, before it headed lower. U.S. Dollar Index® posted a loss of 1.08% for the day at 102.75 closing below the daily 20 SMA for the first time since March 2022. This was the largest daily loss for the month and the biggest daily fall since 9th March 2022. The bulls returned on the last trading day of the week on 20th May and tried to recover some of the losses made previously however the damage was done and there was too much ground to recover. U.S. Dollar Index® closed up for the day at 103.17 with a gain of 0.22%.

Overall, the U.S. Dollar Index® closed the week with a loss of 1.41% putting an end to the consecutive weekly higher closes seen over the past six weeks to record the largest weekly drop since early February 2022.

This bearish momentum continued into the following week and as trading opened on the 23rd May the U.S. Dollar Index® was unable to gain any positive ground. The market again fell heavily throughout the day to record a loss of 0.90% and closed at 102.10 after testing the lower boundary of the daily Bollinger Bands. The U.S. Dollar Index® continued to fall during trading on the 24th May and although the Bollinger Bands provided some support this was not enough and the U.S. Dollar Index® closed below the lower boundary for the first time since 13th January 2022.

Trading on 25th May was more positive as the bulls returned and the U.S. Dollar Index® lifted from the lower banding and started to rally. Even below estimated Durable Goods Orders for April, which published below expectations at 0.4% against 0.6%, did not dampen the market and the U.S. Dollar Index® rose to a high of 102.45 for the day. FOMC minutes came out later in the U.S. session and whilst the information generally was public, the initial reaction saw U.S. Dollar Index® fall although it recovered a short while later. The minutes highlighted the concerns around inflation being near the 40 year highs (although CPI data recorded a slight drop in April) and interest rates would be one of the measures taken to help combat inflation.

As inflation is set to play a key role in interest rate decisions throughout 2022 the ICE U.S. Dollar Information Expectation Index Family is a tool to help plan for the future.

The FOMC minutes also confirmed the 0.5% interest rate hike announced earlier in the month, which was the single biggest increase seen in 22 years and further rate increases are anticipated. The Committee will also be going ahead with the reduction in the Federal Reserve’s Balance Sheet as planned on 1st June. U.S. Dollar Index® closed the day with a gain of 0.31% at 102.08.

On 26th May, the bears returned and the U.S. Dollar Index® closed down with a loss of 0.24% at 101.86, the negative sentiment was exacerbated as GDP data published showed a negative rate as a preliminary indication for Quarter 1. This disappointing news was below the prior announcement of -1.4% and expectations of -1.3%. Trading on 27th May was mixed and the U.S. Dollar Index® closed marginally down for the day at 101.70 with a loss of 0.05%.

Overall, the U.S. Dollar Index® ended the week with a loss of 1.28% at 101.70. This is the second consecutive weekly drop and the largest drop over a two-week period seen since July 2020.

Monday 30th was Memorial Day in the US and although there were, no major announcements the U.S. Dollar Index® traded to close down for the third consecutive day at 101.30 recording a loss of 0.36%.

On the final day of trading, the U.S. Dollar Index® found some support and the bulls helped to lift price from the lows to close the day up at 101.77 a gain 0.34%.

After a bearish turn mid-May, the uptrend that the U.S. Dollar Index® had been trading in broke on the daily timeframe with potentially a new downtrend beginning to form. The U.S. Dollar Index® in the weekly timeframe remained in an uptrend.

The U.S. Dollar Index® closed the month of May at 101.77 with a loss of 1.41% the largest monthly loss since April 2021.

UPCOMING HIGH IMPACT EVENTS
  • Wed 1 Jun ISM Manufacturing PMI (May)
  • Thr 2 Jun ADP Employment Change (May)
  • Fri 3 Jun Nonfarm Payrolls (May) 
  • Fri 3 Jun ISM Services PMI (May)
  • Fri 10 Jun CPI (May)
  • Fri 10 Jun Michigan Consumer Sentiment (Jun) PREL
  • Wed 15 Jun Retail Sales (May)
  • Wed 15 Jun Fed Interest Rate Decision
  • Wed 15 Jun Fed’s Monetary Policy Statement
  • Wed 15 Jun FOMC Economic Projections
  • Wed 15 Jun FOMC Press Conference 
  • Thr 23 Jun Bank Stress Test Result
  • Tue 28 Jun Durable Goods Order (May)
  • Tue 28 Jun Gross Domestic Product Annualized (Q1)
  • Tue 28 Jun Nondefense Capital Goods Orders ex. Aircraft (May)

CORRELATIONS

The charts identify price turning points between U.S. Dollar Index®, Brent Crude Oil (BRN) and Bitcoin (XBT) which could be used to identify periods during which prices of each of the markets appear positively or negatively correlated.
BRENT CRUDE OIL (BRN): POSITIVE (SINCE SEPTEMBER)

Source: ICE Connect
NYSE® BITCOIN INDEX (XBT): NEGATIVE (SINCE JANUARY)

ICE ASIA TECH 30 INDEX - ICEAT30 | ATI
DAILY TREND: DOWN
ATI created a new low in May at $3,234 despite a strong finish to April reaching the $3,600 level. The first half of May experienced consecutive down days, turning mid-month to set a lower high intra-month around $3,550, and then a higher low at $3,400, (the lows at which March and April had held). This could be seen as a reverse head and shoulders pattern, which is bullish given the last three days of the month, saw prices end consecutively stronger, and closed above the two prior highs set in May. 

ATI closed the month at $3,690 with a +2.2% change.

Index Composition: 37% China, 23% Japan, 23% Taiwan and 17% South Korea.

Index Composition: 37% China, 23% Japan, 23% Taiwan and 17% South Korea
BRENT CRUDE OIL - BRN | BM
DAILY TREND: SIDEWAYS
Brent held below the range $112-$115, which had held since late March as the Russian-Ukrainian conflict continued to add pressure to oil prices pushing them higher.

Sanctions on Russian oil exports are starting to bite, and exemptions to Russian production target commitments under OPEC+ agreements could tighten the penalties already being felt by Russia in global attempts for a cessation in hostilities.
 
Brent closed the month at $115.60 with a significant +10.6% change.





UPCOMING HIGH IMPACT EVENTS
NYSE BITCOIN INDEX® - XBT | BMC
DAILY TREND: DOWN
After dropping heavily at the start of the month, bitcoin traded sideways intra-month under $31,000 and jumped at month end to break and hold that level. The $34,000-$36,000 prior support area could be the new resistance area being targeted next.


XBT closed the month at $31,692 with a -17.8% change.
  • Fri 10 Jun China CPI (May)
  • Wed 15 Jun  Retail Sales (May)
  • Mon 20 Jun PBOC Interest Rate Decision
  • Thr 30 Jun China Non-Manufacturing PMI (Jun)
Source: ICE Connect, FXStreet Economic Calendar
  • Thr 2 Jun OPEC+ policy meeting to decide on whether to increase supply of oil in July by 432,000 barrels per day similar to prior months or by some other amount.
  • Spring 2024 bitcoin halving event 
ICE ASIA TECH 30 INDEX CORRELATIONS
The charts identify price turning points between the ICE Asia Tech 30 Index, South Korea’s KOSPI Composite Index (KOSPI) and Thailand’s SET Index (SET) which could be used to identify periods during which prices of each of the markets appear positively or negatively correlated.
KOSPI COMPOSITE INDEX (KOSPI): POSITIVE

Source: ICE Connect
THAILAND SET INDEX (SET): POSITIVE

PRODUCT HIGHLIGHT: MINI BRENT CRUDE FUTURES
KEY ATTRIBUTES

Mini Thai Baht / US Dollar Futures (SBD) contracts with a notional contract size of approximately THB 300,000 (as of June 2022) are cash-settled. Retail and professional investors are able participate in these markets with minimal upfront deposits.

The Thai Baht is issued by the Bank of Thailand and according to SWIFT is the 10th most traded currency in the world in 2021. Thailand’s gross domestic product (GDP) was $502 billion in 2020 and the second largest economy in South East Asia. Thailand exports include automobiles and electronics equipment, and is the world’s third largest exporter of seafood. Thailand has a large services sector contributing close to 45% of GDP made up of tourism, banking and finance.

Brokers offering this product include KGI Futures, Orient Futures and Phillip Futures.
TECHNICALS (DAILY)
Source: ICE Connect 
MONTHLY EDUCATIONAL BITES
Terminology and concepts of the financial markets and futures.
What is Hedging?

Hedging is the action taken through the use of a financial instrument to minimize the loss or risk of the loss of value of an asset due to adverse asset price movements.

Who are Hedgers?

Hedgers are market participants such as commodity producers who want to lock in selling prices of commodities they produce, or food manufacturers who want to lock in buying prices of raw materials purchased.

Market participants also include financial institutions handling financial assets and use derivative products such as futures to manage the risk of a portfolio of financial assets.

What is the difference between Physically Delivered vs Cash Settled Futures Contracts?

Physical delivery is a term in a futures contract which requires the actual underlying asset to be “physically delivered” upon the specified delivery date, rather than being traded out with an offsetting contract.

Cash settled futures on the other hand allows for the net cash amount to be paid or received on the settlement date of the futures contract.

Futures exchanges may offer both types of contracts to market participants who have different purposes for trading futures contracts.
Educational resources are available and provided by Traddictiv.
RISKS AND OPPORTUNITIES FOR CORPORATES AND INDIVIDUAL INVESTORS
Common application of financial market instruments for managing risk and opportunities.
Diversification: Correlation in Futures

Investors could allocate a portion of their portfolio to establish a managed futures position to deliver non-correlated results under most market conditions, which may serve as a risk mediator within an overall portfolio. This may deliver lower relative returns during periods of price stability. However, during periods of market stress, managed futures could outperform the broad market.


For example, the Asia Tech 30 index which has no Thai companies as a component stock would not be expected to have any Thai Baht (USDTHB) currency exposure and which could be included in a managed futures portfolio at times where there is no or low correlation between the two markets and could be used as a hedge during times of negative correlation.



Diversification: Portfolio Focused on Asset Returns

Individual investors who have a portfolio of foreign stocks will have a return that is composed of the return of the foreign currency-denominated stock plus the change in currency exchange rates. Therefore, investing abroad means having exposure to two different sources of risk and return made up of the underlying asset and the exchange rate.


For a long-term investor, the focus on return-generating assets may be the priority rather than returns from currency exchange rates. This could imply removing currency risk through a clearly defined hedging strategy process initially and then adding back currency exposure at a later stage if it is determined that currency exposures could improve a portfolio’s return.


Investors would need to analyze their expected returns with and without currency exposures and determine their net currency exposure that they would like to remove.  U.S. Dollar based portfolios could use futures contracts such as the Mini US Dollar Index ® Futures to hedge a basket of foreign stocks denominated in their respective domestic currencies.


Limitations
© 2022 Intercontinental Exchange, Inc. The information and materials contained in this document - including text, graphics, links or other items - are provided "as is" and "as available." ICE and its subsidiaries do not warrant the accuracy, adequacy or completeness of  this  information  and  materials  and  expressly  disclaims  any liability or duty in connection with  this  information  and  materials.  This document  is  provided  for  information  purposes  only  and  in  no  way  constitutes  investment, legal or tax  advice  or  a  solicitation  or offer to buy or sell investments or market data or otherwise engage in or provide any investment, financial, trading or any other activity or service. No warranty of any kind, implied, express or statutory, is given in conjunction with the information and materials. The information in this document is liable to change and ICE undertakes no duty to update such information. You should not rely on any information contained in this document without first checking that it is correct and up to date. The content of this document is proprietary to ICE in every respect and is protected by copyright.  No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of ICE.  All third party trademarks are owned by their respective owners and are used with permission.

Key Information Documents for certain products covered by the EU Packaged Retail and Insurance-based Investment Products Regulation can be accessed on the relevant exchange website under the heading “Key information Documents (KIDS)”.

Trademarks  of  ICE  and/or  its  affiliates  include  Intercontinental  Exchange,  ICE,  ICE  block  design,  NYSE  and  New  York  Stock Exchange. Information regarding additional trademarks and intellectual property rights of Intercontinental Exchange, Inc. and/or its affiliates is located at www.intercontinentalexchange.com/terms-of-use

To retail investors: Futures contracts based on bitcoin may pose specific risks. Such risks may arise from greater volatility in prices resulting from a range of factors. Those risks could in turn affect financial outcomes associated with maintaining required margins or any losses at final contract settlement.
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