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Pound falls, as UK’s May loses support
The pound (-0.49%) has been the biggest G10 loser against the US dollar as PM Theresa May's lead fell by five points according to the latest YouGov poll.

Cable retreated to 1.2861 in London.

The UK will hold a snap general election in less than two weeks and the political uncertainties should further weigh on the pound following its recent failure to clear the critical mid-term resistance at 1.3044 (major 38.2% retracement on post-Brexit sell-off) against the US dollar.

Cable is set to extend weakness to 1.2824 (minor 23.6% retracement on March – May recovery) and 1.2688 (major 38.2% retrace).

The EURGBP has taken over the 0.8700 resistance. There is no obvious obstacles before the next target at 0.8784 (50% retracement on October – April decline).

The FTSE 100 stocks are slightly positive on the back of a softer pound. Gains could remain limited however, as energy stocks may dampen the mood.

WTI dives 5% post-OPEC statement

The WTI crude tanked more than 5%, as the OPEC extended the production cuts by nine months as expected. The goal is to bring the oil inventories below the five year average into March 2018.

The lack of deeper cuts, or a longer duration sent the WTI below the $48.92 (major 38.2% retracement on May rise) following the announcement. Failure to regain this level would suggest a short-term bearish reversal on the pre-OPEC positive trend and pull the price of a barrel to $47.97 (50% retrace) and $47.01 (major 61.8% retrace).

Any price recovery is expected to meet resistance at $49.90/$50.00 (200-day moving average).

The USDCAD rebounded from 1.3380, as traders took opportunity of buying the dip on the oil sell-off. Cheap oil could encourage a renewed attempt to 1.3542 (major 38.2% retracement on May decline) without compromising the weekly negative trend.

S&P500 renews record, USD firm pre-GDP

The US dollar was bid as the country’s retail inventories decreased by 0.3% in April. The data boosted confidence on the US recovery and gave reason to the Federal Reserve (Fed) officials, who projected that the 1Q weakness would to be temporary (Fed minutes).

The S&P500 traded at uncharted territory in New York, despite 2.25% fall in energy stocks. The index rallied more than 2.5% over the past six sessions.

The US’ 1Q GDP data is due today and is expected to be revised higher to 0.9% quarter-on-quarter annualized from 0.7% printed previously. This being said, the enthusiasm posterior to a solid GDP read could be short-lived, given that the second quarter expectations have already taken a hit after the data showed the US’ trade deficit widened in April.

Euro, gold rangebound

The EURUSD consolidates around the 1.1200 level. There is a minor support at 1.1102 (23.6% retracement on April – May rise) and a major support at 1.1000 (38.2% retrace). Resistance is eyed pre-1.1300, the Trump Election Day high.

Gold is rangebound between $1’264 and $1’245 (38.2% and 61.8% retrace on April – May slump). Traders are waiting for a positive or negative breakout to trade a fresh direction. A positive breakout could encourage a further rise to $1’275 (minor 76.4% retrace), while a negative breakout should extend toward $1’235/1’233 (100-day moving average / minor 23.6% retrace).

Japan’s inflation accelerates less than expected

The Japanese inflation, excluding fresh food, rose from 0.2% to 0.3% year-on-year in April, versus 0.4% expected.

The weakness in the inflation data revived the Bank of Japan (BoJ) doves.

The USDJPY remained bid above the 200-day moving average (111.40) for an advance to 112.00 level. Call options trail above 111.25 at today’s expiry. There are no option barriers into the 112.00 level.

Nikkei (-0.64%) and Topix (-0.57%) closed the week on a negative note.