OPEC+

OPEC+ continues to produce well below the required level in April, with Russia accounting for roughly half of that. Compliance with OPEC+ output cuts increased to 220 percent in April, up from 157 percent in March.

This is despite the fact that its output caps have been relaxed in recent months. Notably, the bloc’s production was 2.6 million barrels per day below the required level in April, with Russia producing 1.28 million barrels per day below its own required level.

In other words, don’t count on OPEC+ to help you balance the supply side of the equation.

Russia

Russia claims that no talks with Ukraine are taking place in any form. According to Interfax, Russia’s deputy foreign minister, Andrey Rudenko, no negotiations are taking place between Moscow and Kiev:

“No, negotiations are taking place. Ukraine has effectively withdrawn from the negotiating table.”

Well, it’s not like they were going to get anywhere through dialogue anyway, so it’s not like it matters. It was mostly for show, and markets are already dismissive of the news at this point.

EUR/USD

• EUR/USD rises above 1.0500 as Knot proposes a 50 basis point rate hike
• EUR/USD rises 0.8 percent to 1.0520 on the day According to the weekly chart, the pair is also experiencing a modest bounce off support near 1.0400. With broader risk sentiment improving today, the dollar is losing ground against other major currencies.
• However, the EUR/USD rose from 1.0480 to 1.0520 as a result of Knot’s remarks. At this point, a July rate hike is all but certain, but he floated the idea of a potential 50 basis point hike, which has markets excited.
• The ECB has a history of courting the dramatic, but one must remember that Knot is one of the more hawkish members, and for a central bank that hasn’t raised interest rates in over a decade, it’s difficult to believe in a sudden major shift in mentality from a majority dove to an uber hawkish one. Nonetheless, money markets are now pricing in 105 basis points of ECB rate hikes before the end of the year. This compares to around 95 basis points yesterday. The EUR/USD has now cleared its 200-hour moving average at 1.0494, and a hold above 1.0500 gives buyers some breathing room after an unrelenting push lower since the beginning of the year.
• The region around 1.0580-00 will provide some minor resistance before we begin to seriously consider potential Fib levels to test.

Indices

Risk appetite improves further in European morning trade  

S&P 500 futures are currently up 1.6 percent

Risk sentiment is certainly improving on the session, with S&P 500 futures now up 65 points to 4,070, or up 1.6 percent on the day.

Nasdaq futures are up 2.1 percent, and Dow futures are up 1.2 percent.

The upbeat mood is also helping European indices rally, with gains ranging from 1.3 percent to 1.8 percent across the board.

As much as there is cause for optimism, this could simply be the market letting off some steam after the relentless pressure since April.

The dollar is also easing as risk sentiment improves during the session.

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