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On May 21, Goldman Sachs issued a research report stating that Alibaba (09988.HK)s (the first day of the Alibaba Cloud Summit in Hangzhou, coupled with the Chairman and CEOs letter to shareholders released on the same day, indicates that the group is entering a new phase of significant investment in the era of AI agents. Management emphasized that the industry is at a critical turning point in the development of Artificial General Intelligence (AGI), with a large number of AI agents driven by model-generated tokens taking on a larger share of work and becoming the main interface between humans and the digital world. The bank believes that a portfolio of AI agent products can support Alibabas recently announced annual recurring revenue (ARR) targets for MaaS, reaching RMB 10 billion in the June quarter and RMB 30 billion by the end of fiscal year 2027. Goldman Sachs believes that Alibabas current valuation does not fully reflect its comprehensive AI layout and international cloud potential, and expects the group to increase its investment in AI enterprises and the consumer sector in the next 12 to 24 months, while achieving double-digit profit growth. The bank maintains its buy rating on Alibaba and places it on its Asia Pacific conviction buy list, with a 12-month target price of HKD 180.Germanys May composite PMI preliminary reading was 48.6, below the expected 48.4 and the previous reading of 48.4.Germanys preliminary manufacturing PMI for May was 49.9, below the expected 51 and the previous reading of 51.4.Germanys preliminary services PMI for May was 47.8, in line with expectations of 47 and the previous reading of 46.9.On May 21, the General Administration of Customs held a briefing to interpret the recently issued "Several Measures on Promoting the Expansion and Quality Improvement of Comprehensive Bonded Zones" and invited relevant enterprises to exchange and explain their policies. The meeting noted that by 2025, comprehensive bonded zones will achieve an import and export value of 7.2 trillion yuan, a year-on-year increase of 8.2%, accounting for 15.9% of the national total. From January to April this year, the import and export value reached 2.7 trillion yuan, a year-on-year increase of 25.2%, accounting for 16.8% of the national total. With only 0.05% of the countrys land area, these zones contribute one-sixth of the nations foreign trade import and export value, becoming an important platform for serving my countrys foreign trade development.

USD/TRY reestablishes its annual high on route to 17.00, notwithstanding Erdogan's expectation of future inflation moderation

Alina Haynes

Jun 06, 2022 15:25

 截屏2022-06-06 下午3.23.52.png

 

In spite of Turkish currency (TRY) traders' inflation worries and President Erdogan's efforts to appease TRY purchasers, the USD/TRY continues to trade near $16.36, the highest level since 2022. The pair's upward momentum is influenced by Friday's high Turkish inflation data for May, as well as the US dollar's comeback over the last week, not to mention expectations of the Fed's faster/more aggressive rate rises.

 

According to Reuters, "Turkish President Tayyip Erdogan stated on Sunday that inflation numbers from the month of May, when annual consumer prices soared to a 24-year high, indicate that inflation is now on the down." It is noteworthy that the May inflation rate for Turkey increased to 73.5 percent in the most recent report.

 

Reuters also reported that the lira fell by 44 percent last year and has been the poorest performer in emerging markets for several consecutive years, mostly owing to economic and monetary policy worries under the administration of President Tayyip Erdogan.

 

In contrast, the odds supporting a 0.50 percent rate hike by the Federal Reserve in September have lately increased to 75 percent from 35 percent a week earlier, which emphasizes this week's US Consumer Price Index (CPI) data and favors US dollar purchasers. In spite of this, the US Dollar Index (DXY) reversed a two-week downward trend at Friday's close, trading down 0.14 percent intraday near 102.000 as of press time.

 

US Nonfarm Payrolls (NFP) for May came in at 390K, above expectations of 325K but falling short of the upwardly revised prior readings of 428K. In addition, the unemployment rate stayed constant at 3.6% against predictions of a minor reduction to 3.5%. In addition, the US ISM Services PMI dropped to 55.9 in May, compared to the market estimate of 56.4 and the flash reading of 57.1 in April. Following the release of the statistics, Loretta Mester, president of the Federal Reserve Bank of Cleveland, stated that the Fed's only worry is inflation. The officials underlined that the likelihood of a recession has increased.

 

Wall Street benchmarks finished in the negative and US 10-year Treasury rates saw their first weekly increase in three weeks to reflect the risk-averse sentiment of the previous day. However, S&P 500 Futures increased by 0.5 percent to 4,126 and US 10-year Treasury rates fell by 1.3 basis points (bps) to 2.942 percent as per the most recent data available.

 

Amid a pre-Fed blackout for Fed officials and in anticipation of Friday's US CPI, USD/TRY traders should pay attention to risk drivers moving forward.

Technical Evaluation

A successful breach of the prior resistance line from early January, about 16.45 at the time of publication, would lead USD/TRY values toward the $17.00 mark before testing the late 2021 top at $18.36.


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