Daily Market Review April 06



The International Monetary Firm will release its new set of forecasts next week, but its managing director, Christine Lagarde warned on being cautious. The situation gets delicate as the global economy looks subdued due to strong economy versus emerging economies, with recovering economies trapped in the middle. Eurozone’s economic data did indicate some signs of improvement, but European stocks continued to linger in the lows. On the other hand, the Federal Reserve maintains its rates saga.

In Hong-Kong yesterday, Chicago Fed president Evans looked quite confident while stating that there might be another two set of rate hikes in the U.S. this year. Fed is looking forward to bring its inflation to its set target, while Fed’s blurry decisions keep affecting Gold prices and the dollar. Gold prices tried to hold on to gains as China services PMI came in slightly up to 52.2 from a previous reading of 51.4. Gold futures rose to $1,231.50 a troy ounce, up by 0.15 percent. Elsewhere, currencies sag.

The Euro still looks likely to grab previous gains against the dollar, while the greenback posts unsatisfactory rallies against the Yen and the European currency. The Yen is still strong as Japan’s central bank continues its monetary policy, while the GBP looks weak compared to the dollar. U.S. crude oil fell to $35. 89 in the past hours of trading, notably due to a likely rise in U.S. crude inventories. Earnings season will create volatility on stocks and the Wall Street already shows signs of declines. The S&P 500 fell by 1 percent while the Dow Jones Industrial Average dropped by 0.8 percent yesterday.

Technical Analysis:
Monitor the EURUSD pair closely and traders will see long consolidation modes which start from 1.138 level to 1.1355 level. The 1.1355 level seems likely to be the resistance line with the pair coming back to the same point again and again yesterday. With important data awaited from the European Central Bank today, the Euro may get boosted. A tentative meeting of Mario Draghi, the ECB president is scheduled for today, but as it is tentative investors cannot really rely on this data. Yesterday, the pair commenced the session around the 1.138 level and upped to the 1.1401 level. From there on, the pair was pulled back to the 1.1355 level and closed the session at the 1.138 level. Keep an eye on data for a safer trading.
Will the FOMC meeting gather strength for the USD today? That is the mind boggling question bothering most traders. Yesterday, the pair USDJPY initiated the session around the 111.2 level and was brought down to the 110.3 level. Note that the 110.3 level is the lowest level for the USDJPY pair since October 2014. The strength of the Yen has caused the dollar to subside and keep trading in the lows. Even the NFP data last week could not help the pair to rise higher. After consolidation in the new lows, the pair tried to gap higher at the 110.5 level but closed the session at the 110.3 level. Note that Fed chair Yellen is to speak today at 21:30 GMT, thus keep an eye on this pair trends.
The trend in unclear for the GBPUSD, with no fundamental helping Britain to edge higher. But tomorrow might be the day, the GBP may find strength to up higher against the dollar. With important data lining up tomorrow, the GBPUSD may rise upwards. Traders are advised to keep an eye on Yellen’s speech today, which might generate boost for the GBP, but the USD may remain intact as it has been doing for weeks. The pair GBPUSD initiated the session at the 1.426 level yesterday but was brought down to the 1.413 level by several little pullbacks. The session came to an end at the 1.415 level and the pair still dwells in the same vicinity. Look forward to data releases tomorrow, but keep an eye on market trends.

 

Economic Calendar