For instant updates, follow FCI Markets on Twitter
Intermarket:
• SP Futures 4166 (-0.41%)
• EUSTXX 3959 (-1.30%)
• Crude Oil 64.73 (-0.31%)
• US 10YR 1.60% (+0.44%)
• EurUsd 1.2142 (+0.11%)
• UsdJpy 108.85 (+0.05%)
• DAX 15221 (-1.22%)
After posting fresh record highs on Monday, US equities declined, with the three major indexes closing lower, with particular heavy selling in NASDAQ. Bearish sentiment continued in Asia trade, and Europe is poised to open lower as markets are cautious as this week’s US CPI data and surging commodity prices may show strong inflationary pressures and challenge the FED’s patient stance. US10YR is at 1.6%. USD little changed. Oil down. Gold unchanged. Reactions in currency markets are mild, however, with commodity currencies just in shallow retreat. Yen is also not gaining much from risk aversion.
GBP remains the leader in FX, as any IndyRef risk has been dismissed and the hawkish BOE shift is back in focus.
Ether gained 18%, overcoming the 4k mark and again widened its performance gap over bitcoin. However, into the close a Spinning Top was formed and suggests caution.
Looking Ahead: Focus today will be on GER ZEW and then in UK on Queen’s Speech, which will outline policy agenda for government over the next year.
Matters that Matter:
• Top U.S. fuel pipeline remains days from reopening after cyberattack
• Biden urges employers to boost wages, get people vaccinated
• BOJ policymakers warned of risks to recovery prospects at April meeting
• China’s input prices surge by most in over 3 years: Apr PPI YY 6.8%, 6.5% f’cast, 4.4% prev
• CN Apr CPI YY, 0.9%, 1.0% f’cast, 0.4% prev
• ECB will not adjust policy on this year’s inflation spike – Schnabel
• GB Apr BRC retail sales YY 39.6%, 20.3% prev
Majors 1-Day View:
USDJPY
Prices posted an “inside day” on Monday, with trading contained within Friday’s range. As such, trend signals are weak and only a break of Friday’s range would strengthen signals. However, short-term momentum would suggest a the potential for intraday longs from close to 108.40-50. Support further down is at 108.00, 107.64. Resistance remains at 109.00 and 109.40-50. USD dynamics and risk appetite are the key drivers.
EURUSD
Although Monday posted the 3rd higher daily high & low in a row, sellers returned from close to key resistance at 1.2178, prices declining by ½ Big Fig. However, prices remain above Friday’s Marabuzo at 1.2111 and the trend of higher daily lows remains intact. As such, Monday’s pullback is seen as corrective, although it may extend towards key support zones are 1.2111, 1.2060-80 and 1.2011. Short-term shorts around yesterday’s top/1.2178 seem viable intraday however. USD dynamics remain the key driver for EUR, alongside ZEW today.
AUDUSD
Prices posted the 4th higher daily low in a row on Monday, with initial gains of ½ Big Fig. However, sellers returned from close to key resistance at .7906, prices declining by almost ¾ Big Fig. As such, signals switch to a cautious short-stance today, and selling on rallies towards .7863/73 remains the favoured short-term stance. Supports are at .7800, .7750-60, .7720s. Risk appetite, USD dynamics and commodity prices are the key drivers.
GBPUSD
Prices posted a range expansion on Monday, posting almost 200% of the 22Day ATR and reaching a high of 1.4158. As such, signals remain bullish for Tuesday but with prices extended at multiple levels, we prefer to buy pullbacks towards 1.4087. Resistance levels are at 1.4177 and 1.4239. Supports are 1.3990/1.4010 and 1.3900/20. Hawkish BOE tilt and USD dynamics are the key drivers.
USDCAD
Prices posted the 4th lower daily high and low in a row yesterday, with modest losses of just ½ Big Fig. As such, signals remain bearish for today but with some caution as prices are extended at multiple levels in proximity to a key support at 2017 lows at 1.2077. Beyond there, support is found around 2015 lows at 1.1937. Pullbacks are to be expected and resistance levels are 1.2131, 1.2196, 1.2354. Hawkish BOC and USD dynamics are the key drivers.
FX Relative ATR Grid
Comment: Volatility expanded on Monday, especially on GBP, JPY and Aud pairs. Do not expect too much movement in the Pound today as the market may need to consolidate before posting the next leg.
FX Relative Strength Grid
Comment: the strongest trends are currently GBP (bullish), JPY (bearish), USD (bearish). The strongest momentum was seen yesterday in GBP (bullish), JPY (bearish), EUR (bearish).