For instant updates, follow FCI Markets on Twitter
Intermarket:
• SP Futures 4126 (+0.47%)
• EUSTXX 3969 (+0.74%)
• Crude Oil 63.75 (-0.12%)
• US 10YR 1.67% (-1.59%)
• EurUsd 1.2086 (+0.07%)
• UsdJpy 109.53 (+0.09%)
• DAX 15285 (+0.69%)
Risk assets are poised for a positive open in Europe today, after Asia followed the strong recovery on Wall Street. The lack of further downside in equities, and the pullback in yields, despite better initial jobless and Producer Price Index suggests the market had priced in the better data, and focus shifts to today’s Retail Sales report (expected 1%). SP500 is up; VIX fell to 23.00; oil soft; UST bonds rallied, with the 10-year yield retracing to 1.65%. USD mixed.
Current narrative is the standoff between FED members (suggesting a cautious stance, seeing inflation as transitory) and market expectations (suggesting the FED is behind the curve). Inflation prints are becoming more influential as a result. Attention in Europe, will likely be on April ECB minutes as board members have also played down inflation risk, though there are mixed comments on prospect of slowing down pace of asset purchases. BoE’s Bailey also played down inflation concerns, but the Bank is watching closely.
Looking Ahead: US retail sales are the main event today, and are expected to surge on reopening, labour market recovery and stimulus. We also US Consumer Confidence and Fed’s Kaplan (hawk).
Matters that Matter:
• St Louis Fed Bullard – U.S. on verge of moving from recovery to expansion
• Waller – 4% inflation month after month would be a concern
• Biden voices optimism on infrastructure deal after meeting with Republicans
• Biden says East Coast fuel shortages to end in days as pipeline reopens
• Musk decries bitcoin’s ‘insane’ energy use after Tesla payment U-turn
Majors 1-Day View:
USDJPY
After gains of 1 Big Fig on Wednesday, prices consolidated on Thursday, with a pullback that reached the 23.6% retracement of this week’s gains. Such a shallow retracement, with prices still above key Marabuzo support, maintain a cautious bullish bias for Friday. We prefer buying on a dip towards 109.45. Resistance is at 109.70, 109.94 and 110.41. USD dynamics and risk appetite are the key drivers alongside Retail Sales today.
EURUSD
Prices posted the 2nd lower daily high & low on Thursday, but net movement was limited as price was contained between Wednesday’s Marabuzo at 1.2107 and support at 1.2050. As such, signals are more neutral but until the trend of lower daily highs is broken, selling into rallies remains the favoured strategy. USD dynamics remain the key driver.
AUDUSD
Prices posted the 3rd lower daily high & low in a row on Thursday, but buyers returned from close to key supports at .7674-.7700, and initial losses of over ½ Big Fig were recovered. As such, immediate signals have improved, but until the trend of lower daily highs is broken, caution is advised. As such, cautious longs around .7705 are possible, but the 13/21 SMAs at .7760/70 should attract sellers. Risk appetite, USD dynamics and commodities are key drivers.
GBPUSD
Prices posted the 2nd lower daily high & low in a row on Thursday, but buyers returned from close to key support at 1.4010 and initial losses of ¾ Big Fig were recovered. As such, immediate signals have improved but until the trend of lower daily highs is broken, caution is advised. As such, cautious longs around 1.4020 are possible, but yesterday’s top to 1.4087 should attract sellers. Hawkish BOE tilt supports the Pound, and UK/Irish ministers to meet today. US Retail Sales the main risk however
USDCAD
After Wednesday’s Spring Hammer, prices posted a higher daily high & low on Thursday, with gains of 1 Big Fig. As such, the bias for Friday remains bullish, keeping in mind that any upwards move is currently seen as corrective. As such, we prefer to buy on dips towards 1.2115-30. Resistance is at 1.2170/90, then 1.2270 and 1.2354. Crude Oil and US Dollar dynamics are key drivers currently.
FX Relative ATR Grid
Comment: volatility declined yesterday as markets digested Wednesday’s range expansion. Only CAD posted a volatility expansion due to Crude Oil’s decline. Expect larger moves today on US data.
FX Relative Strength Grid
Comment: the strongest trends are currently GBP (bullish), AUD (bearish), JPY (bearish). The strongest momentum was seen yesterday in EUR (bearish), CHF (bullish), JPY (bearish).