Brazil’s Real Bulls See More Gains as Pandemic, Fiscal Woes Ease

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Key Notes From The April FOMC Meeting

Policy Held Unchanged The April FOMC meeting, which concluded yesterday, failed to deliver any fireworks and saw a mostly muted market reaction. The Fed held its monetary policy unchanged, as expected, keeping rates at record lows of 0.10% and asset purchases at $120 billion per month. In terms of the statement issues alongside the monetary policy decision, the Fed stuck broadly to its previous statement though there were some subtle changes to note.On the Economy On the economy, the Fed struck a more upbeat tone noting that Amid progress on vaccinations and strong policy support, indicators of economic activity and employment have strengthened.” The statement went on to note that those areas of the US economy which had been hardest hit during the pandemic had “shown improvement”. Most notably, perhaps was the Fed’s assessment of the current risks to the US economy which were no longer described as “considerable”, which was the term used at the last meeting.On Inflation On inflation, the Fed noted that inflation had “risen” though stuck to its message that higher inflation would likely be transitory and not require a change in policy. Rising inflation expectations have been a key focus point over recent months though the Fed has been resolute in downplaying inflationary risks. In the press conference following the meeting Powell opined: “It seems unlikely, frankly, that we would see inflation moving up in a persistent way that would actually move inflation expectations up while there’s still significant slack in the labor market.”Forward Guidance Looking ahead, Powell said that the central bank was still “a long way off” removing accommodative monetary policy and said that policymakers haven’t yet discussed removing any easing. Powell noted that: “The economy is a long way from our goals and is likely to take some time for substantial further progress to be achieved,” he said. “We expect to maintain an accommodative stance to monetary policy until these employment and inflation outcomes are achieved.”On Rates On rates, Powell said: “With regard to interest rates, we continue to expect it will be appropriate to maintain the current zero to 0.25 percent target range for the federal funds rate until labor market conditions have reached levels consistent with the committee’s assessment of maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time.”In all, meeting passed as expected with the Fed acknowledging the improvements in the economy and the outlook while still fighting to keep its cards close to its chest and downplay any tapering expectations. Still, with vaccinations progressing and re-opening developing further, the June meeting could find the Fed in a very different situation which might require attention.Technical Views US10YYields have turned a little higher following the meeting with price breaking out of the bull flag structure. 10Y is now trading back above the 1.584 level following the correction from 1.770 highs. If the market can break back above the 1.685 level bulls will be looking for a test of those highs next. Alternatively, if bears manage to carve out a lower high here, a further break below 1.584 could see the 1.424 support brought into play.Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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Market Spotlight: Trading US GDP & Jobless Claims

US GDP & Weekly Jobless Claims Due The advance quarter-on-quarter USD GDP reading is due later today and will be the main data focus for the US session following the prior quarter’s 4.3% reading, the market is now looking for GDO to have expanded to 6.8% over the last quarter. With easing of restrictions over Q1 and with vaccination progress and fiscal stimulus having lifted sentiment and activity, there are upside risks in today’s data.Similarly, the weekly jobless claims number is also expected to improve today from 547k last week to 545k. Again, with re-opening underway across America and with better optimism as a result of the ongoing vaccination effort, today’s reading could beat expectations. While the Fed was keen to stick to its message of caution regarding inflation, in acknowledging the improvement in the economy and the outlook, incoming positive data sets are likely to receive more attention and create more movement in the Dollar and USD-linked assets.Where to Trade Today’s US Data? USDJPYThe correction from the failed break above the bull channel top and bearish trend line from the 2018 highs has seen price reversing down to test the bull channel low, which held as support. Price has now moved back above the 108.39 level and while above here there is room for a continuation higher towards the 109.86 level and beyond.Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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Sterling rallies but politics could limit gains

As the US dollar resumed its now 4-week down trend, earlier posting a 2-month low at 90.42 by the measure of the USDIndex, the Sterling has posted a 9-day high versus the US dollar while hitting respective 2- and 9-day highs against the Euro and Yen.

Speculation that the Fed might have at least hinted at a tapering, which hadn’t been our view, was thwarted, and longer-dated Treasury yields and the US dollar duly took a turn lower. The 10-year T-note yield was pressed back under 1.62% after yesterday foraying above 1.65% ahead of the Fed’s announcement. The limited magnitude of movement shows that most market participants viewed the FOMC as being uneventful, and the Fed’s description of inflation pressures as likely being “transitory” as unsurprising.

Sterling, which has developed a pandemic-era proclivity to correlate positively with risk appetite in global markets, has lifted concurrently with a burst in risk appetite in global markets today. The currency has over the last month underperformed the currencies we track (being the G10 units plus several others), aside from the case against the US dollar, but still registers as an outperformer on the year-to-date, with only the oil-correlating Canadian dollar and Norwegian krone having risen by a greater extent than the UK currency.

Overall  the bullish outlook on the Pound against the Euro has been retained, and more especially the low-yielding currencies of surplus economies, such as Japan and Switzerland, which is hinged on the expectation that the global pandemic recovery trade will continue into 2022. The rootedness of JGB yields makes GBPJPY, USDJPY and even EURJPY attractive target for speculators to play shifting yield differentials. Rate differentials are in favour of the USD, GBP and EUR if we compare it with Japanese yields hence this is a key factor that could likely to keep JPY under pressure against these majors.

Meanwhile, the UK’s main equity indices are replete with globally-focused cyclical stocks, which should benefit as major economies rebound. The broad trade-weighted value of the Pound still remains near historically weak levels, too. These factors will have to offset any erosion in UK productivity and investment that may become apparent as a consequence of Brexit.

UK local elections in early May will warrant monitoring, particularly with regard to how the pro-independence parties fare, and whether they can reach a supermajority in the Scottish parliament. This would legitimise their calls for another independence referendum, though polls have been tipping out of their favour lately. It’s a close call: Politico’s poll-of-polls tracker currently shows 46% favour remaining in the UK with 45% favouring an exit, with the remaining 9% undecided.

Nevertheless, along with elections the BoE is also one of the risky events for the week ahead and May overall. The BoE officials seem increasingly optimistic on the recovery and after underperforming last year, the UK economy is likely to post above Eurozone growth in 2021. With vaccinations proceeding rapidly and the economy set to re-open fully in coming months some expect the central bank to start scaling back asset purchases soon. BoE deputy governor Broadbent told a newspaper last week that the economy will see “very rapid growth at least over the next couple of quarter”. That leaves some event risk for the May BoE meeting, although we suspect that the BoE may be reluctant to move before the Fed, although with markets already pricing in 15 higher rates by the end of the year the pound could struggle at least short term, if there is no hawkish leaning signal next week.

GBPUSD – DAILY CHART

GBPUSD return to 1.3900 area; however the positive momentum appears to be weak so far and currently impotent to break the 1.4010 Resistance level. This is a crucial Resistance level reflecting the 4 upwards fractals and the key 61.8% Fibonacci level since February’s down leg. As the asset remains above  20-, 50- and 200-day SMA the long term outlook remains positive. However only a decisive break of 1.4010 could define price direction for May.  

GBPJPY – WEEKLY CHART

GBPJPY is sustaining a neutral to positive outlook as it held 2020-2021 gains intact, nudging  a strong floor at the 50-day SMA despite the zeroing of the positive sentiment. Currently turned above 152.00 covering more than 60% of the distance until 2-years peak at 153.40. The fresh buying seen after dovish FED could retest the latter as momentum indicators started rising further with daily RSI at 61. However only a confirmed break above 153.40 could suggest the continuation of 8-month rally.

Click here to access our Economic Calendar

Andria Pichidi

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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Apple Results – An Update

APPLE, Daily

During yesterday’s US trading session, the Dow Jones industrial average fell more than 150 points (0.4%) to just below historical highs, while the S&P500 stabilized by surpassing the new record it had reached two days ago. Meanwhile, the Nasdaq was 0.3% below its own all-time highs after Tuesday’s fall, while Apple dropped by 1%, as the stock continues to build a cup base with a buy point of $145.19 pending the publication of its quarter profit results. (1)

Through a conference call, The Apple Maven reviewed Apple’s second fiscal quarter earnings report, which Wall Street analysts expected to be outstanding. Revenue was expected to see an increase of 32% year after year with earnings per share reaching 53%, strengthened by the iPhone they hoped would benefit from a solid line and simple compositions that would position it with strong double-digit growth and the iMac as another candidate to be the most successful segment of the company during the quarter, because Apple’s PC sales expectations were positioned to increase by 50% or more, compared to last year. (2)

From Apple’s earnings history, it can be noted that its quarterly EPS performance, despite fluctuations during the coronavirus pandemic, has remained generally positive, except for a decline during the fourth quarter of 2020 that was 3.0%, while quarters with year-on-year profit growth have ranged from 3.8% to 34.6%. For its part, Apple’s revenue has also shown steady improvement in recent quarters, posting year-on-year revenue gains in 9 of the last 11 quarters, having only a small stagnation with a gain of 0.5% during the second quarter, but recording a 21.4% year-on-year increase for the first quarter of 2021, considered to be the strongest rise in nearly three years. (3)

It should be noted that Apple surpassed the $100 billion revenue milestone for the first time in the previous quarter, thanks to the boost it received from strong sales across all product categories, highlighting iPhone 5G sales; Apple reported gross revenue of $11.4 billion, an increase of 21.3% year-on-year and with first quarter earnings of $1.68 per share, a 34.4% increase year on year, exceeding analysts’ expectations of $1.42 per share. (4)

Apple announced within the financial results of its second quarter ended March 27, 2021 that it earned a record income of $89.6 billion, up 54% year-over-year, with quarterly diluted earnings per share of $1.40, and international sales accounted for 67% of the quarter’s revenue. The company’s board of directors declared a cash dividend of $0.22 per share of the company’s common stock, a 7% increase to be paid on May 13, 2021, and also authorized a $90 billion increase to the existing share repurchase program. (5)

Apple shares rose more than 4%, earning a EPS of $1.40 versus the estimated $0.99. In the revenue sector, its iPhone product earned revenue of $47.940 million versus $41.430 estimated, an increase of 65.5% year-on-year, its iMac product reported $9.1 billion versus $6.86 billion estimated, an increase of 70.1% year on year, its iPad product published revenues of $7.80 billion versus $5.58 billion estimated, an increase of 78.9% year-over-year, while the revenue in the sectors from services and other products made $16.9 billion with an increase of 26.7% and $7.83 billion with an increase of 24% year on year, respectively. (6)

In early pre-market trading today #APPL is changing hands up 3% at 137.71. US equity markets open at 13:30 GMT, following US Advanced GDP readings for Q1 GDP, which could exceed 7.1%, although consensus is for 6.8%, and Weekly claims which are expected around the 545,000 level again, at 12:30 GMT.

1.- https://www.investors.com/market-trend/stock-market-today/dow-jones-falls-as-apple-earnings-on-deck-alphabet-amd-jump-on-earnings/

2.- https://www.thestreet.com/apple/news/apple-earnings-day-3-predictions-on-apple-stock-price-moves

3.- https://www.investopedia.com/apple-q2-2021-earnings-report-preview-5180676

4.- https://finance.yahoo.com/news/apple-earnings-preview-expect-134106373.html

5.- https://www.apple.com/newsroom/2021/04/apple-reports-second-quarter-results/

6.- https://www.cnbc.com/2021/04/28/apple-aapl-earnings-q2-2021.html

Click here to access our Economic Calendar

Aldo Weidner Zapien

Reginal Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

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The Crude Chronicles - Episode 87

Oil Traders Increase Upside BetsThe latest CFTC COT institutional positioning report showed that crude traders increased their net ling positions in crude oil last week by a further 7,305k contracts, taking the total position to 499,983k contracts. This latest uptick in upside exposure came amidst the ongoing decline in the US Dollar which has helped keep oil prices supported recently. Price action this week has seen oil futures drifting higher, though still largely contained within the recent 57.24 – 65.52 range.USD Remains Weak, Supporting Oil This week, the upside in oil has once again mostly been a reflection of continued weakness in the US Dollar. The sell-off in the greenback was maintained this week with the Fed keeping rates on hold as expected. While the Fed sounded more upbeat on the economy, it maintained its message that any uptick in inflation will be due to transitory factors, maintaining the view that easing will need to remain in place across this year.Global Risk Backdrop Supportive In terms of the global risk backdrop, equities have remained mostly buoyant this week which has helped oil prices continue higher. With the focus still on the global vaccination effort and expectations of global re-opening, the demand outlook for oil still looks set to improve dramatically over the remainder of the year.EIA Reports Less Than Expected Build The rise in oil prices this week came despite the Energy Information Administration in the US reporting a build in crude stockpiles. Headline crude inventories were seen rising by 90k barrels last week, taking the total inventories position up to 493.1 million barrels.However, given the expectations for a 659k barrel increase, this result did little to detract oil from its current rally. Similarly, gasoline inventories were seen rising by 92k barrels, but this was also well below the expected 508k barrel rise. Distillates were lower over the week, falling by 3.3 million barrels against an expected 648k barrel drop.Technical ViewsWTIThe rally in crude oil prices this week has seen the market rising back up to challenge the highs printed last week, which are holding as resistance for now, just ahead of the 65.52 level. The bounce off the 57.24 level is slowly drifting higher and, while price remains within the broad bullish-channel off 2020 lows, the outlook remains geared towards further upside. A break above the 65.52 level should target the 69.53 level next.Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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Central bank digital currencies are coming, whether you like it or not

• SEE MORE What is “Britcoin” and what could it mean for you?
• SEE MORE A beginner’s guide to bitcoin: how to buy bitcoin

Today we talk central bank digital currencies – CBDCs.

Are they evil? The final step into the Brave New World Orwellian Great Reset Dystopia that we seem to be heading inevitably, inextricably towards?

Or are they the on-ramp (or, as we British call it, the slip road) to the bitcoin motorway?

The answer is both.

CBDCs can give governments extraordinary control over your spending

The big issue with CBDCs is that their money is programmable. That means that the issuer can build certain rules into it.

If I have a £10 note in my hand, I am free to do pretty much as I like with it. I can put the money towards buying a house; I can give it to a beggar; I can buy booze or fags with it. I can go to some shady part of town and buy some weed. What’s more, if I want to keep what I spend that money on to myself – if I want privacy, in other words – I can have it. 

Cash grants its user freedom. Freedom is a power. When you start using banks, you lose a certain amount of that freedom. In exchange for that loss of freedom you get convenience. You can now safely store, receive and send over distance large sums of money. On the other hand, the bank sets the terms of the relationship and it knows exactly how much money you have spent  and received, and exactly what it was spent on and received for. 

Any large sums the banks will usually question. It can limit how much you send in a day and, in some cases, prevent you sending and receiving money altogether – to and from bitcoin exchanges, for example. 

Programmable money – CBDCs – means that you, the user, have even less control over your money. Pretty much anything can be coded into a CBDC. China is looking at expiry dates in its CBDCs, for example. You have to spend the money by a certain time or it expires. Perhaps there is a national crisis which requires, according to the central planners, a boost of consumer spending, so an expiry gets implemented. Harsh on those who would rather save, but this is a national crisis. Money velocity can be manipulated by changing expiry dates.

It could be arranged that the money won’t work in certain retailers, on certain products or in certain jurisdictions. Every transaction ever made will be visible to and traceable by the all-seeing government. Should Big Brother choose to watch, he will see all.

It’s likely that, in some jurisdictions, other bodies will have direct access to your wallet – for the removal of taxes, for example. Imagine the headache you will have retrieving money that is yours when the wrong amount was removed.

Different rates of interest can be granted to different users. Perhaps you are wealthy and, in the same way as you are in the higher tax threshold, you might also get put in the negative interest rate threshold. 

Monetary policy can be linked to your social rating as well as your credit rating. If a user has a high social credit score – they do and say the right things in other words – they might qualify for a more generous interest rate. Or they might receive higher levels of a universal basic income. 

In the same way that the US freezes enemies – Iran or North Korea, for example – out of the international financial system through a process known as “dollar weaponisation,” so the same possibility will exist for enemies of the state at home. I am not saying this will happen, but I am saying that programmable money opens up the possibility.

A government can pre-program the types of loans banks can give out. Perhaps only loans for a certain type of house or a certain type of business will be allowed. 

CBDCs are inevitable – but cryptocurrencies provide an alternative

As you can see, scope is opened up for Orwellian levels of economic intervention in the economy. Money, like taxes are today, will be used to control and shape behaviour. 

In exchange for getting its CBDC over the line, a government might promise that this or that intervention will never happen. But promises get broken. Different governments get elected. At times of crisis, such as a global pandemic, all the rules go out of the window.

You can’t, however, uninvent a technology. Once it’s there it gets used. CBDCs are inevitable. Nine out of ten central banks are now looking into them, according to a recent study by Fintech and IT Benchmarks. They are coming. It’s a question of when, not if. 

Benevolent governments with respect for freedom will take a more laissez faire approach; the authoritarians will use CBDCs as a means to implement their designs.

There will be unintended consequences and loopholes galore. There always are. Crony capitalism will go even more bananas than it is now. Special interest groups, big corporations, big banks and whoever else is rubbing elbows with powerful politicians will curry all sorts of favour. Snouts will be in the trough wherever you look. What could possibly go wrong in an economy where success is determined more by social credit rating than merit?

The Cantillon effect, named after 18th-century economist Richard Cantillon, describes an inflationary process whereby those closest to the issuance of new money benefit most, while those furthest from it lose out. Things will get Cantastic, so to speak. Who knows what the counterfeiters will make of it?

Bitcoin fixes many things, and perhaps it fixes this Great Reset as well, because crypto provides alternatives. Those alternatives mean competition, and that competition should keep CBDCs that suffer from overreach and mission creep in check.  

What’s more, once ordinary consumers start getting the hang of central bank digital wallets, the use of wallets and peer-to-peer money will be normalised. And right there is your slip road, your on-ramp into bitcoin.

In short, CBDCs should benefit crypto. Heck, Rishi Sunak is even calling the Bank of England’s coin “Britcoin” (some hypocrisy given the FCA’s stance towards crypto). Nevertheless, it’s a tacit recognition that bitcoin is top dog. 

So, fintech companies aside, the way to play the CBDC might be to own a healthy portfolio of crypto.

Daylight Robbery – How Tax Shaped The Past And Will Change The Future is now out in paperback at Amazon and all good bookstores with the audiobook, read by Dominic, on Audible and elsewhere.

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Investment Bank Outlook 29-04-2021

RBC Capital Markets Overnight, USD has stabilised, consolidating the small losses (0.3% in DXY terms) that came in the immediate wake of the FOMC announcement. Similarly, US 10yr yields have settled around 4bp lower. The FOMC statement was almost entirely unchanged from the previous version and the reaction largely reflects some disappointment that Powell did not drop stronger hints on the start of tapering in the press conference. When asked, he simply said “it's not time yet.”From here on, we go back to watching data for clues on when this might change. USD’s soft tone is also helped a rally in tech stocks (NASDAQ future +1.0%) after strong results from Apple and Facebook. Subsequent to the Fed, overnight news flow has been limited.Day ahead: The first estimate of US Q1 GDP is the highlight of the day’s releases (see USD below). German April CPI data may shift expectations for tomorrow’s Eurozone release (see EUR). Otherwise, the calendar is packed with a steady stream of relatively minor releases (see table below). All of China’s April PMI releases are out overnight (official and Caixin, manufacturing and non‐manufacturing). US Q1 earnings announcements are due from Amazon and TwitterCiti No surprises from the Fed or President Biden overnight have seen markets take this as a green light for further gains. Positive tech earnings overnight too have supported equity indices comparatively more than risky FX, but nonetheless, we see a number of pairs testing/eyeing key levels including GBP, AUD and EUR. Ahead, further USD weakness is expedted by CitiFX Strategy, with the narrative turning back towards reflation trades and stability in rates space for now.Data today should not derail the narrative either, with USD jobless claims, Q1 GDP and core PCE likely to be overlooked given the Fed still sees “some time” before “substantial further progress”.EUR looks to Germany CPI and unemployment, as well as Eurozone economic confidence data. These prints could be interesting at the margin, but again unlikely to materially move the market. Lastly, EM sees a TRY inflation report as the only point of note.Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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Market Update – April 29 – What a night!!!

Market News Today –  Japan was closed for a holiday today but elsewhere stock markets got a boost from the FOMC’s commitment to ongoing stimulus and Biden’s USD 1.8 trillion social support plan, with stimulus expected to underpin the recovery in world growth.

• Action was seen in the front end of the Treasury market. The 2-year yield dropped 1.6 bps to 0.164% from a test of 0.18% after the FOMC assured tapering and lift off was still not even in the conversation. There had been some suspicion, and pricing, for a possible bearish hint, which was not forthcoming.
• Wall Street was mixed and choppy on the day before closing with slight losses. With the US indexes just off record highs initially and a mix of earnings.
• Apple, Facebook earn massive profits amid increased scrutiny.
• Apple reported record fiscal second-quarter revenue of $89.6 billion on surging sales of premium iPhones and pandemic-induced buying of its other products. Apple authorized an additional $90 billion in stock buybacks.
• NatWest returned to profit in the first quarter of 2021($1.32 billion pre-tax).
• In Australia, much higher than expected import and export prices will keep lingering inflation concerns alive. Import price inflation finally turned positive and export prices jumped more than 11%.
• The Fed acknowledged rising inflation though and German preliminary inflation data for April is likely to be a focus today and could weigh on bonds later in the session.
• Amazon is raising wages for its hourly employees after a majority of workers at one of the e-commerce giant’s warehouses voted not to unionize.
• Facebook  temporarily blocked posts containing hashtags calling on Indian Prime Minister Narendra Modi to resign, then reinstated them on Wednesday, saying the action had been taken in error.

In FX markets, the USD continued to weaken as a doggedly dovish outlook from the FED and spending plans from the White House gave a green light for the global reflation trade, although the Yen also struggled and USDJPY held pretty steady at 108.61. The front end WTI future meanwhile is trading at USD 64.11 per barrel. The EUR and GBP gained against a largely weaker USD, with EURUSD at 1.2135 and cable just under the 1.40 mark. The AUD was under pressure. USOIL above $64 as bullish forecasts for a demand recovery this summer offset concerns of rising COVID-19 cases in India, Japan and Brazil. Palladium & Copper retreats from the all-time high hit on Tuesday.

Today – The markets will quickly turn their attention back to earnings and data after the uneventful FOMC. Today’s  data releases include German jobless numbers as well as Eurozone ESI confidence data, while earnings calendar features reports from Amazon, Mastercard, Merck, Thermo Fisher, McDonald’s, Shell, Bristol-Myers Squibb, Caterpillar, American Tower, S&P Global, Altria, Southern Company, Twitter etc.

 

Click here to access our Economic Calendar

Andria Pichidi

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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Dollar Remains Near Lows as Fed Shrugs Off Rising Commodity Prices

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Daily Market Outlook, April 29, 2021

Daily Market Outlook, April 29, 2021 Fed Chair Powell reiterated that now is not the time to talk about tapering yet and it is likely to be some time before substantial progress is made to achieve the Fed’s goals. However, US equity markets pared initial gains after Powell acknowledged that “some of the asset prices are high” and parts of the market are a “bit frothy”.The S&P 500 touched a record high during the day but closed down 0.08% with VIX was also lower at 17.28. Apple, Facebook and AMD also reported strong earnings, while Alphabet announced a buyback boost. The UST bonds turned higher with the 10-year yield at 1.61% after Powell reiterated that a taper is not on the cards yet as the recovery remains “uneven and far from complete”. Meanwhile, the ADB upgraded its growth forecast for developing Asia from 6.8% to 7.3% for 2021 and 5.3% in 2022, but trimmed Southeast Asia’s 2021 growth forecast from 5.5% to 4.4% due to a projected decline in Myanmar (-9.8%). Separately, S&P has warned that India’s second Covid wave poses downside risks to GDP which could impede its pace and scale of recovery and will have implications for its sovereign credit rating.The USD dipped post-FOMC and amid month-end flows, after staying largely supported in Asia and early LDN. Commodity currencies outperformed as a whole, with the oil-linked NOK and CAD gaining the most after another leg higher in the crude complex. The EUR took out the high seen earlier this week, while the USDJPY retreated from the 109.00 handle to close little-changed on the day. Commodity currencies, as a bloc, have outperformed amid the Risk-On tilt, and with the commodity up-cycle resuming. For now, there may still be legs to run, so long as equities continue to hold up (note however the “signs of froth” comment from Powell and Gundlach saying equities overvalued).CITI: Month-end FX Hedging prelimThe preliminary estimate of month-end FX hedge rebalancing flows points to a greater than average USD selling need this month.· US equities and bonds have out-performed in April, meaning that foreigners’ needs to hedge gains in US assets will likely dominate this month-end’s rebalancing. Both bond and equity investors are likely to be USD sellers, although equities hedge rebalancing contributes 86% to the signal.· The signal exceeds 1.5 standard deviations in all crosses except GBP where good performance of UK equities and bonds creates some offsetting GBP selling needs.· Average signal strength across all USD crosses measures 1.7 standard deviations. Signals of this magnitude have occurred only 5% of the time since 2004.· There are plenty of data releases and central bank speakers scheduled for Friday, 30 April, albeit most of them fall hours ahead of the 4pm Ldn fix.G10 FX Options Expiries for 10AM New York Cut(Hedging effect can often draw spot toward strikes pre expiry if nearby)Larger FX Option PipelineEUR/USD: Apr29 $1.1850(E1.5bln), $1.1875-85(E1.1bln), $1.1890-1.1905(E1.4bln-EUR puts)USD/JPY: Apr29 Y106.25($1.3bln), Y106.60-70($1.5bln-USD puts), Y106.85-107.00($1.5bln), Y108.45-50($1.2bln-USD puts), Y109.00($1.0bln-USD puts)EUR/JPY: Apr29 Y129.85-95(E1.1bln-EUR puts)GBP/USD: May03 $1.3700(Gbp1.3bln)USD/CHF: Apr29 Chf0.9200($1.1bln-USD puts)AUD/USD: May04 $0.8000(A$1.1bln)AUD/JPY: Apr29 Y81.00(A$1.1bln-AUD calls)AUD/NZD: May04 N$1.0855-65(A$2.0bln-AUD puts)USD/CAD: Apr29 C$1.2550($1.15bln-USD puts)USD/MXN: Apr30 Mxn19.50($1.4bln)USD/ZAR: Apr29 Zar14.20($1.0bln-USD puts)Technical & Trade ViewsEURUSD Bias: Bearish below 1.1990 bullish aboveEURUSD From a technical and trading perspective, as 1.1990 supports look for a test of trendline resistance at 1.2125. UPDATE>>Target achieved expect profit taking pullback as 1.2080 supports bulls target a 1.22 test. A close sub 1.2080 would warn of deeper corrective cycleFlow reports suggest topside congestion through to the 1.2160 level from the highs and then while there maybe some weak stops just beyond stronger offers are likely through the level to the 1.2200 area with weak stops again appearing but very limited and the 1.2250 again seeing the stronger offers through to the 1.2300 level with the market then having the ability to test this year’s highs, downside bids light through to the 1.2000 area and then weak stops on a move through the 1.1920 level opening the market to the 1.1850 area where stronger congestion appears.GBPUSD Bias: Bullish above 1.39 bearish belowGBPUSD From a technical and trading perspective, as 1.3960 contains upside attempts look for a test of range support towards 1.37. UPDATE>> Through 1.3960 exposes offers and stops above 1.40 again.Flow reports suggest topside offers into the 1.4000 area and likely weak stops on a push through the 1.4020 level however, light congestion around the sentimental levels 1.4050, 1.4100 area likely to be a little stronger with long time trend line in the area then opening to weak sentimental to the 1.4200 strong offers with break out stops likely through the 1.4250 area.USDJPY Bias: Bullish above 108 targeting 112USDJPY From a technical and trading perspective, as 107.50 acts as support there is potential for a test of the pivotal 108.50, through here will open another look at 110. Failure below 107 would be a significant bearish developmentFlow reports suggest downside bids into the 107.80 however, a break through the level is likely to see weak stops and breakout stops appearing and the market free to quickly test 107.50 and an old trendline then nothing until closer to the 107.00 area where stronger bids start to appear but the downside opening to Feb levels, Topside offers appearing through the 109.00 level light offers until the 109.40 area is likely to see strong congestion increasing through to the 110.00 level before stronger stops are likely to appear.AUDUSD Bias: Bearish below .7700 bullish aboveAUDUSD From a technical and trading perspective, the closing breach of .7730 has relieved downside pressure opening a move to test offers towards .7820Flow reports suggest topside offers continue through the 0.7800 area with a break through the 0.7820 area likely to see weak stops and a test towards the sentimental 0.7850 area however, while there maybe some offers in the area the market looks to be fairly open through to the 79 cents level and ultimately ranges from the end of Feb, downside bids light through the 0.7700 level with weak stops likely on a move through the 0.7680 before stronger bids around the 0.7650 area and continuing through to the 0.7600 likely increasing in size, any further moves are likely to see strong support into the 0.7550 to calm the situation.Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/daily-market-outlook-april-29-2021"
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S&P500: Ready, Steady, Go!

Good day,The price of American stock index S&P500 is forming dojis for the 3rd day in a row, compressing the spring. We feel that this asset might either break it through and jump or target the level of 3959.00 and potentially gain the required support.Having broken the flag, the British pound is heading up. In principle, the pullback is complete therefore the asset might potentially target the level of 1.4200.Gold has pulled back to the broken level of 1767.00. It is currently forming the dojis, signifying the potential jump and the move aside from the support. Let us remind you that the asset started ascending move from the double bottom that has formed earlier. This bottom is a very strong figure, signifying the potential trend reversal.Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/sp500-ready-steady-go"
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Dollar Down, Euro Up as Fed Maintains Dovish Monetary Policy

from Forex News https://www.investing.com/news/forex-news/dollar-down-euro-up-as-fed-maintains-dovish-monetary-policy-2489238
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No more kebabs for bitcoins as Turkey's crypto-payment ban looms

from Forex News https://www.investing.com/news/forex-news/no-more-kebabs-for-bitcoins-as-turkeys-cryptopayment-ban-looms-2488231
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