Date Thursday April 16, 2021
Drivers
A sharp increase in the manufacturing index in New Zealand this morning from 58.4 to 66.8, in addition to Q1 China GDP numbers which showed the economy expanded by 18.3% YoY and 0.6% QoQ, and an increase in Chinese retail sales by a record 34.2%, is adding to the overall global optimism for a quick recovery and pushing European equities higher this morning. All eyes are on the FTSE100 index after it cracked the 7000-mark for the first time since the start of the Covid19 pandemic, and whether it will end the week above it or not.

Wall Street also inched higher yesterday following robust economic data, with US retail sales surging 9.8% vs 5.8% consensus and jobless claims totaling 576k vs 703k consensus. The Dow and the S&P500 ripped to another all-time high while the Nasdaq settled less than 0.5% off its February record buoyed by big tech names, including Microsoft, Apple, and Facebook, as investors are confident the tech giants are going to continue to be able to deliver enough cash flow to justify the high valuations.

Surprisingly, the benchmark 10-year US Treasury yield dipped below 1.55% for the first time since early March, which suggests that investors are finally accepting the Fed’s assurances that interest rates will remain lower longer. The US Dollar, however, did not tumble along with US yields this time. Time to sell the news. Except for Gold, accelerating to $1770 an ounce in a couple of hours after cracking our resistance level at $1748.

The crypto craze also continues with Ethereum (ETH) flying to a record $2500 before retracing back lower earlier this morning. Bitcoin (BTC) also declined to nearly $61000 as momentum seems to be fading following the Coinbase IPO two days ago.

Later today, finalized inflation figures from the Eurozone as well as UoM consumer sentiment will have an impact on the day.

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Market Updates

EURUSD Despite US retail sales surging 9.8% versus 5.8% consensus, and US jobless claims totaling 576k versus 703k consensus, the EURUSD didn’t move much, still capped by the 1.1985 resistance on the upside and supported by the 200-period moving average around 1.1920. Later today, finalized inflation figures from the Eurozone will be in focus.

GBPUSDThe British Pound dropped below the 200-period moving average on the hourly timeframe, and slightly below our support at 1.3765, signaling weakening momentum. But, on the longer-term timeframe GBPUSD is still bullish. Moreover, there are no material stats due out of the UK today, therefore we expect another choppy and directionless day.

USDJPYThe US Dollar against the Japanese Yen dropped slightly below the ¥108.80 support, after US yields tumbled to nearly 1.52% following strong US economic data. But surprisingly, the USDJPY currency pair managed to go back above crucial ¥108.80 earlier this morning during the Asian trading session, which means that the market is trying to build a base to continue the long-term uptrend.

FTSE 100The FTSE100 moved above our 6960-resistance, following strong US economic data yesterday that pushed global equities significantly higher. The UK blue-chip index accelerated higher again this morning and is currently attempting to cross the 7000-mark, as markets in Asia ended the week on a largely positive note, following robust growth GDP figures from China, with a sustained move above 7000 to trigger an acceleration to the upside. The RSI however is in overbought territory, suggesting a weakening momentum.

DOW JONESThe Dow Jones Industrial Average surged slightly beyond 34000 on the back of figures showing US jobless claims came in at their lowest level since the start of the covid-19 pandemic, while retail sales soaring 9.8% in March as Americans began spending their $1400 stimulus cheques. Technically speaking however, the RSI is signaling a weakening momentum in the short-term, with a move back below 34000 to trigger further declines.

DAX 30The German DAX ended yesterday’s session on a fresh record close, tracking a record in US equities driven by tech, leisure, and travel stocks. Strong Retail Sales out of the US along with better-than-expected Jobless Claims and stronger bank earnings boosted risk on sentiment while momentum indicators are signaling a shift lower with the 50-period SMA around 15250 as nearest target.

GOLDA surprise drop in US10Y yields yesterday after better-than-expected Initial Jobless Claims data (Actual: 576K, Previous: 744K, Consensus: 700K) spurred bullish demand on the yellow metal which ended the session above $1760 resistance, now turned into support. Technically, $1760 – $1767 support/resistance level to direct today’s session ahead of Michigan Consumer Sentiment data.

USOILChinese GDP data released in early trade showed a record expansion during the first quarter, boosting higher prints on WTI Crude with $63.85 key resistance level to direct today’s session. An hourly close above $63.85 will keep bullish momentum strong with $64.40 as next resistance target. Baker Hughes US Oil Rig Count data expected later today..

 

 

Rony Nehme

Rony Nehme

Chief Market Analyst at SquaredFinancial

Rony has over twenty years of experience in financial planning and professional proprietary trading in the equity and currency markets. Prior to joining SquaredFinancial, Rony educated and coached numerous traders helping them find their edge and arming them with proven trading methodologies to successfully battle the markets. Rony obtained a B.S. in Finance from Concordia University in Montreal, and his professional designations include Certified Financial Planner CFP® obtained from the Canadian Securities Institute.

 

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