US equities enjoyed a moderate increase last week as the DJ100 and S&P 500 moves closed to a record and the Nasdaq 100 lagging but also trending upwards. Volatility and liquidity were down due to the Easter season. European equities also hit record highs, with Germany’s DAX leading the week at another record high but also global stock markets were generally higher over the week.
Last week’ headline was that market sentiment is risk-on. The demand has been ignited by dovish monetary policy and stimulus by the US.
In the FX market, traders witnessed the strongest increase of the Swiss franc and the euro and the strongest drop of the British pound. Though, the US dollar moved in a counter trend direction, so the FX market was generally varied without any solid leaders.
This week kicks off with a Fed Chair Powell interview on early Monday to discuss the economy conducted by 60 Minutes. Check below the most important news this week:
- Monday; The Bank of Canada’s Business Outlook Survey and US 10-y Bond Auction
- Tuesday; The Australian NZIER and NAB Business Confidence Survey, The US monthly Consumer Price Index.
- Wednesday; The New Zealand’s RBNZ Rate Statement and Official Cash Rate, US Crude Oil Inventories and the Fed Chair Powell Speech.
- Thursday; The Australian Employment Change and Unemployment rate, The US monthly Retail Sales and Unemployment Claims
- Friday; China’s quarterly GDP and Unemployment Rate and The US Prelim UoM Consumer Sentiment
Several big US banks and financial firms will report their Q1 earnings next week, giving the market its first indication of just how strong earnings might be this year. These includes JPMorgan, Goldman Sachs, Bank of America, Wells Fargo, and BlackRock.
According to data from FactSet Research, total earnings for the S&P500 should rise 24.5% in the quarter from a year ago and financial segment earnings are likely to rise 80% from the first quarter of 2020.
Major Currencies Performance and Signals
EUR/USD
The euro rallied significantly during the week, breaking above the top of the hammer from the previous week. We expect the bullish bias to continue this week as well.
FORECAST: BUY
Resistance: 1.1900, 1.1950, 1.2000
Support: 1.1850, 1.1800, 1.1750
GBP/USD
Fears related to the AstraZeneca vaccine and Brexit are beating the British pound. The UK macroeconomic calendar will remain light until next Tuesday. The Cable is in position to extend its drop towards the 1.3500 price zone.
FORECAST: SELL
Resistance: 1.3750, 1.3800, 1.3850
Support: 1.3700, 1.3650, 1.3600
AUD/USD
Last week, the US equity record highs seemed to boost the Aussie. Australian macroeconomic figures continue to indicate economic growth. The AUDUSD pair has a rang to bearish bias, and break below April lows should signal a steeper decline. We remain Neutral this week on the Aussie.
FORECAST: NEUTRAL
Resistance: 0.7650, 0.7700, 0.7750
Support: 0.7600, 0.7550, 0.7500
USD/JPY
US equities’ record highs and restrained government bond yields kept the pair towards the mean. The dovish comments from Fed’s chief Powell cooled expectations for higher inflation. This week we expect a continuation of the bulls targeting 111 price level.
FORECAST: BUY
Resistance: 110.00, 110.50, 111.00
Support: 109.50, 109.00, 108.50
USD/CAD
The good March Net Change in Employment report and WTI falls from Monday’s open, then range bound to Friday helped the Canadian dollar last week. There are some concerns of the Covid-19 increase as it looms to restrict Canadian economic recovery.
FORECAST: SELL
Resistance: 1.2550, 1.2600, 1.2650
Support: 1.2500, 1.2450, 1.2400
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