Market news

Overnight Headlines

*USD rises for the first time this week, trading above 90

*US equities closed higher with the Nasdaq outperforming

*Gold pulls back from highs last seen in early January

US equities rose midweek driven by consumer discretionary, communication services and financial sectors. Futures are giving back some of those gains with Asian markets generally lower while European stocks are set to open  marginally higher.

USD bounced off multi-week lows, gaining against most of its peers amidst month-end rebalancing flows. EUR/USD fell the most in two weeks, USD/JPY pushed above 109 as US bond yields rose with the kiwi testing 0.73, its highest level since February after the hawkish surprise from the RBNZ.

Market Thoughts – Quiet markets, low vols

Markets are fairly tranquil at the moment with the Vix back down to a 17 handle and currency volatility remaining low. There is some speculation that the PBoC will allow a stronger yuan to offset the rise in commodity prices and possibly work against the secondary impact for future inflation. Meanwhile, another Fed official suggested at some point it will become important for the Fed to discuss plans to tighten its asset purchase programme.

There’s a slew of US data out later with the second print of the US first quarter GDP expected to tick up a tenth to +6.5% q/q. Weekly initial jobless claims will be checked to see any ongoing improvement though we are still some way off the pre-pandemic prints around 280k for the headline number. More focus will be on tomorrow’s PCE inflation data.

Chart of the Day – Bitcoin consolidating

After the massive volatility of last week, with crypto coins grabbing seemingly everyone’s attention in the non-finance world, prices of bitcoin have settled down as expected after such strong selling seen in the previous two weeks with the world’s most popular crypto losing over half its value at one stage.

Prices have bounced back above the 50% retrace from the high/lows of this year which sits just under $35k but the 200-day SMA is capping any further upside this week around $40,746. The end of February low at $43,016 will offer further resistance above while this week’s low at $34,407 sits on the 50% retrace level as firm support.

Jamie DuttaAnalyst / Trader

"With extensive experience as a full time trader and financial market commentator, I have worked as a trader in top tier investment banks and trading houses, including Morgan Stanley and GAIN Capital trading Forex, Index derivatives. and Bonds. I combine technical analysis with a deep fundamental knowledge to identify trade set-ups. My real life experience allows me to break down the complexities of financial jargon and trading. This means everyone can better understand the compelling forces of greed and fear which are realised every day in countless ways across markets."

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