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Mixed markets: Asian stocks and US futures are stable after closing last week significantly higher. Returns on US ten-year bonds remain below 1.60%, somewhat helping stocks.
Cryptocurrencies have been attempting a recovery after collapsing over the weekend. Bitcoin is trading at around $57,000 after dipping below $52,000 on Sunday and nearing $65,000 last week. Ethereum and XRP are mimicking BTC’s moves while Dogecoin stands out with rapid gains. The sharp moves come after Coinbase, one of the world’s largest digital asset exchanges, listed on Wall Street.
EUR/USD is trading below 1.20 as political uncertainty in Germany’s ruling CDU party persists while more shots are getting into arms. The European Central Bank’s rate decision is awaited on Thursday.
GBP/USD is clinging to gains around 1.3850 as nearly half the population has received at least one inoculation. Gold has been holding onto its gains, benefiting from low US yields with XAU/USD hovering above $1,770.
The US reached 40% of its population with one jab, as all Americans are now offered the vaccine, but COVID-19 cases continue rising in several states. The reopening boosted economic activity as seen in March’s 9.8% leap in retail sales and a sharp drop in jobless claims to 576,000.
On the other hand, global coronavirus cases continue rising, hitting new records above five million per week. India is among the countries suffering a sharp increase.
In China, Huarong, a troubled asset manager, has paid a large bond debt, alleviating worries that were circulating in recent weeks. The world’s second-largest economy grew at a rapid annual pace in the first quarter this year but industrial output expansion somewhat disappointed.
The GBP/USD pair is starting to erode the near-term downtrend at 1.3821, leaving the focus on the 1.3920 level, Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank, reports.
Cable is holding over the nine-month uptrend
“GBP/USD stays bid while above the nine-month uptrend line at 1.3653 and has started to erode the 1.3821 resistance line to leave attention on the 1.3920 6th April high.”
“Key resistance is seen at 1.4018, the March high and this guards 1.4238/45, the recent high and the March 2018 high.”
Starting out a fresh week on Monday, gold remains in a bullish consolidative mode near $1780 levels as rising covid infections and China’s boost to gold imports render XAU-positive.
XAU/USD gathers strength to test $1800 as USD remains vulnerable
“US-Russia geopolitical tensions and the continued rise in the covid infections globally also lifted gold’s safe-haven appeal.”
“Reports that China has granted domestic and international banks permission to import large amounts of gold into the country could continue to offer support to the gold bulls.”
“Looking ahead, the sentiment on Wall Street and upbeat on the US infrastructure spending plan will be closely eyed for fresh impetus.”
“A sustained break above the channel resistance at $1784 is likely to trigger a fresh rally towards the $1796 measured target.”
“If the price closes the hourly candlestick below the upward-sloping 21-hourly moving average (HMA) at $1777 then a test of the channel support at $1773 could be in the offing.”
“The bullish 50-HMA support at $1766 could rescue the XAU bulls. Further down, the psychological $1750 level could challenge the bearish commitments.”
In opinion of FX Strategists at UOB Group, AUD/USD’s upside is seen advancing to the 0.7785 level in the next weeks.
24-hour view: “We highlighted last Friday that ‘while conditions remain overbought and momentum is beginning to wane, there is scope for AUD to make another push higher towards 0.7785’. Our expectation did not materialize as AUD traded sideways between 0.7724 and 0.7760. Conditions remain overbought and momentum has waned further. That said, it is too early to expect a sustained pullback. For today, AUD is likely to trade within a lower range of 0.7700/0.7745.”
Next 1-3 weeks: “We continue to hold the same view from yesterday (15 Apr, spot at 0.7730). As highlighted, ‘risk is for a higher AUD towards 0.7785’. Shorter-term overbought conditions suggest that AUD may struggle to break 0.7785 within these few days. Looking ahead, the next resistance is at 0.7820. A break of 0.7670 (‘strong support’ level was at 0.7645 yesterday) would indicate that the upside risk has dissipated.”
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