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22 April 21
Markets torn between vaccine and virus news, ahead of ECB, US jobless claims
Markets are calm after a positive day, with yields and the dollar falling. Optimism about a developed-world vaccine-led recovery is countered by surges in covid cases in India and elsewhere. The ECB is set to leave its policy unchanged and US jobless claims are eyed as well.
Mixed mood: Coronavirus cases are dropping in the US as the world’s largest economy reached 40% of its population with at least one inoculation and optimism about Europe’s recovery is also eyed. On the other hand, India hit a record of over 300,000 infections in one day and Japan’s worsening situation also worries investors. S&P 500 futures are stable after Wednesday’s bounce.
The European Central Bank is set to leave its policy unchanged and take stock of the improving economic environment amid growing US demand and hopes for a significant rebound. Christine Lagarde, President of the ECB, will likely be asked about the bank’s bond-buying scheme and if it intends to taper it down at any point.
USD/CAD remains on low ground around 1.25 in the aftermath of the Bank of Canada’s decision to taper its purchases of government debt. The hawkish move, on the backdrop of America’s economic boom and rising housing prices, may precede a similar move by the Federal Reserve.
The US dollar is off the highs as US 10-year yields extend their drop below 1.55%. Gold has failed in its attempt to move above $1,800 and remains correlated with returns on US debt. US unemployment claims are set to show a rise from last week’s surprisingly low figure of 576,000. Existing Home Sales for March are also awaited.
USD/CAD: Positive BoC to cap rallies, further losses below 1.2450 – OCBC
The CAD recovered from Tuesday’s underperformance as the Bank of Canada came in more positive than expected. Terence Wu, FX Strategist at OCBC Bank, notes that further downside in the immediate term will require a clean break of the 1.2450 support.
Continue to favour the CAD space in the medium-term
“The USD/CAD outperformed, with the BoC first out of the gates in terms of tapering asset purchases. In a positive statement overall, the guidance on inflation and output gap seemed to imply that rate hikes may be on the table by late-2022 – perhaps earlier than what the market expected the BoC to communicate and ahead of other major central banks.”
“Expect the BoC’s stance to place a cap above the USD/CAD going forward.”
“The 1.2450/00 support zone is again into play for the USD/CAD. Any further breach would leave the pair targeting the 1.2370/00 March lows.”
https://www.investing.com/currencies/usd-cad-chart
EUR/USD: A tilt to the upside from the ECB could boost the euro to 1.2110
EUR/USD has bounced off its lows as US yields have been retreating. To 1.2110 or 1.1950? Lagarde is set to break the tie between bulls and bears, Yohay Elam, an Analyst at FXStreet, reports.
The ECB’s critical rate decision is set to rock the euro
“COVID-19 cases have begun falling in the US, showing the effects of reaching 40% of its population with one vaccine dose. Britain and even Europe are also on the right path. However, there are reasons for global markets to hit the ground on Earth Day as coronavirus cases have hit new highs in India – topping 300,000 daily infections – and the situation in other parts of the world remains concerned as well. This explains why some still seek the safety of the dollar.”
“The European Central Bank announces its decision on Thursday. The Frankfurt-based institution is broadly expected to leave its policy unchanged, with the deposit rate at -0.50% and the Pandemic Emergency Purchase Program at €1.850 trillion. However, Europe’s quicker immunization effort, America’s economic boom, and other reasons may prompt reporters to ask ECB President Christine Lagarde about potentially slowing down the bond-buying scheme or not deploying in full.”
“Moreover, the ECB’s decision comes less than 24 hours after the Bank of Canada announced it will taper bond buys. Is the BoC an outlier or just the first central bank to act? The ECB will likely take its time with any such decision, but optimism could lift the euro.”
“Resistance awaits at 1.2080, April’s high, followed by 1.2110, which was a swing high in March. The upside target is 1.23.”
“Below critical support at 1.20, the next cushion is at 1.1950, followed by 1.1930 and 1.1860.”
https://www.investing.com/currencies/eur-usd-chart
Gold Price Futures (GC) Technical Analysis – Plenty of Room to Upside if Buyers Successfully Defend $1788.50
The direction of the June Comex gold market on Thursday is likely to be determined by trader reaction to the major 50% level at $1788.50.
Daily Swing Chart Technical Forecast
The direction of the June Comex gold market on Thursday is likely to be determined by trader reaction to the major 50% level at $1788.50.
Bullish Scenario
A sustained move over $1788.50 will indicate the presence of buyers. Taking out $1798.40 will signal a resumption of the uptrend. This is a potential trigger point for an acceleration to the upside with the main top at $1817.60 the next likely upside target.
Bearish Scenario
A sustained move under $1788.50 will signal the buying is weak and the selling is stronger. This could lead to a labored break with potential support levels lined up at $1781.00, $1767.60, $1763.50 and $1760.80.
https://www.investing.com/currencies/xau-usd-chart
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