Daily Market Reviews

Economic Calendar for April 26, 2017

Time (GMT) Currency Event Previous Forecast
01:30 AUD CPI q/q 0.5% 0.6%
01:30 AUD Trimmed Mean CPI q/q 0.4% 0.5%
04:30 JPY All Industries Activity m/m 0.1% 0.8%
12:30 CAD Core Retail Sales m/m 1.7%
12:30 CAD Retail Sales m/m 2.2%
14:30 USD Crude Oil Inventories -1.0M


Global Market Overview

The Euro continued making strong gains against rivals on Tuesday as traders remain fully bullish over the shared currency following the weekend results of the first round French presidential elections.  The Pound was also mostly stronger for the day as it benefitted from the stronger Euro.  The USD was mostly weaker and fell versus rival currencies.  The Yen softened broadly as traders continued to unwind their safe haven trades.  Gold continued falling on Tuesday as the resurgence of risk appetite among traders has put serious downward pressure on the haven asset.  Crude recovered from the previous sessions’ losses, but gains were mute by remaining concerns over rising U.S. crude production levels.

Daily Currency Pair Analysis

EUR/USD – The pair continued rising for a second consecutive session on Tuesday, making another strong gain and slicing up through the 1.0900 level.  It’s the highest level for the pair in five months, and it’s likely we will see a continuation of the upward trend to test the next level of resistance at the 1.1050 level in the coming days.  With the U.S. president looking to weaken the USD and uncertainties over further defections from the European Union pretty much laid to rest we might even see the pair testing the major resistance up at the 1.1400 level, although we don’t think that is likely with looming interest rate hikes in the U.S. and little potential for monetary tightening in the European Union anytime soon.

USD/JPY – The pair made major leaps higher on Tuesday, gaining 150 pips and slicing up through the major resistance at the 110.50 level.  By the close the pair was above the 111.00 level as traders continued to dump their safe haven positions in light of the resurgence in risk appetite around the globe.  The pair is now facing light resistance at the 111.75 level, but if it can get past that we could get a continued rally in the pair that will take it back above the 113.00 level and up as far as the 114.00 level.  We don’t think the pair can get beyond that at this time, and there is also a good chance that this rally in the pair will break down on any type of uncertainty or geopolitical risk that might present itself.

USD/CAD – The pair moved up through the 1.3600 level during the session on Tuesday, but was unable to remain that high as resistance struck and sent the pair back down for a much smaller gain on the day.  In addition, the resulting candle is a bearish pin bar and if the market respects the formation we could see the pair breaking lower in the coming sessions.  More likely is that we will see some sideways movement out of the pair as we don’t think we will get a rally in crude that would send the pair lower, nor do we think the pair can get through the resistance at the 1.3600 level.  This only leaves sideways as the most likely direction for the pair at the current time.  We think a range of 1.3475 to 1.3550 makes sense for the pair, and the next few sessions will tell if this is accurate.

GBP/USD – The pair moved higher on Tuesday, trading back above the 1.2800 level.  The pair remains in the range seen over the past week however, as it continues to trade back and forth over the 1.2800 level.  Traders have become more bullish over the Pound following the call for the June 8th snap elections in the U.K., but haven’t become bullish enough to send the pair any higher than the 1.2800 level as the results of the snap elections, while widely expected to favor the conservative party, are not guaranteed.  Until that uncertainty is out of the way we could see the pair continue to flounder around the 1.2800 level, at least in the absence of any other catalyst.


Commodity Update

Gold – Gold continued in its retreat on Tuesday, reaching a two week low in the wake of the return of risk appetite among traders following the results of this past weekend’s French elections.  The drop on Tuesday took gold below the $1,275 support level, and the precious metal is showing no signs of buying from traders.  The return of risk appetite in markets is placing serious downward pressure on gold, and we could see a drop all the way to the $1,225 support level before any signs of a recovery appear.

Oil – Crude rebounded on Tuesday, recovering somewhat from Monday’s losses, but gains remained capped by concerns over rising U.S. production levels.  The modest gains weren’t enough to bring crude back above the $50 a barrel level, and with the concerns over U.S. production and the future of OPEC production cuts weighing on the commodity we think it will struggle to get above the $50 level.  We will need a catalyst such as a drop in U.S. inventory levels of crude, or a continuation of the OPEC production cuts next month, if we want to see crude trade back above the $50 a barrel level.