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Market review

from 24 to 28 April
Artem Alekseev Аналитик «Olymp Trade»
Artem Alekseev
Аналитик «Olymp Trade»

Fundamentals

Monday 17.04.2017 On Monday the exchanges were closed for the Easter holiday. China’s GDP numbers were noteworthy among the fundamentals news. GDP and industrial output continue to climb. The actual number was 6.9% against the forecast of 6.8%. Also, Bank of Japan Governor Kuroda spoke on Monday. His speech in no way affected the value of the national currency.
Tuesday 18.04.2017 The number of construction permits issued in the United States was released on April 18. The indicator rose to 1.26 million. At 10:05 GMT Theresa May announced that a snap parliamentary election would be held. According to experts, May made this decision out of political considerations, i.e., the Labor party’s losses of its seats.
Wednesday 19.04.2017 The Eurozone's consumer price index was published on Wednesday. It was 1.5%. As always on Wednesdays, traders were keenly watching oil inventories. The US Department of Energy’s data were not very strong. Inventories fell by 1.034 million barrels while they were predicted to fall by 1 million barrels. This had no appreciable effect on the cost of the black gold.
Thursday 20.04.2017 Data on the number of initial jobless claims released on Thursday were worse than expected. The predicted number of new applications was 241,000, but the actual number was 244,000.
Friday 21.04.2017 Given the weak fundamentals, the dollar continued to lose ground against the euro. Note, however, that the risks for euro are growing significantly, since this Sunday will see the first round of the elections in France.

Stocks

Monday 17.04.2017 On Monday, the American entertainment company Netflix, which is traded on the NASDAQ, reported. The company released a respectable report, with an EPS of $0.40. The US stock market edged up on Monday, but the overall trend remains negative.
Tuesday 18.03.2017 The report from Goldman Sachs disappointed investors. The company’s per share profit of $5.15 was worse than expected. At Tuesday's opening the company’s stock formed a gap down, losing about 20 points at the opening. By contrast, Bank of America's EPS rose. Its profit per share was $0.41 against a predicted $0.35.
Wednesday 19.04.2017 Morgan Stanley, the US-based global financial giant traded on the NYSE, reported on Wednesday. The news was good: Its EPS was $1. The company's shares surged on the news. The bears later tried to close the gap, but failed. For now, the price gap can therefore be classified as a trend reversal gap.
Thursday 20.04.2017 Philip Morris's earnings report was not very strong. Its EPS shrank to $0.98 versus the forecast of $1.03.
Friday 21.04.2017 The US Dow Jones continues to decline, and the NASDAQ Composite is trading flat. Apple shares broke through the middle Bollinger band and took off from the support line at $140.

Commodities

Gold and Oil Gold fell over the week, but political tensions and the succession of terrorist acts are dampening investors’ mood. Judging by the rate of growth in the assets of funds that trade gold, investors are not yet in any hurry to take their money out of the gold equivalent, which is keeping gold around the $1280 mark.
The proximity of France’s presidential election and the recent shooting in Paris are aggravating an already fraught situation: there is no clear leader in the race, and events are boosting the rating of the combative Marine Le Pen. This will also maintain interest in gold as a safe haven together with the reserve currencies.
Brent crude fell to $53/bbl for the week, occasionally breaking through this mark downward. The deciding factors in the decline are the strengthening of the US dollar and the continued growth in US oil production since the beginning of this year. Nor can we forget the steadily growing number of drilling rigs: Last week Baker Hughes announced an increase by another 11 rigs for the week. Today’s number can be interpreted like this: if the number increases by fewer than 10, it’s a good sign that will lead to a weekly decline in US oil production for the current week. If the number of rigs again rises by 11+, this is a bad sign, indicating the continuation of the aggressive US oil policy.

Technical analysis:

EUR/USD: +0,82%

CAD/JPY: -0,56%

USD/JPY: +0,46%

USD/CAD: +1,04%

EUR/JPY: +1,29%

GBP/USD: +2,09%

EUR/GBP: -1,24%

USD/CHF: -0,64%

AUD/USD: -0,67%

AUD/JPY: -0,21%

GBP/JPY: +2,55%

CHF/JPY: +1,12%

EUR/CAD: +1,86%

AUD/CAD: +0,36%

NZD/JPY: +0,54%

NZD/USD: +0,09%

AUD/NZD: -0,75%

GBP/AUD: +2,78%

EUR/AUD: +1,52%

EUR/CHF: 0,17%

GBP/CHF: +1,43%

EUR/NZD: +0,75%

AUD/CHF: -1,31%

GBP/NZD: +2,01%

USD/ MXN: +1,79%

GBP/CAD: +3,14%

BTC/USD: +6,46%

USD/RUB: -0,13%

USD/SGD: -0,04%

EUR/USD

As we predicted last week, the bears made fairly successful attacks this week. The resistance was at 1.0700. Note that, as of this writing, the level has not been broken through. Technically, we might therefore anticipate that the bears might still be in charge at the start of next week. Time will tell.

GBP/USD

Our prediction turned out to be wrong. We have to acknowledge our errors. The pound rose against the dollar at Theresa May’s announcement of snap parliamentary elections on June 8, 2017. Technically the pound is approaching the resistance line, the 9-EMA, on the monthly charts. If this boundary is broken through bottom up at 1.2800, we might even ponder a reversal of the long-term trend. The mid-term trend is apparently already broken.

USD/JPY

The pair edged up over the week. On the daily charts the dollar is testing the 9-day moving average, attempting to break through. The intersection of the MACD and signal line hints at continued growth, but the formation of a bearish flag pattern points to a decline. By the look of it, the position is still off the market. At least until the MA is broken through.

USD/CHF

As we already noted, the bears continued attacking the franc. The currency went past parity. The intersection of the 9-day moving average and the middle Bollinger band points to a continued decline. If the attack continues, the target will be 0.9900.

AUD/USD

The breakthrough of the MA on the aussie's daily charts turned out to be false. The aussie again reversed, losing against the dollar. The support is at 0.7460. If the bulls try to take the situation in hand, for starters they will have to overcome an MA with a boundary of 0.7540 (0.7550) again.

USD/CAD

In this instance, our forecast fully aligned with reality. The US dollar not only reached 1.3450, but broke through it and went 20 pip higher. Technically, there may be a bounce and a double top on the daily charts.

NZD/USD

The kiwi turned out to be locked in a narrow trading corridor with boundaries at 0.6930 – 0.7050. Technically the MACDF began to fall, giving indirect indications that the bears will try to attack.

Oil

Technically, both the technical indicators and the moving averages point to a continued downtrend, both intra-day and over the coming week. Oil is again approaching the lower boundaries of the local price range at $52-57. If the lower boundary is overcome, we will quite likely see even lower numbers, right down to $50, a psychological barrier. For now, the closest support line is at the $52.50/bbl mark.
Next week, we'd advise again paying attention to preliminary oil inventory numbers from the American Petroleum Institute (API) on Tuesday and to the Department of Energy (EIA) report on Wednesday. New statistics from Baker Hughes, which indicated a rise in the number of drilling rigs a week earlier, will end the week. The forecast growth is 10-12 rigs for now.
Note that it is only a little more than a month until the meeting of OPEC and non-OPEC representatives on May 25 in Vienna. This means that oil industry representatives from the various members of the pact will try to find a reason to extend it; they will probably speak publicly. Of course, verbal interventions can also strengthen oil.

Gold

Technically, the indicators and moving averages indicate a rather positive trend in all timeframes, even in the weekly range. Gold might ultimately remain above the key support of $1280 and trade at the top of the $1250-$1300 range, approaching the coveted level of $1300. This pattern could be seen a week earlier, when gold almost reached this level during limited trading on Good Friday.
Next week we should keep an eye on the initial results of the French election on April 23. Also, the inordinate strengthening of the US dollar might adversely affect the erratic gold quotes.