Date : 18th March 2021.

Dollar on Bid | 18 March 2021.

Action remains mixed and subdued ahead of today’ s FOMC results.

The market cheered as Fed Chair Powell assured that there would not be a pre-emptive tightening. Yields pulled back from session highs initially, leaving modest gains on the longer dated issues and pulling short and medium term yields underwater. Fed Powell stressed that the Fed will clearly telegraph to the markets before it begins to taper QE purchases. Wall Street rallied.

For bonds the initial relief over the FOMC’s assurances on the rate outlook was short lived and Treasury yields started to move higher again, with bonds across Asia also under pressure as the optimistic economic outlook for the US economy revived reflation trades.

Headlines:

The increasingly optimistic growth outlook for the US contrasts with concerns that the much slower vaccine rollout in the EU will delay the recovery in the Eurozone. GER30 is up 0.8%, versus a 0.4% rise in the UK100.

Fresh reports that the Bank of Japan is considering widening the trading range around the 10-year target added to pressure on JGBs as the BoJ starts its 2-day meeting.

Australian shares dragged down by technology and healthcare stocks.

An economic contraction in the final quarter of 2020 sent New Zealand’s benchmark index to its biggest drop in two weeks. GDP at -1% q/q for Q4.

The JPN225 was up 1.01% at the close and the Topix managed to clear the 2000 mark for the first time since 1991.

Australia Feb. employment change +88.7K (vs expected +30K) & unemployment rate 5.8% (vs expected 6.3%).

A high-level diplomatic meeting taking place today, in Alaska between China and the US; China has outlined its hopes for an easing of tensions as a result of the meeting but also expressed low expectations.

Forex Market

Dollar on bid as Yields rally

JPY – spiked to 109.29 ahead of EU open.
EUR – pulled back to 1.1948 from 1.1988 highs.
GBP – lifted to 1.3993 as the focus turns to the BoE, which is also expected to signal a strengthened growth outlook, while keeping policy settings stable.
AUD – steadied close to 20-day SMA.
CAD – dropped sharply as Powell removed lingering fears that the Fed would begin to remove accommodation before 2023, leaving the pair at 1.2365 from 1.2490 ahead of the announcement.
USOil –drops for 5th straight day after US inventories rise. The EIA inventory data showed a 2.4 mln bbl rise in crude stocks.
Gold – rose 0.35% to $1,755.47 per ounce by 01:19 GMT, as the Fed’s pledge to keep rates low and worries about inflation pushed up the precious metals. But currently lower on stronger Dollar.

Today: The focus turns to the BoE, which is also expected to signal a strengthened growth outlook, while keeping policy settings stable. The calendar also includes Eurozone trade numbers as well as comments from ECB President Lagarde.

BoE Preview: The bank is widely anticipated to leave policy unchanged by unanimous vote at the nine-member committee meeting, which will leave the repo rate at its historic low of 0.10% and the QE total at GBP 875 bln. Some focus will be on the statement and minutes, though these aren’t likely to be too interesting so soon after last month revising its quarterly forecasts. Nonetheless, it will be interesting to see the policymakers’ take on the transition afoot in markets — the spike in Gilt and global sovereign yields and the tumble and rotation in global stock markets. Most likely the guidance will be sanguine given the basis of improving global growth prospects, and the effective Covid vaccination program in the UK, juxtaposed to the level of spare capacity in the domestic economy.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HotForex Economic calendar.

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Click HERE to READ more Market news.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Date : 24th March 2021.

Market Update – March 24 – Better PMI data for UK & Eurozone.

EURGBP, H1

Preliminary March UK PMI survey data came in much stronger than expected, with the headline composite reading rising to a seven-month high of 56.6, up from 49.6 in February. The median forecast had been for a much more modest improvement, to 50.6. The manufacturing PMI headline came in at a 40-month high at 57.9, improving from 55.1 in the month prior. The services PMI rose to a seven-month high at 56.8, advancing sharply from 49.5, with the sector expanding again after four consecutive months of contraction. This is the first month since last September that both the manufacturing and services sectors have seen a rise in new orders.

A rebound in sales into easing lockdown measures, which has come on the back of a so-far successful and rapid Covid vaccination program, has driven the improvement. Consumer confidence increased and the survey highlighted a surge in demand for residential property services. It is also notable that service sector activity overtook manufacturing sector activity for the first time in the pandemic era, and the survey also evidenced the release of pent-up demand, with businesses rebuilding capacity in response to rising consumer demand.

The data showed the first increase in staffing numbers in the private economy since February 2020, with the rate of job creation at the highest in almost two years. Optimism about the 12 months ahead  rose for a third consecutive month, and stood at the highest level seen since the index began in July 2012. Input costs spiked by the most in over four years, which was accompanied by the highest rate of output charge inflation in over three years.

Earlier Eurozone Composite PMI was also back in expansion territory, with the overall reading lifting to an 8-month high of 52.5 from 48.8 in the previous month. The breakdown still reflects a two-speed recovery, with the manufacturing sector leading the way. The Manufacturing Output PMI as well as the general Manufacturing PMI were at record highs in March with readings of 63.0 and 57.9 respectively. The Services PMI remained in contraction territory at 48.8, but this was up from 45.7 in the previous month and indeed a 7-month high. Germany reported the first expansion of activity for six months, which ties in with the cautious re-opening of activity in March, although given that the government already signalled an extended “quiet period” over Easter as case numbers rise, the risk of a set-back is high. The manufacturing sector meanwhile is bursting at the seams, with the backlog of orders now rising again, particularly in Germany. The developments are also good news for the labour market, with Markit reporting that manufacturers saw headcounts rise at a rate not seen since August 2018 and that the services sector reported the largest rise in employment since the start of the pandemic.

Overall a very good report, that suggests the first quarter of the year was less weak than feared and that even in the services sector things are starting to look a bit better. In the very short term there may be a setback, but with the EU procurement scheme ensuring that vaccines are pretty evenly distributed across the EU/EEA area, even if national rollouts differ, the area remains set to bounce back in the second half of the year.

EURGBP spiked to 0.8645 earlier following the surprisingly weak UK CPI data, subsequently retraced to under today’s pivot point at 0.8617, before settling over 0.8620. The 20-day moving average at 0.8600 is the key support level in the higher timeframes, with immediate resistance at 0.8700 and the upper Bollinger Band.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HotForex Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Date : 26th March 2021.

Market Update – March 26 – USD & Equities higher as risk taking seeps back.

Market News Today – USD gains on safe-haven & better econ. news, EUR & JPY pressured, Sterling, AUD & NZD higher. US stock markets higher (+0.5%), Nikkei closed +1.56%. Quarter end rebalancing & risk seeping back into markets. Good US data (Claims at 1-year lows (under 700k – this week last year 3.2 million), Q4 GDP upgraded to +4.3% and all the Fedspeak cool with the path for inflation. Gold $1730, USOil $59.60 (The Evergreen is not going anywhere soon – $10bn of global trade held up). Overnight – PBOC sees 6% growth for China in 2021, CPI in Tokyo ticks higher and UK Retail sales in line at 2.1%. Biden – 100 million vaccines in 42 days wants 200 million in 100 days, EU cases and vaccine problems persist – leaders disunited over action.

Investor sentiment improved on the last day of the week and Asian stock markets were broadly higher, after a positive close on Wall Street yesterday. Vaccine optimism outbalanced reports of a climb in global Covid-19 case numbers and strengthened confidence in a recovery of global economic activity later in the year. Chinese markets bounced after being weighed down yesterday by fears of escalating US-China tensions. Stable US yields also helped somewhat. The US 10-year rate is currently down -0.1 bp at 1.63%, after another lacklustre (7-yr) auction yesterday. Topix and Nikkei closed with gains of 1.5% and 1.6% respectively and the ASX lifted 0.5%. Hang Seng and CSI 300 also closed up 1.7% and 2.2%, respectively.

In FX markets the Yen weakened and USDJPY lifted to 109.27, although the Dollar fell back against most other currencies. AUD and NZD were supported. The EUR managed to recover some ground against the Dollar and is currently trading at 1.1783. Cable lifting to 1.3755 following the rebound in UK retail sales, which lifted 2.4% m/m in February after falling -8.7% m/m at the start of the year, is adding to the positive mood. The annual rate improved to -1.1% y/y from -3.7% y/y.

Today – German IFO, US PCE & core PCE, personal income & spending, Uni. of Michigan (final).

Biggest (FX) Mover @ (07:30 GMT) AUDJPY (+0.68%) Volatile week continues, big rally from 82.50 lows yesterday. Rallied to test R2 at 83.37. Faster MAs remain aligned higher, RSI 69 and rising to test OB zone, MACD histogram & signal line aligned higher and both back over 0 line for first time since 18th. Stochs OB but still rising. H1 ATR 0.1228, Daily ATR 0.7285.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HotForex Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Date : 31st March 2021.

Market Update – March 31.

Trading Leveraged Products is risky

Market News Today – Treasuries are closing the quarter pretty much as they began, with the belly and long end of the market losing ground. The improving outlooks on growth, fostering a hefty reflation trade, have been boosting yields. The market has also been pricing in inflationary pressures. The 10-year was 1.7 bps cheaper at 1.72%, though rates were off early highs of 1.774% and 1.433% respectively on short covering and positioning into month- and quarter-end.

Currently they are posting fractional gains as markets await more details on stimulus from US President Biden, who is set to speak on infrastructure today. Elsewhere the details on the fallout from Archegos’ collapse weighed on sentiment overnight, and after European markets closed broadly higher yesterday, we are likely to see a more cautious tone, ahead of key data.

In FX markets the Yen weakened and USDJPY lifted to 110.85, although the Dollar strengthened against most other currencies, with USDIndex hitting 93.45. AUD and NZD steadied at March lows. The EUR rebounded on EU open at 1.1725 but remains off 1.1800. Cable dropped to 1.3755 (200-hour SMA). Oil prices remain supported on expectations OPEC+ will keep a lid on output, above 50-DMA for a 4th day. Gold remains low at 1,676.

Today – Data releases today include German jobless numbers and preliminary Eurozone inflation data. The former is likely to show a decline in the sa jobless reading, as parts of the economy re-opened, while the latter is seen jumping sharply higher on the back of base effects, although the headline should remain firmly below the ECB’s implicit target of 2%. The final reading for UK Q4 GDP numbers and US ADP are due today, and President Biden is also due to speak.

Biggest (FX) Mover @ (07:30 GMT) CADJPY (+0.54%) The asset prices spiked at 87.86 reaching R2 , extending the 6 day rally and recovering nearly all March losses. Fast MAs remain are flattened for now, with RSI turning lower below 70, however MACD histogram & signal line are bullishly crossed. These suggest near term consolidation or even pullback with the overall outlook holding positive. H1 ATR 0.126, Daily ATR 0.65.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HotForex Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Andria Pichidi
Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Date : 2nd April 2021.

NFP – Biggest monthly jobs gain since August 2020.

Trading Leveraged Products is risky

US March nonfarm payrolls report was a blowout! Payrolls climbed 916,000 after the 468,000 (was 379,000) jump in February and the 233,000 (was 166,000) increase in January for net 156,000 in upward revisions. It is the biggest jump since August’s 1.583 million. The unemployment rate fell to 6.0% from 6.2%.

[MEDIA=facebook]509029903821489[/MEDIA]

The labour force surged 347,000 following the 50,000 rebound in February. Household employment was up a hefty 609,000 after gaining 208,000 previously. Average hourly earnings dipped -0.1% but following an upwardly revised 0.3% (was 0.2%) jump. The workweek advanced to 34.9 hours from 34.6. The labor force participation rate edged up to 61.5% from 61.4%.

Total private payrolls were up 780,000 versus 558,000 (was 465,000) previously (and compares to the 517,000 ADP gain). The service sector added 597,000 versus February’s 602,000 (was 513,000) pop. The goods sector added 183,000 with construction contributing 110,000. Leisure and hospitality payrolls rose 280,000, and there was a 136,000 rise in government jobs.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HotForex Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Andria Pichidi
Market Analyst
HotForex   

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Date : 6th April 2021.

Market Update – April 6 – Equities Rally & USD Cools.

Trading Leveraged Products is risky

Market News Today – US Equities closed at new all-time highs, (Service PMIs at record, TSLA beats delivery targets – shares up +4%) USD and 10-yr yields cool. No change to rates (0.1%), bond buying or outlook from RBA, AUD unfazed. Yellen suggests global minimum tax rate, Credit Suisse announces $4.7bn hit from Archegos margin call. Overnight JPY earnings better, spending worse, CNY Services PMIs beat. UK shops pubs & restaurants open from April 12, NZ-Aus flight corridor April 19. Globally 658 million vaccines administered across 151 countries. The EU vaccine roll-out and new infections in India & Brazil remain areas of concern.

RBA – Governor Lowe stressed that the “board is committed to maintaining highly supportive monetary policy conditions until its goals are achieved” and that the cash rate won’t rise “until actual inflation is sustainably within the 2-3% target range”. “For this to occur, wages growth will have to be materially higher than it is currently”. At the same time, Lowe warned that “given the environment of rising housing prices and low interest rates, the bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained”. AUD house prices increased the most since 1988 in February.

Week Ahead – RBA (6th) EU PMIs & FOMC Minutes (7th), ECB Minutes, Weekly Claims & Powell speech (8th), CAD Jobs & US PPI (9th).

The Dollar has found its feet after taking a tumble in thin markets yesterday. The bullish case for the Dollar remains strong, given the outsized fiscal stimulus coursing through the US economy alongside the relatively advanced states of Covid vaccination progress in the US and likelihood for further widening in the US Treasury yield differential versus peers. The March jobs report was a blowout, while the ISM services index surged to a record peak. Wall Street also scaled to new record highs yesterday. The only blot on the bullish dollar landscape is the uber accommodative stance of the Fed, which has been downplaying the scope for runaway inflation risks, although the relatively high Treasury yields, among low- and sub-zero yielding peers, will offset this. The USDIndex has lifted to the upper 92.0s after yesterday posting a 12-day low at 92.52. EURUSD has concurrently tested the waters below 1.1800 after making a 12-day peak at 1.1820. USDJPY has lifted back above 110.00. AUDUSD has dropped back from one-week highs, while Cable has tipped back under 1.3900 after earlier pegging an 18-day high at 1.3920. The Pound yesterday printed a 14-month high versus the Euro, which although occurring in holiday-thinned trading reflects the contrasting fortunes of the reopening UK economy with the re-restricted economies across the Channel. The rate of new Covid cases is now 4% of what it was at the peak seen in early January, despite a more than doubling in testing over that time, while the death rate is less than 3% of what it was at the highs.

Today – EZ unemployment, ECB asset purchases, US JOLTS.

Biggest (FX) Mover @ (07:30 GMT) NZDCHF (+0.20%) rallied from test of 200MA on open, (0.6600) to PP at 0.6620 and over 50 MA. Yesterday declined from 0.6645 high. Faster MAs remain aligned higher, RSI 53 and rising, MACD histogram & signal line aligned higher but under 0 line from open after yesterday’s fall. Stochs rising. H1 ATR 0.0008 Daily ATR 0.0046.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HotForex Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Date : 9th April 2021.

Market Update – April 9 – USD & Yields heading for Weekly loss.

Trading Leveraged Products is risky

Market News Today – US Equities higher (USA500 hit new intra-day ATH 4098) USD weakness continues as 10-yr yields dip to 1.632%. Powell talked of “brighter outlook”, Bullard & Kashkari: “Fed in no rush to raise rates”. Daly – Bullish on recovery but Fed “we have to see substantial progress”. Unemployment claims missed again (744k vs 680k), counter to the big NFP beat last week. Gold rallied over $1750 and USOil under $60.00. Nikkei +0.5%. Overnight – Chinese PPI beat and at 2-year highs, AUD & NZD weaker, CHF Unemployment drops significantly but German Ind Prod. & Trade Balance both missed expectations.

The Dollar has steadied after printing fresh lows yesterday, which has been concomitant with the 10-year U.S. Treasury yield lifting back above 1.650% after yesterday posting a two-week low just under the 1.630% mark. The USDIndex has lifted to around 90.30 from the 17-day low that was logged at 92.0. EURUSD has concurrently ebbed back under 1.1900 from a 17-day peak at 1.1928, while USDJPY has recouped to the mid 109.00s from a 15-day low at 109.00.

Cable, meanwhile, has dropped to a new two-week low at 1.3671. The Pound has at the same time sank, to a fresh six-week high versus the euro and a two-week low in the case against the yen. Some narratives have been linking the UK currency’s notable underperformance this week to the blot-clotting concerns of the Oxford AstraZeneca Covid vaccine, though the yield correction in Gilts has been more pronounced than in some peers, including Bund and JGB yields, which is likely a stronger reason for sterling’s fall out of favour. The 10-year Gilt yield is at prevailing levels showing a 1 bp bigger decline from last week’s highs compared to even the US 10-year yield.

The Australian dollar has dropped quite steeply, by 0.8% in making an eight-day low versus the greenback at 0.7588, breaking through the lows of the choppy range that’s been seen this week. Softness in base metal prices and a sputtering price action across Asian stock markets have been weighing on cyclical currencies, such as the Aussie. Regarding stock markets, the MSCI All Country World index edged out a new record high during the early part of the Asia-Pacific session before drifting back. Chinese markets led equity markets lower in Asia, with perkier than expected inflation data out of China raising investor concerns of policy tightening.

Today – US PPI, Canadian labour market report, ECB’s de Guindos, Fed’s Kaplan.

Biggest (FX) Mover @ (07:30 GMT) AUDUSD (-0.79%) stalled at 0.7660 earlier from yesterday’s rally. Reversed significantly back under PP, S1 and 0.7600, S2 0.7580. MAs remain aligned lower, RSI 26, OS but still falling, MACD histogram & signal line aligned lower and under 0 line in this current hour. Stochs in OS zone and falling. H1 ATR 0.0011, Daily ATR 0.0067.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HotForex Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Date : 13th April 2021.

Q1 Earnings Season – The Banks.

This week the key Q1 Earnings season kicks off in earnest with many of the major US banks reporting. Q1 earnings are seen as key for setting the tone of company performances as the post-pandemic timeframe gains momentum as the vaccination rate continues to climb and states continue to open up. Overall the US equity markets closed at all-time highs again last week, with a strong close on Friday just shy of those inter-day highs. The USA500 closed at 4,123, the USA100 at 13,800 and the USA30 at 33,751.

The Financial sector has been a major beneficiary of the “reflation” trade and the $1.9 trillion Stimulus Bill and the proposed $2.25 trillion Infrastructure Bill, which are all likely to benefit the banking sector in particular. So far 20 of the S&P 500 companies have reported and on average they have beat expectations by 11%, which is over 1.5 times above their average over the last 3 years. Overall expectations for the S&P 500 is for Q1 Earnings to grow by a very significant 25%, which would be the best performing quarter since President Trump’s tax cut inspired Q1 2018. Additionally, what is more encouraging is that estimates have been rising as the Earnings Season arrives; normally they start to decline as the data starts to emerge. Back in late February/early March consensus was for 22% Q1 growth. This enthusiasm is tempered by the high valuations the S&P500 is running currently; forward earnings are currently projected at 22.3 times whereas in a normal economic cycle the historical average is 15 times earnings, hence the scepticsim over further growth from here. However, overall 2021 earnings growth remains very robust and is penciled in at 26.5% versus a -12.6% decline for 2020. Another key drag on future growth in 2021 is President Biden’s proposed increase in Corporation Tax to 28% from 21%; estimates suggest that this could reduce earnings by 7.4% for 2021.

Earnings season kicks off significantly tomorrow, (April 14) with big banks leading the charge. Reports are due from JP Morgan Chase, Goldman Sachs, Wells Fargo and First Republic Bank. Later in the week there will be data from Bank of America, Citigroup, BlackRock, U.S. Bancorp, Truist Financial, Morgan Stanley, HDFC Bank, PNC Financial, Bank of New York Mellon, State Street, Citizens Financial, Ally Financial.

Whatever the outcome, much is anticipated from the numbers and tomorrow (April 14) JP Morgan are first up at 12:00 GMT with expectations of an Earnings per share (EPS) of $3.10 and revenues increasing 5% to $30.10 billion, this is followed by Goldman Sachs at 12:25 GMT with consensus numbers of an EPS at $9.79 and revenues also up to $11.71 billion and also before the bell tomorrow is Wells Fargo at 13:05 GMT with an expected EPS of $0.69 on revenues of $17.41 billion. Last time JPM and Goldman Sachs both beat on both revenue and EPS numbers significantly whilst Wells Fargo missed, disappointing the markets. All three key banks remain technically Bullish trading north of their respective 20-day moving averages. On Monday (April 12) JPM closed at $153.07, a few dollars shy of the March 18 high at $157.18, Goldman Sachs closed down 2% at $324, some $23 below the March 18 high, whilst Wells Fargo closed at $39.98 off 1.93% for the day and $0.89 below the close on March 18.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HotForex Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Date : 15th April 2021.

Q1 Earnings Season – BAC and Citigroup.

This week the key Q1 Earnings season kicks off in earnest, with many of the major US banks reporting and expected to massively beat consensus, something that could please the bulls. But will this be the case? And if yes, then what? As Goldman Sachs and JPMorgan stated, Q1 is the peak in terms of earnings growth; even though  the absolute level of growth will still be very healthy,  deceleration is a powerful force in the market.

Nevertheless, investors seem to be waiting for  new catalysts before pushing valuations out much further and the earnings season provides a major focus against the background of conflicting virus and vaccine headlines.

Hence the earnings slate remains busy for the remainder of the week, and will include reports from UnitedHealth Group, Bank of America, Pepsico, Citigroup, BlackRock, U.S. Bancorp, Truist Financial, PPG, Delta Airlines, J.B. Hunt, Morgan Stanley, HDFC Bank, PNC Financial, Bank of New York Mellon, State Street, Kansas City Southern, Citizens Financial, Ally Financial.

Hence the focus today turns to Bank of America and Citigroup Inc. and their first Quarter earnings release for 2021.

The Bank of America (#BankofAmerica OR BOA) consensus recommendation is “Buy”, even though revenues are expected to miss as earnings are likely to exceed according to the majority of the consensus recommendations from the Eikon Reuters terminal. According to Zacks Investment Research, the report for the fiscal Quarter ending March 2021 is expected to experience a near quarter rally of its Earnings Per Share (EPS) compared to last year, at $0.65 from $0.40. Reuters Eikon predicts similar EPS, while the company’s revenue is seen depreciating slightly from a year ago to $22.03 billion (Eikon) with a mean change at 3.63%.

The BOA has surpassed earnings forecasts in the last two quarters, driven by a positive decline in provisions of credit losses on a sequential basis, while its revenues have suffered due to weakness in core banking, which it is strongly dependent on. As Forbes stated, the company witnessed an 11% y-o-y drop in net interest income, which contributes around 50% of the total revenues. Despite the fact that the financial sector has been a major beneficiary of the “reflation” trade and the $1.9 trillion Stimulus Bill and the proposed $2.25 trillion Infrastructure Bill, which are all likely to continue benefitting the banking sector, the net interest drop led to a drop in the full year 2020 BOA revenues, despite a 20% jump in the Global Markets segment driven by higher sales & trading and investment banking revenues.

In regards to Citigroup now, things are slightly different as the bank’s pandemic reserves are worth almost 10% of the bank’s market capitalisation. However as more and more Americans are vaccinated and the government releases more stimulus, the more the pressure from the banks’ credit models will be for the banks to release some of the cash. This means Citgroup will face less pressure than other big banks. On top of the above, Citigroup is in general in a better setup as higher trading activity in the securities market and a jump in underwriting deal volumes boosted trading and investment banking revenues for all the main banks and Citigroup was no different. Further, with the stimulus and possible vaccination development (so far 119 million people have received the Covid-19 vaccine in the US), provisions are expected to see a further decrease in Q1 2021, boosting its profitability.

Hence Citigroup is expected to report adjusted earnings of $2.60, in comparison with the $1.06 EPS reported for the same quarter last year. The revenue is seen at $18.82 billion, according to Eikon group analysts estimates, nearly 9% lower than Q1 2020.

From a technical perspective, whatever the outcomes are, much is anticipated from the numbers of Bank of America and Citigroup, both banks are expected to outperform the consensus estimates for earnings, while revenues are likely to fall short of expectations. Both banks remain technically Bullish, trading north of their respective 20- and 50-day moving averages. Today #Citigroup is at $72.90, below its 2021 highs at $76.13 but still in  3-year high territory. #BankofAmerica is at $39.86, just a breath below all record highs with next Resistance areas at the Fibonacci extensions, at the $42 and $45.30 levels.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

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Andria Pichidi
Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Date : 19th April 2021.

Market Update – April 19 – Equities at highs, BTC hit from weekend hiatus.

Market News Today – US Equities at new closing highs on Friday, (4 consecutive weeks for USA500), USD remains weak with 10-yr yield now well under 1.60% at 1.56%. Asian markets higher and European FUTS up too. JPY seeing some buying in Asia – EUR weaker. BTC weekend collapse (65k – 51K) reason? – US regulators preparing move on money launderers? Power cut in China’s crypto mining hub Xinjiang? (Trades down 14% at 57k now). AUD-NZD air corridor open, European Football in revolt, Biden to reduce Corp. tax demands to 25%?, $5.4tn global savings stockpile – FT

Week Ahead – ECB, BOC, & PBOC rate decisions, more CPI data, PMIs, and more key Q1 Earnings reports. – including Netflix, AT&T, Johnson & Johnson, Intel and American Express.

The Dollar has remained soft in concert with heavy US Treasury yields. Ranges have been narrow, though the USDIndex still edged out a one-month low at 91.05, extending the decline from the five-month high that was seen in late March at 93.44. The 10-year Treasury note yield has at the same time settled on a 1.560% handle, just a couple of basis points above last week’s five-week lows. The benchmark yield remains down by nearly 20 bp from the 14-month highs that were seen in late March. Amid the dollar softening theme, which lifted EURUSD beyond 1.2000 to seven-week highs at 1.2036, there , was a side theme of moderate yen outperformance, which aided USDJPY to a seven-week low at the key 108.00, while EURJPY and AUDJPY printed respective 11- and five-day lows.

Asia stock markets have remained underpinned, though the MSCI Asia-Pacific index remained off recent highs. S&P 500 E-mini futures was showing a 0.3% decline in early London trading, correcting after the cash version of the index closed on Wall Street at a record peak on Friday in what was its sixth consecutive weekly gain. Incoming corporate earnings will remain a focus, especially those of cyclical businesses.

European stock markets are mostly higher, although the DAX is slightly lower and overall moves have been muted as investors look to the earnings season and this week’s central bank meetings for fresh catalysts.

The global Covid vaccine supply capacity continues to ramp higher, and continental Europe seems to be past the point of peak pessimism, with infection rates steadying and the vaccine rollout set to accelerate in the weeks and months ahead. The sharp spike in Covid cases in India and, increasingly, Pakistan, are cause for worry, however, as it’s been driven by variant B.1.617, which has two ‘escape mutations’ that make it able to dodge antibodies. This variant has been detected in 77 cases in the UK.

Today – Highlights include ECB asset purchases and earnings from IBM, Coca-Cola and United Airlines.

Biggest (FX) Mover @ (07:30 GMT) BTCUSD (-14.00%) Gapped on open – see news item above. Technically stalled at S3 56,150 from a close on Friday at PP 61,850. MAs remain aligned lower although 5 EMA now above 9 EMA, RSI OS (29 and rising), MACD histogram & signal line aligned lower and under 0 line from Friday morning. Stochs rising from OS zone. H1 ATR 970.00, Daily ATR 2860.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HotForex Economic calendar.

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Click HERE to READ more Market news.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Date : 21st April 2021.

Market Update – April 21 – USD gets safe haven bid reprieve.

Market News Today – US Equities moved down again (-0.68%) (Netflix subscribers fell – shares down 11% after close) USD move off 7-week lows (USDIndex at 91.20) & JPY gain safe haven bid as commodity currencies trade mixed. EUR holds 1.2030 & GBP at 1.4000. 10-yr Yields down at 1.56% mid-march lows. Asian markets down 2.0% and European FUTS off after DAX -1.55% & FTSE -2% yesterday. USOil holds at $62.00, Gold up to $1784 and the VIX up 15% to a 21.55 high. Virus rebounding in Asia (Tokyo & Osaka in lockdowns, India record daily cases 200k+ per day as cases double every 13 days) and LATAM (Brazil, Peru, Argentina &  Uruguay lead infection spikes). ESL collapses after the 6 English cubs withdraw. Overnight data – AUD Retail sales beat significantly, NZD CPI was a tick better & UK CPI a tick worse. Xi to attend Biden climate summit for first meeting and Powell is planning to “limit inflation overshooting too far”.

European Open – Bunds slightly higher in opening trade, and the 10-year rate has dropped back -0.2 bp to -0.265%. Peripherals are outperforming for now, which is encouraging, but if risk appetite continues to wane, that will also rely on ongoing ECB support. Treasuries have held yesterday’s gains overnight and are still at 1.56%. DAX and FTSE 100 futures are moving higher, while US futures are paring some of their earlier losses, which suggests somewhat improved sentiment. Data releases at the start of the session included UK inflation numbers, which showed the headline CPI rate rising to 0.7% y/y in March, up from 0.4% y/y in the previous month, but actually slightly lower than feared. Core lifted to 1.1% y/y from 0.9% y/y with base effects playing a role. PPI data meanwhile showed sharply higher input as well as output costs, with the former reaching 5.9% y/y, the latter 1.9% y/y.

Today – Highlights include Canadian inflation, BoC rate decision, BoE’s Ramsden, Bailey, Earnings from Verizon, ASML (already out – a big beat) Ericsson, Baker Hughes, Halliburton and NextEra.

Biggest (FX) Mover @ (07:30 GMT) VIX.F (+15.00%) Gapped on open after strong day yesterday following stock market weakness and lows of 16.82 on Friday. Rallied to 21.55 highs. Faster MAs remain aligned higher from yesterday, RSI OB at 73 and cooling , MACD histogram & signal line aligned higher and over 0 line from Friday. Stochs OB zone and cooling.  H1 ATR 0.47, Daily ATR 0.98.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HotForex Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Date : 23rd April 2021.

Market Update – April 23 – Equities and Bitcoin Lower; USD Flat.

Market News Today – US Equities down again (-0.92%), USD (91.20) & Yields (1.55%) flat, BTC tanks under $50k on Biden proposal to raise capital gains tax to 40%. ECB nothing new, Largarde talked up strong 2H recovery, June meeting likely to see some changes. Claims at 13-month low. Overnight AUD up on good PMIs, JPY CPI lower PMIs ease higher too, Big jump for credit card spending in NZ and UK Retail Sales much better 5.4% vs 1.5%. AT&T & Intel beat expectations. Earth Summit – Biden cuts US emissions target by 50% for 2030, Japan, Canada and UK also cut targets.

European Open – Asian stock markets traded mixed, after Wall Street was hit by proposals for a higher capital gains tax for the wealthy in the U.S. as a way to pay for the government’s social plan. U.S. futures are already moving higher again, but Asian markets struggled after the weaker close in the U.S.. Topix and Nikkei lost -0.6% and -0.8%, as inflation came in a tad higher than anticipated, although at -0.1% y/y the headline rate remains stuck in negative territory. The ASX lost -0.1%, while Hang Seng and CSI 300 are currently up 0.7% and 0.5% respectively. The U.S. 10-year rate has lifted 2.0 bpo to 1.56% and bonds were also under pressure across Asia. In FX markets the dollar struggled, while CAD and AUD were supported. EUR-JPY dropped back to 107.89. Oil prices meanwhile pared a weekly loss, as the focus shifts back to recovering demand at the end of a week that was dominated by concerns over the resurgence of virus cases and rising stockpiles.

Today – Highlights include Eurozone, UK & US flash PMIs, ECB’s Lagarde. Earnings from Daimler, Honeywell and American Express

Biggest (FX) Mover @ (07:30 GMT) AUDCHF (+0.34%) rallied from 0.7060 low yesterday and open today. Moved over 20- and 50-hour MAs, next resistance 200-hour at 0.7096. Faster MAs remain aligned higher from open, RSI 53 cooling , MACD histogram & signal line aligned higher but remain under 0 line. Stochs rising. H1 ATR 0.0011, Daily ATR 0.0058.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HotForex Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.