US equity futures point to a bounce after a six-day losing streak

Canada March PPI -0.5% y/y vs -1.7% prior

Canada March new housing price index 0.0% vs +0.1% expected

What’s coming up in Monday’s North American trade? Not much on the calendar

Happy Monday.

Today’s North American calendar is a bit of a dud but there is a focus on equities after a six-day slide in the S&P 500. Shares of Tesla aren’t helping with a 3% pre-market drop but it’s a huge week of earnings so that will be the guide.

As for economic data, we get PCE and GDP later in the week but it’s a slow start. There is nothing market moving on the US data or Fedspeak calendar today.

For Canada, we get March PPI (shown above) and the new housing price index at the bottom of the hour.

At 10 am, we get eurozone consumer confidence for April.

ForexLive European FX news wrap: Risk bounces back as market fears ebb

Headlines:

Markets:

  • NZD leads, GBP lags on the day
  • European equities higher; S&P 500 futures up 0.6%
  • US 10-year yields up 3.7 bps to 4.660%
  • Gold down 2.1% to $2,341.79
  • WTI crude down 0.7% to $81.47
  • Bitcoin up 1.5% to $65,915

As geopolitical fears ebb, risk is looking to be back on the up again to start the new week. The likes of gold and oil are being pushed lower, while equities are hoping for a decent bounce after last week’s slide. S&P 500 futures were slightly optimistic early on, up around 0.2% as European traders entered. It is now up roughly 0.6% ahead of US trading.

Meanwhile, gold fell by quite a bit during the session in a drop from $2,370 to $2,341 currently. The near-term chart also isn’t too promising for gold at the moment.

In FX, the dollar is steady but trades more mixed on the day. It is up against the European currencies but now against the antipodeans amid the better risk mood.

EUR/USD is down 0.2% to 1.0633 while GBP/USD is down 0.4% to 1.2313 on the day. USD/JPY is keeping underpinned around 154.75, with higher bond yields also helping. Still, the 155.00 mark is a stretch too far for now. Then, we have AUD/USD up 0.3% to 0.6435 and NZD/USD up 0.4% to 0.5905 on the day.

There wasn’t much other notable headlines to start the week but things are to pick up surely, if the economic calendar this week is anything to go by.

Cable extends fall to lowest in five months

It all started with the dollar making some headway two weeks back, before a drop below 1.2500 made things really tough for GBP/USD. There was a brief consolidation phase below the figure level but we’re seeing sellers pick up the momentum again in the last two days. And now, the pair is down another 0.4% to 1.2315.

GBP/USD daily chart

From a technical perspective, there is very little support in stopping the drop here. The next key support target will be the October low itself at 1.2037. That’s still nearly 300 pips away from here.

Unless the mood music changes up for the dollar, it might be tough to argue otherwise. And that is despite the recent inflation data from the UK, as argued last week here.

While the BOE is still poised for a potential August rate cut, the Fed’s timeline has readjusted quite significantly. We’re looking at one potentially in September but even that isn’t as much as a given as compared to the BOE for August. And that pretty much outlines the risk balance for both the dollar and pound currently.

I mean, if sterling can’t even compose itself even with a better risk mood today, that’s not a good sign in the short-term especially with the chart looking as it is above.

Gold sees near-term momentum get called into question to start the week

The price action in gold lately has been one that has been hovering just under the $2,400 mark mostly. Buyers tried for a firm break of the key level but ultimately failed to hold a daily close above that. The mood music was also helped by recent geopolitical tensions between Israel and Iran. But as those fears ebb a little now, we’re seeing gold slip back. But has that changed the recent momentum?

Gold (XAU/USD) hourly chart

Well, if you go by the hourly chart, it might be suggestive of a change in fortunes. That at least in the near-term for gold price action. During the run higher this month, price was largely defended by the key hourly moving averages. If not at the 100-hour moving average (red line), then at least at the 200-hour moving average (blue line).

That helped to keep buyers poised but now we’re seeing those key near-term levels falter in trading today.

Price is now down to $2,360 and trading below both key levels, suggesting that the near-term bias has shifted to being more bearish instead. I’d still put some emphasis on the minor support around $2,320-25 but if that gives way, we could be looking at a quick retracement to $2,200 for gold next.

The structural view still dictates that there is plenty of upside potential for gold though. I mean, this run higher comes despite markets having significantly pulled back on rate cut bets. So, if that starts to come back in again, there’s certainly fuel to add to the fire for gold in the big picture.

But just as how equities have retraced slightly after the bustling gains since last November, gold might be overdue that as well at some point.

What are the things to watch out for in the economic calendar this week?

The Fed will only be meeting next week but now we’re in the FOMC blackout period. And that means there will be no Fed speakers until the rate decision. With that in mind, markets will have to work with the geopolitical risk mood and events on the economic calendar for the week. Let’s dive straight into the latter, shall we?

  • France, Germany, Eurozone April flash manufacturing, services PMIs (23/04)**
  • UK April flash manufacturing, services PMIs (23/04)**
  • US April flash manufacturing, services PMIs (23/04)***
  • US March new home sales (23/04)
  • Australia Q1 CPI figures (24/04)**
  • Germany April Ifo business climate index (24/04)
  • Canada February retail sales (24/04)
  • US March durable goods orders (24/04)
  • US Q1 advanced GDP figures (25/04)***
  • US weekly initial jobless claims (25/04)**
  • BOJ announces its April monetary policy decision (26/04)**
  • US March PCE price index (26/04)***

Despite a slower start today, the calendar dictates that things could definitely pick up in the days ahead. And that will start with the barrage of PMI data from tomorrow.

The only notable major central bank meeting is the BOJ. However, they are expected to maintain the status quo after having already changed up policy last month. That being said, just be wary in case of any surprises – especially with USD/JPY continuing to keep closer to the 155.00 mark this week.

SNB total sight deposits w.e. 19 April CHF 481.3 bn vs CHF 477.9 bn prior

Risk steady but FX not up to a whole lot for now

The market mood is a better one compared to Friday last week. But this is just a slight breather as there were no significant escalation in geopolitical developments over the weekend. In FX, the changes among dollar pairs leave a lot to be desired:

The moves are less than 20 pips for each pair with a flattish mood being observed for some as well. In the bigger picture, the dollar continues to sit in a comfortable spot but further gains are being capped for now.

USD/JPY remains a key one to watch as the pair continues to consolidate close to the 155.00 mark. The figure level is a key threshold to take note of as it is a potential intervention trigger for the BOJ.

If risk trades are to gain further, I can see the dollar losing a bit more ground. But soon enough, we’ll have some modest data releases to work with in the week ahead. And those perhaps might give traders more push in a call to action.