News & Analysis

US stocks mixed – Apple earnings beat – Eyes turn to the FED; Oil –Gold drop; USD continues its charge; GBPUSD belated again!

May 2, 2018 | Daily Market Outlook

Upcoming high impact news:

Ôû© 18:30 GBP Construction PMI
Ôû© 22:15 USD ADP Non-Farm Employment Change
Ôû© 00:30 OIL Crude Oil Inventories
Ôû© 04:00 USD FOMC Statement – Federal Funds Rate EXP hold at 1.75%
Ôû©

US markets – finished mixed on Tuesday, earnings continued as the main driver. Apple reported after the close beating expectations. iPhone sales fell short but the company announced a generous $100 billion capital return program. Of the S&P 500 companies that have reported thus far, 80 percent have posted better-than-expected earnings, according to Thomson Reuters I/B/E/S. Merck, Pfizer, Aetna, and Archer Daniels Midland all reported stronger-than-forecast results before the bell Tuesday. Boeing and Pfizer held the Dow in the red as they both traded 3.4% lower.

The Dow Jones lost 64.10 points. The S&P500 rose by 6.75 points and the NASDAQ closed 64.44 points higher.

European markets – most major bourses closed for May Day. The FTSE traded 11.06 pts higher. Just Eat lead the charge closing 4% higher. BP added 1.8% after reporting profits surged 71 percent amid the rally in oil prices.

Oil – fell sharply overnight continuing the range. Price hitting 2-week lows. The dollar remained near a four-month high and traders digested the latest developments around the Iran nuclear deal. Israeli Prime Minister Benjamin Netanyahu stepped up pressure on the United States to pull out of the 2015 deal with Iran. OPEC oil output fell to a one-year low in April due to declining production in Venezuela and lower shipments from African producers, a Reuters survey showed. Looking to the daily chart price is locked into a range between 68.85 and 67.05. US inventories will be released tonight this may break the deadlock. The market is looking for a 1.0M stockpile figure.

Forex – the USD continues to rule the roost, risk pairs and the Yen closing lower. The AUDUSD was smashed again breaking below .75. The EURUSD lost 81 pips and returned back below 1.2000, new 5-month lows. Divergence between growth and the interest rate outlook versus other countries spurred investors to chase the currency higher. The USDJPY jumped above 109.85, its highest close since 2nd of February. The USDCAD started with a strong lead and did touch new weekly highs at 1.2913 before better than expected Canadian GDP knocked the USD back.

The GBP continued to be flogged as the USD and continuing poor data pulled the floor out from underneath buyers. The Latest was the Manufacturing PMI, it came in at 53.9 below 54.8 expected. The Cable 145 pips lower. Gold followed the crowd losing $11.40 and breaking back below 1307. The 2-year yield hit its highest level since 2008 in last night’s session.

Federal Reserve – Most investors are not expecting the central bank to tighten its policy. Expectations in the market for a rate hike are just 5.7 percent, according to the CME Group’s FedWatch tool. However, investors will be on the lookout for clues about the central bank’s views on inflation and the economy.

“A key focus for us this week will be the extent to which the Fed statement on Wednesday jawbones markets to force pricing for hikes in 2018 higher,” Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets, said in a note.

“The current pace of repricing in fed funds is not immediately problematic for the Fed and there is yet time to price more into the curve, though we’d argue that at the June meeting, it’s likely the markets will have to come to grips with the possibility of a fourth hike in 2018 and price more appropriately,” Lyngen said.

Risk carnage to the USD. The AUDUSD has lost 623 pips since January, 300 of it since April. The GBPUSD has lost 730 pips since April.

Good trading from Eightcap.

Sources; CNBC All times are AEST

* The information provided here has been prepared by EightCap’s team of analysts. All expressions of opinion are subject to change without notice. Any opinions made may be personal to the author and do not reflect the opinions of EightCap.

In addition to the disclaimer on our website, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. EightCap accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.

Please note that past performance is not a guarantee of or prediction of future performance. This communication must not be reproduced or further distributed without prior permission.

Follow Us