Daily Report (Market Drivers & Snapshot) – 18/04/2018

Bank of Canada’s monetary policy statement and the tone of Governor Poloz’s press conference
Dow Jones 24758 / Dax 12605
Oil $67.05/bbl
Gold $1343/oz
UK: CPI y/y actual 2.5% vs 2.7% expected.
EZ: Final CPI actual 1.3% vs 1.4% expected.
North America: BOC Rate Statement at 05:00 pm. (Beirut Time).

Yesterday the U.S. dollar traded higher against all the major currencies. No escalation from Trump side towards China and Russia gave the greenback a breath of support. The rally wasn’t impressive as the market is still on defense concerning any geopolitical news.

The Sterling was hit hard today after the inflation data, the market sentiment was pricing in a rate hike next month; the inflation numbers released today may weight on the BOE decision. Further the final inflation figures from the Eurozone have missed, the Euro will be under pressure for the rest of the day.
The main focus today will be the Bank of Canada’s monetary policy announcement and Governor Peloz press conference. No policy changes are expected the economic figures have improved; and both U.S. President Trump and Canadian Prime Minister Trudeau have said they are close to reaching a NAFTA deal and according to Mexico’s Economy Minister, the negotiation team could meet again on Thursday in Washington to start working on their issues again and move the process forward. In general the market is not looking for a rate hike before July, yet a tone of optimism will give the Loonie a push.

Trump sent the CIA Director Pompeo in Easter to meet with North Korea’s Kim Jong Un; as they negotiated the terms of a summit aimed at eliminating North Korea’s nuclear stockpile.

Today’s Snapshot
Crude Last 67.05/bbl.

Crude oil was steady to slightly higher overnight. Stochastics and the RSI are overbought and are turning neutral to bearish hinting that a short-term top might be in or is near.

If May extends the rally off February’s low, the 62% retracement level of the 2014-2016-decline crossing at 70.46 is the next upside target. Closes below the 50-day moving average crossing at 62.65 would confirm that a short-term top has been posted. First resistance is last Wednesday’s high crossing at 67.45. Second resistance is the 62% retracement level of the 2014-2016-decline crossing at 70.46. First support is last April’s low crossing at 61.81. Second support is March’s low crossing at 59.91. If the geopolitical environment doesn’t escalate the crude oil prices will fade down and consolidate on lower level.

Today is the BOC rate decision, if the Loonie get any support the crude oil might consolidate near the highs.

Written by:
Nehmat Harb
Financial Advisor

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