Daily Report (Market Drivers & Snapshot) – 23/04/2018

U.S. 10 Years Treasury Yields

Dow Jones 24384 / Dax 12512
Oil $67.89/bbl
Gold $1328/oz
UK: No Data.
EZ: PMI holds steady in April.
North America: U.S. PMI data at 04:45 pm.

It was a great week for dollar bulls. Economic data supported the FED outlook, the geopolitical tension was calm. The sharp rise in Treasury yields led to a higher dollar. The OPEC outcome was unchanged in recommendations which led to a slip in crude oil price. North Korea is moving towards denuclearization. Senior Trump administration said “North Korea will have to earn lifting of sanctions”.

As this week’s trading session got started, the Japanese Yen gapped lower over a report that Japan’s government is considering an initial budget proposal that would inject over 100 trillion Yen into the economy. According to the details, this is intended to be a preemptive move to avert an economic slowdown ahead of a planned increase in a consumption tax in October 2019. If Trump doesn’t escalate over the geopolitical issues; fundamentals will be the leading news for this week.

Treasury yields should have a greater impact on the dollar’s flows. If 10 year rates break 3%, stocks could crash leading to a broad based currency sell-off. The Dollar Index is now testing the 90.5 resistance. Whilst the sharp rise in bond yields is creating nervousness in equity markets. Indices slipped for the past three sessions and now threatening the recovery of recent weeks.

Today we will be watching the treasury yields if it breaks the 3% the dollar will continue its rise.

Today’s Snapshot

CLM8 Last $ 67.89

Thursday’s negative candle left a high at $69.55 and despite a late session bounce back (from $67.50) a corrective move still could be seen. Any weakness would still be a corrective move within the range, but if the support at $65.55 is broken then the corrective move could accelerate. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways prices are possible near-term. Key resistance at $69.55, second resistance is the 62% retracement level of the 2014-2016-decline crossing at 70.46. First support is the 20-day moving average crossing at $ 65.27. Second support is April’s low crossing at $61.81. Donald Trump has tweeted on Friday about how OPEC is keeping oil artificially high, the price has threatened a slip. Today Iraq’s OPEC official said “we are hitting our inventory target, we are going back to the 5 year average” – RTRS. The oil prices will be vulnerable to any comments from officials. 

Written by:
Nehmat Harb
Financial Advisor

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