Daily Report (Market Drivers & Snapshot) – 24/04/2018

The market will be looking towards the ECB and BOJ end of the week

Dow Jones 24384 / Dax 12512
Oil $68.90/bbl
Gold $1326/oz
UK: Public Sector Net Borrowing -0.3B better than expected.
EZ: German Ifo Business Climate actual 102.1 worse than expected.
North America: U.S. CB Consumer Confidence at 05:00 pm. A reading above 126.3 is good.

The dollar has taken a pause after the 10 years treasury yields slipped back from the 3% psychological level (intraday high of 2.998%). Despite of this dollar recovery, the majors are still within the 3 months range. The market needs a stronger confirmation that a low is in place and the USD Index has turned back higher. The Euro bears are eyeing the ECB monetary policy meeting on Thursday and later the ECB press conference. If Draghi sounds dovish the 3 months main support at 1.2137 will be tested. All the economic data from the EZ is not being supportive for the Euro. This morning the German business confidence deteriorated for a fifth consecutive month in April, it fell to 102.1 from 103.3 in March the lowest reading since December 2012. “High spirits among German businesses have evaporated,” Ifo chief Clemens Fuest said. “The German economy is slowing down,” he added. Last month IMF’s Lagarde said “Eurozone countries should set up a “rainy-day fund” that could cushion members when they hit economic hard times”.

The dollar is the main story will it sustain this move up after breaking up. There is a sense that this is a crossroads moment for the dollar, and traders across the markets are waiting to see if the greenback rally has simply been short covering or something else more sustainable.

Today’s Snapshot
Gold Last $ 1326

A third consecutive negative candle has now entirely unwound the gains of the past couple of weeks, bringing the market back to the support at $1321. So far though, looking at the wider context of how the dollar strength has played out across markets, the gold chart has held up relatively well. With the support at $1321 holding up, the gold bulls have remained in the market. The momentum indicators have deteriorated for the near term, but the medium term range outlook is intact. We will watch carefully the support at $1321. This is a mid-range level that protects the real support of recent months $1307. Resistance levels still the same at $1338, $1356 and the major resistance at 1376

Written by:
Nehmat Harb
Financial Advisor

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