Daily Report – 30/04/2018

US Inflation is in focus this week

Dow Jones 24365 / Dax 12605
Oil $67.47/bbl
Gold $1317/oz
UK: No Data.
EZ: German Retail Sales actual -0.6% vs. 0.8% expected.
North America: Core PCE Price Index forecast 0.2%.

The week started with the German Retail sales that slipped to -0.6%, the forecast was for 0.8%. Deterioration in the EZ economic figures and mainly Germany the EZ first and biggest economy is continuing and will keep weighting on the Euro. The upcoming FOMC minutes on Wednesday and the NFP figures at the end of the week will shape the Euro outlook for the coming months.

Geopolitical concerns have eased, especially that the North and South Koreans’ summit has ended with success. This allowed renewed focus on yield differentials. Inflation is in focus this week, with the core PCE expected to tick higher to +1.9% and it will be interesting to see how the Q1 Employment Cost Index rising to 0.8% plays into wage growth. All data supports the dollar, if the numbers meet expectations then USDJPY could once again test the 109.50 level and if the 10 Y trades towards 3.00% once again, dollar bulls could make a run towards the 110.00 level as the day proceeds.

The Cable went under pressure after the bad GDP number last week; BoE Governor Carney has completely reduced the chances for a rate hike in May given the continuing weak data. The pound will stay under pressure for the coming week unless there would be major positive changes in the Brexit negotiation outlook that would give the pound a slight back up.

 

 

Today’s Snapshot
DAX-M18 Last 12620

The DAX retested the 12600 level on Friday but closed below it; this morning has opened above it and still trading with no retreat back. Now the pivot point stands at 12535 with support levels at 12425and 12357. Above 12600 the bulls are finding traction, with opening to 12745 and 13000 next resistance levels. On the hourly chart the momentum outlook is still uncertain, and the hourly RSI needs to push into the 70s to suggest positive momentum is growing. Yet till now there is no confirmation and a correction might be near.

 

Written by
Nehmat Harb
Financial Advisor

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