Risk warning: Spread betting, FX and CFD trading carries a high level of risk to your capital and you can lose more than your initial deposit. These trading products may not be suitable for all investors so seek independent advice. View full risk warning
EUR gains as Eurogroup meets
EURUSD stepped above the 1.0780 hurdle yesterday as a senior Greek official said he is expecting a positive sign from today’s Eurogroup meeting in Riga. The pair advanced to 1.0897 as European markets opened this morning. Given the current pace in negotiations, there would be a possibility to reach a bailout agreement by the end of this month. We remain cautious on such comments and do not rule out the downside risks regarding the Greek puzzle.
The short-term view turns cautiously positive with first line of resistance seen at 1.0907/25 (50-dma / technical resistance). A break above this level should send the EURUSD to the upper limit of the mid-term trading range of 1.0470/1.1080.
EURGBP rebounded from a month low. With political risks on both sides, the direction remains uncertain. A break out of 0.70143/0.73935 range (Mar 11th low / Fib 38.2% on Dec’14 – Mar’15 drop) is needed for fresh trend.
What is the upside potential in Cable before May 7 elections?
Cable extends gains, the short-term bullish momentum strengthens. A daily base is building stronger at 1.5080/1.5100 (Mar 22nd resistance / Fibonacci 50% of April 13-16 projection to April 21) as speculative short-term traders are chasing dips to jump on the bull trend. However, we see low probability of a sustainable follow-up on Cable’s bullish attempt as we step into the critical two week period before elections. The pending political uncertainties should cap the Cable rally pre-1.5200/30 (Fibonacci 76.4% on projection).This might be the last push before a downside correction. The latest poll results give no clear direction on the potential outcome of May 7 elections. The ComRes survey prints 36% for Conservatives, 32% for Labour; YouGov/Sun gives 35% chance for Labour and 33% for Conservatives.
Unimpressive US growth in Q1, US durable goods orders on the wire
The two-way volatility in US stocks continues as big American companies’ earnings flow in. The P&G and 3M Co. missed estimates and lowered their FY EPS forecasts as sturdier the US dollar is expected to further weigh on overseas sales. eBay rallied on higher-than-expected profits. Volvo and Biogen are among the companies to release results this Friday. As the majority of this week’s earnings have been published, today’s announcements should not have a significant impact on the market. The focus will certainly be on the US durable goods orders; a soft read should reinforce the USD weakness before the closing bell.
Nasdaq and S&P 500 hit new record highs of 5073.92 and 2120.49 respectively; the energy companies outperformed (+0.62%) on 4.5% surge in WTI yesterday. At this point, the equity traders find reason to push the stock markets higher in any scenario. Either we talk about a greater enthusiasm on company results or about a dovish shift in Fed expectations, the bias remains positive on equity indices. On the FX, the USD was broadly offered in New York as the initial jobless claims unexpectedly rose to 295K on week to April 18 versus 287K expected. The potential USD rebound is seemingly not on the agenda until the next FOMC meeting and the NFP release (due on April 29th and May 8th respectively).
US dragging everyone higher
European equities are set to start with gains this morning tracking overnight moves higher in the US and Asia. Although yesterday was a mixed bag for Europe, what with weak economic data and lingering jitters over Greece, the rising tide of new all-time highs in the Nasdaq looks like it will lift all boats his morning.
The US equities held their ground rather well considering the recent worries that a stronger greenback and lower oil prices will hurt corporate results. New home sales data was much weaker than anticipated falling 11.4% in March but somehow the Dow Jones was resilient closing slightly up at 18056.
The single currency rallied 98 pips against the US dollar to 1.0825 as Greek Prime Minister Alexis Tsipras urged an acceleration of negotiations to reach an agreement by the end of April. He added that ‘much of the distance has been covered’. Later today, the focus will shift on Riga, Latvia where euro area finance ministers will yet again try to convince Athens to implement reforms in exchange for aid payments.
Oil prices posted a sharp rally yesterday after tensions in the Middle East appeared to escalate fuelling growing concerns about supplies. WTI crude prices jumped to $57.47 a barrel as Saudi Arabia and its allies continued to bomb Yemen. Signs of economic slowdown in the US and also China boosted demand for gold as a safe harbour pushing its price $6.1 higher to $1193.3.
Ipek Ozkardeskaya is a Market Analyst at London Capital Group. She has strong technical background in quantitative finance. Previously, she worked as FX strategist in Swissquote Bank and as a client sales executive at HSBC Private Bank in Geneva. She also developed quantitative models in automatic trading as part of BCV’s Structured Products team. Ipek has a Master’s degree in Financial Engineering & Risk Management and a Bachelor degree in Economics from University of Lausanne.
Marius is a dealer at Capital Spreads. His involvement with CFDs and spread betting started in 2008 after graduating from London Metropolitan University with an MSc in Finance. He provides analysis of the forex, stock index and commodity markets, with a particular focus on oil and gold.
Jonathan is also a dealer at Capital Spreads. Having started his career in the City trading interest-rate and bond derivatives in 2005, he entered the spread betting and CFD industry in 2007 by joining the dealing desk at City Credit Capital. After successfully managing multiple-asset risk books across the European, US and Asian time zones through the height of the financial crisis, he joined Capital Spreads in 2010.
This information has been prepared by London Capital Group Ltd (LCG). 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.
LCG 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. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.