Yesterday’s market action
The majority of movement was generated by inflated headlines from unnamed Greek Government sources saying that both Greece and Creditors were commencing a Staff Level Agreement. This would mean low primary budget surpluses, tax overhauls and most importantly a short-medium term accord on Greek Sovereign debt relief. This allowed European bourses to lift temporarily as we saw a medium-scale risk-on move filter through. The bund also fell from its highs in an inversely correlated move- this was however short lived as we had contrarian comments from Dombrovskis countermanded any claims by Tspiras, who supported the unnamed official’s claims by stating that a deal with creditors was close. This sparked a minor retracement of the moves made with the majority of European bourses struggling to make any further headway higher but remaining comparatively elevated despite negative commentary. Dombrovskis releases a statement saying “we do not yet have the catalyst that will allow an agreement...we are already basically a month behind schedule.” Traders were on the whole surprised at the lack of downside reaction in the wake of these comments. Overnight we saw the API crude numbers released; the headline figure showed a build of 1268k barrels against the previous of -5200k. This will provide a bearing for the DOE release later on this afternoon, delayed by a day due to the bank holiday on Monday.
Today’s View
Moving on from the Euro-circus of yesterday’s trading session, today saw the release of UK preliminary GDP for Q1. We saw a small miss on expectations which resulted in a choppy period initially before making new lows on the session. GBPUSD has since tested the 1.5300 handle, finding psychological support. This afternoon we see a break in the dearth of data releases with Initial Jobless claims, still printing the best rolling 4 week-average for the past 15 years. Continuing claims are also expected with a reading of 2195k- look for excess dollar reactions if we see the actual figure surpass the high/low of the range. We also have Pending home sales for the month of April expected at 0.9% for the monthly reading and 10.80% for the annual reading. We also have the Department of Energy’s weekly inventory releases with a draw-down of -1500k barrels expected. However with the build in supply from the API reading, there is a chance we could see some oil down-side as supply could increase. This will be exaggerated if we have good US data this afternoon and further dollar strength. A second print to watch out for is the Gasoline inventory number; overnight we saw a significant drawdown in API inventories so it is likely we will see similar figures in the DOE figure today. The easiest trades are likely to be in the dollar and T-notes with equities demonstrating possible confusion as traders react to the interest rate hike date. Although we had comments from the Richmond Fed President Lacker saying that a June hike is still on the table, it is likely that the date will be both data dependent over a number of months. With poor US data in the past few monthly prints it is unlikely that the June hike will go ahead.
Amplify Trading is a Limited company registered in England and Wales. Registered number 6798566. Registered address: 50 Bank Street, 3rd Floor, Canary Wharf, London, E24 5NS. Information or opinions provided by us should not be used for investment advice and do not constitute an offer to sell or solicitation of an offer to buy any securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments. When making a decision about your investments, you should seek the advice of a professional financial adviser.
Recommended Content
Editors’ Picks
USD/JPY flat-lines below 151.50 after soft Japanese CPI data
USD/JPY stays defensive below 151.50 after the release of a soft Japan's CPI report and mixed Industrial Production and Retail Sales data on Friday. Japanese verbal intervention also weighs on the pair amid the holiday-thinned conditions on Good Friday. US PCE inflation awaited.
AUD/USD buyers lack vigor above 0.6500 amid Good Friday trading lull
AUD/USD is trading listlessly above 0.6500 in the Asian session amid light trading on Good Friday. The Aussie pair shrugs off encouraging comments from China's FX regulator, as price action remains subdued ahead of the US PCE inflation data.
Gold flirts with record highs above $2,230, all eyes on US PCE data
Gold price flirts with record highs around $2,230 during the Asian session on Friday. The uptick of yellow metal is bolstered by the safe-haven flows amidst growing economic concerns and the prospect of interest rate cuts from the US Federal Reserve.
Optimism price could fall as nearly $90 million worth of OP tokens is due flood markets
Optimism volatility has shrunk in the ours leading to the network’s cliff unlock. It joins the likes of dYdX and Sui, which have similar events on their calendars. As token unlocks are often considered bearish catalysts, investors should brace for a reaction after the event.
Will they won’t they cut rates is the question of Q2?
There has been some significant push back from Fed and Bank of England members around the timing of rate cuts, and the Bank of Japan still haven’t physically intervened in the FX market to stem yen weakness although they are threatening to do so.