Are global indices now due a correction lower?

Giles Coghlan LLB, Lth, MA Financial Source

Global indices are increasingly vulnerable to a correction lower after stunning returns over the last 12+ months. The question that investors are asking is, ‘when will the inevitable correction in stocks come?’ Ultimately, the answer to that question is unknown. However, at times like this investors can use trendlines, percentage loss limits, and key technical barriers to place stop behind to limit risk. The one mistake investors must avoid is being over-leveraged at the very end of a bull market. Next month begins the weaker half of the year for stocks, so be aware of any deeper correction lower.

Other key events from the past week

USD: Interest Rate Statement, Apr 28: The Federal Reserve left policy unchanged and pushed back on early tapering expectations. Jerome Powell however did say that the recovery has occurred far quicker than expected. Watch out for possible further USDJPY strength over the next few weeks.

Bank of Japan: Interest Rate Outlook, April 27: The BOJ changed nothing at the latest meeting. Although they increased the GDP projections for this year, they also reduced inflation expectations. In conclusion, the BoJ is on hold for the foreseeable future and this should keep the JPY weak medium term.

AUD: Inflation data, Apr 28: The inflation data out of Australia was amiss at 0.6% q/q vs 0.9% expected. This sent AUDNZD lower through 1.0750 and the AUDNZD bond yield spread lower too.

Key events for the coming week

AUD: Interest Rate Statement, May 04: The last RBA meeting saw an abundance of caution. The latest employment data was a disappointment as full-time workers fell, so will the RBA maintain a cautious stance? Most likely they will.

GBP: Interest Rate Statement, May 06: The last BoE meeting was hopeful and last weekend Deputy Governor Broadbent signalled a ‘fast economic recovery’ for the UK. Will the BoE announce bond tapering next week and boost the GBP further?

Learn more about HYCM

Author

Giles Coghlan LLB, Lth, MA

Financial Source

Giles is the chief market analyst for Financial Source. His goal is to help you find simple, high-conviction fundamental trade opportunities. He has regular media presentations being featured in National and International Press.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.