Traders are Baffled by the Ambiguity of US Monetary Authorities

Fundamentals

Here is the fundamental news from yesterday that we thought necessary to cover. At 12:30 pm GMT the basic index of personal consumption expenditures was announced. The number was 0.2% against a forecast of 0.1%. At 2:00 pm GMT the Conference Board’s consumer confidence index came out in the United States. The number hit 117.90.
Graeme Wheeler, governor of the Reserve Bank of New Zealand spoke today at 1:10 am GMT. Unfortunately, at the time of this writing we do not have information about what the head of the RBNZ said. Note that, according to the latest data, the rate of GDP growth in New Zealand has slowed a little, but unemployment remains fairly low (4.9%). Still, according to the latest inflation data published on April 19, 2017, the inflation rate in the country rose fairly appreciably to 2.2%, which was almost twice the expected number. We might therefore quite rightly expect Wheeler to comment on further inflation expectations.
The EU’s consumer price index comes out today at 9:00 am GMT. At 12:00 pm GMT there will be a speech by FOMC voting member Robert Kaplan. Given the uncertainty over what US monetary authorities will do next, traders might lend an ear to statements by the individual representatives of the committee to shed light on the future.
The change in Canada’s GBP comes out at 12:30 pm GMT. The GDP is expected to increase 0.2%.
The US pending home sales index comes out in the second half of the day (2:00 pm GMT). At 6:00 pm GMT, as is the tradition before the Non-Farm Payrolls comes out, the Fed's beige book will be published.

Stocks

Among corporate reports, traders will be watching Hewlett Packard (a drop in EPS to $0.35 is predicted) and Michael Kors, whose stock is traded on the NYSE.
As for the Dow Jones, as we wrote yesterday, the opening after yet another weekend was accompanied by a small gap down. So far, the bulls are not making further attempts to attack, and there is a slight lull. If we apply Bollinger Bands, we can see the support at the middle band, which is about 20700 points.

Currency Market

The EUR/USD rose a little yesterday, rebounding from the support at 1.1160. Locally, therefore, the bulls are still winning, at least until that boundary is successfully attacked. Still, we see a test of the upper Bollinger Band on the weekly charts, so in the long-term we can’t rule out a fairly successful attack by the bears. The weekly support is fairly low - 1.0800, the location of an unopened gap. Time will tell.
As we said yesterday, the EUR/JPY pair is sagging locally. If there is no support at 123 yen, then we might see the bears clearing a path downward. As with the previous pair, on the daily charts there is a gaping hole of 3.5 yen from April 24, 2017, and for the moment this is around 118 yen. It’s facing a hard climb, but a fall could be very painful.

Nikolay Dudchenko, Olymp Trade analyst.

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