US Indices Climb to Highest in a month, Dollar Sinks

US Equities

Major US indices climbed to almost a month high, as trade tensions and Syria turmoil faded. Investors turned their attention to the first-quarter earnings. Earnings season showed a good start with financial sector companies beating estimates. Wall Street analysts has set high expectations for this season with a 17.3 percent incease in earnings.

USD

The dollar index, dropped to the lowest in three weeks. President Donald Trump tweeted yesterday “Russia and China are playing the Currency Devaluation game as the U.S. Keeps raising interest rates. Not acceptable”, this tweet might have a lot of meanings in the future. Knowing Trump’s latest behaviors, investors will be waiting for actions to weaken the dollar. Dollar is down 13% since Trump’s election. As for today, we await building starts, housing starts, and the industrial production.

EUR

The euro is gaining against the United States dollar, ahead of ZEW numbers from Germany. Euro traders are optimistic about the consumer price index numbers that are due tomorrow, and they are positioning to a good inflation outlook that will allow the European Central Bank to taper and tighten its monetary policy.

GBP

The British pound traded at the highest level since the Brexit vote against the US dollar. Pound was again the best performer yesterday. Pound often performs well in April, due to the seasonal rise in inward capital flows, and foreign companies increase dividend payments to British shareholders. Moreover, traders are waiting good numbers in the Job Report, especially the earnings index which will support the Bank of England to raise interest rates in May.

Gold

Gold prices rose slightly on a weaker US dollar. The major support for gold prices in the past weeks was the trade war tension between China and the United States, and the geopolitical unrest. As these factors eases, investors will be looking for risky assets. CFTC report showed that gold speculators cut marginally their net long positions over April 3-10, but the ETF buying interest for gold is at the strongest since September 2017.

Oil

Oil prices retreated from more than three years high, as investors were seen taking profits. US oil production is still on the rise to 10.53 million barrels per day, due to the booming shale industry. The American Petroleum Institute is due to publish weekly U.S. fuel inventory data, while also the official government data from the Energy Information Administration is awaited tomorrow.

The most important economic events:

GMT Country Event Expectation Previous
8:30 UK Average Earnings Index +Bonus (Feb) 3.0% 2.8%
8:30 UK Claimant Count Change (Mar) 13.3 9.2
8:30 UK Unemployment Rate (Feb) 4.3% 4.3%
9:00 EU German ZEW Current Conditions (Apr) 88.0 90.7
9:00 EU German ZEW Economic Sentiment (Apr) -0.8 5.1
12:30 US Building Permits (Mar) 1.330 1.321
12:30 US Housing Starts (Mar) 1.270 1.236
12:30 CA Manufacturing Sales (MoM) (Feb) 1.0% -0.1%
13:15 US Industrial Production (MoM) (Mar) 0.3% 0.9%


Disclaimer
The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.

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