Best Trade Ideas for April
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Dollar holds high ground against most currencies ahead of FOMC minutes
Information is not investment advice
Ichimoku Kinko Hyo
CHN/JPY: The pair is trading above the cloud. An upward pressure would lead the pair to exit further the cloud, confirming a bullish outlook.
Fibonacci Levels
XAG/USD: Silver continuous to stand above 50% retracement area. Bullish pressure is growing today.
EU Market View
European stock markets are seen opening marginally higher Wednesday, after the previous session’s sharp selloff, but investors remain cautious about the strength of the global recovery, the threat of the delta Covid variant and the potential for central bank tightening. However, this enthusiasm is showing signs of waning. All three major European indices dropped by around 1% on Tuesday, not helped by German ZEW conomic sentiment falling by much more than expected. Also, the broad-based S&P500 broke a seven-day winning streak on Wall Street after the ISM non manufacturing, a key gauge of service-sector activity, fell more than expected, raising worries that the U.S. economy may be approaching a peak.
Also causing concern is the ongoing spread of the delta variant of the Covid-19 virus. A study published over the weekend in Israel, one of the most vaccinated countries in the world, showed a decrease in the effectiveness of the Pfizer/BioNTech vaccine in preventing infections and symptomatic illness, suggesting it is less effective against the latest dominant strain of the virus.
Oil was mixed Wednesday morning in Asia, but remained above the $73 mark, as a production dispute between Saudi Arabia and United Arabic Emirates keeps going. The dispute has stalled efforts by the Organization of the Petroleum Exporting Countries and allies (OPEC+) to raise production as the fuel demand outlook brightens.
Gold was up on Wednesday morning in Asia after hitting a three-week high during the previous session. A weakening US dollar also gave the yellow metal a boost as investors await the FOMC minutes. The dollar, which usually moves inversely to gold, inched down on Wednesday but remained near the three-month high hit during the previous week. Benchmark 10-year U.S. Treasury yields also fell to their lowest level in more than four months. The minutes from the Fed’s June 2021 meeting, due to be released later in the day, are expected to provide some clues to the Fed's monetary policy. They could also shed some light on the Fed’s surprise hawkish turn in the policy decision handed down after that meeting.
EU Key Point
- France May trade balance -€6.80 billion vs -€6.24 billion prior.
- Germany May industrial production -0.3% vs +0.5% m/m expected.
- Japan May preliminary leading indicator index 102.6 vs 103.8 prior.
- The bond market paradox is a key focus ahead of the Fed minutes today.
- The yield differential between Chinese and US bonds has widened to a 4 month high.
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