April 24 Daily Market Analysis

Daily Market Analysis

EUR/USD

The pair traded lower Monday, striking its lowest level in three sessions as lingering concern over global growth along with political uncertainty related to France’s presidential elections sparked a wider market selloff for risk-correlated currencies while investors rushed toward the relative safety of the American currency. Market participants were broadly cautious toward the shared currency as potential wining of French socialist candidate Hollande may lead to a smooth conflict with European partners as Hollande, who got the most votes in the first round, vowed that he will reconsider the Eurozone’s signed agreements related to fiscal impact. Technically, the pair found fresh buying demand in the 1.3130-1.3100 region which may be considered the main short-term support zone as comprises Fib 50% of last upswing off 1.2993 while the upper line represents 200 HMA and bulls trendline off mentioned low. Break below this area would expose next retracement barrier at 1.3080 followed by 1.3070 which is a key low on the 1H chart and should clear higher lows pattern particularly if followed by a breach below the next bottom on the same frame at 1.3056. This scenario opens up 1.2970-1.300 major support zone which keeps the overall outlook neutral in the medium term after halted bearish developments since mid-February and so far.

GBP/USD

The Cable dipped briefly below 1.6100 key barrier on morning trades amid a strong early wave of risk aversion spurred by Eurozone political issues that risk Nicolas Sarkozy to leave power as well as negative PMI figures which hit its lowest contraction since July 2009. However, the price managed to retrace higher to climb back above the mentioned handle as the greenback trimmed gains during the US session as risk-off sentiment eased somewhat. Recent five months’ peak at 1.6144 still offers initial resistance ahead of major resistance pivot of 1.6165 which is Oct high and 61.8% retracement of broader uptrend off past year’s high 1.6744, above which opens up 1.6200 prices that also considered a vital resistance factor. On the flip side, the previous yearly high of 1.6060 should hold as a support to keep short-term bulls fully in play while below it to sideline the latter and favors some mild corrections toward 1.600 psych ground where also 200 HMA is lying.

AUD/USD

The pair was among worst performers on Monday as the Aussie was hit by weaker Chinese manufacturing data despite its slight improvement protected the commodity currency from suffering steeper losses. Moreover, Australian PPI release weighed down after unexpectedly dropped in first quarter as cooling inflation risks should raise forecasts over another rate cut during RBA next meeting. Today’s CPI data will be highly anticipated as it should clear the situation further and binary traders can expect heavy selling pressures if the data missed expectations which currently suggests showing a 0.7% rise in Q1. The cross recovered from its lowest levels in nearly two weeks at 1.0270 but didn’t follow with a convincing bullish momentum despite it regained 1.0300 key barrier. Currently the 20 HMA is pressing at 1.0311, if held we may expect fresh weakness toward retesting recent lows, with a loss here to refocus 1.0224 monthly bottoms. Violation of this support should open up yearly low at 1.0140, and then the parity but we speculate a slower bearish pace at least till the inflation report release.

USD/CHF: The pair bounced back from monthly lows hit on Friday to close steadily above 0.9100 barrier on Monday as risk-off trades on European debt woes boosted the greenback sentiment against its peers broadly. Even though the cross retreated after hit an intraday high of 0.9170 as the Swissy still keeping some momentum from past week after Switzerland government finally named Thomas Jordan as the new president of SNB, also the US currency lost some ground later on the session. In spite of recent recovery, the bias remains largely to downside as the price failed to clear a strong short-term resistance around 0.9155 though it breached above briefly. The mentioned level represents 38.2% retracements of 0.9000-0.9250 ascend along with 200 HMA and declining trendline projected form monthly highs. Holding below the latter even if wasn’t followed by another dip below 0.9100 would signal a weak momentum that failed to develop a bullish market after the upside move while below 0.9120 previous low may risk ending the corrective bounce and favors a throwback to retest current base at 0.9080 before deciding next direction.

Commodities

Precious metals dipped to fresh weekly lows on Monday’s session as risk aversion dominated market sentiments amid political uncertainty over French presidential elections after the Socialist challenger François Hollande made a slight progress versus the current president Sarkozy who came in second in Sunday’s first run-off. Market participants turned wary as Hollande pledged to renegotiate about the recent fiscal compact agreement which set new euro spending rules. The yellow metal tracked weak performance of the shared currency while got further pressures as investors preferred to flock to the safety of U.S. dollar in anticipation of violate market moves. Despite price actions still biased to sideways mood but breaking below 1630$ key barrier which held as a strong support since early April triggered some technical selling interest but the bears failed to confirm breakdown as the decline created some bargain opportunities. Eurozone PMI data fueled bearish sentiments after came mostly lower than expected which suggested a deeper contractionary condition that may persist for a third quarter in a row. The technical picture remain firmly bearish and a failure to push above 1640$ mark in the upcoming hours may signal fresh easing toward 1612$ monthly low.

Gold for June delivery fell $10.20, or 0.6%, to $1,632.60 an ounce on the Comex division of the New York Mercantile Exchange.

Silver futures for May delivery slipped $1.12, or 3.5%, to $30.53 an ounce.

Oil prices came under selling pressures yesterday as mounting risks in France’s political scene coupled with soft economic data to trigger a risk-off session while a slight better than expected manufacturing figures coming out from China failed to ease the gloomy trade environment as the marginal improvement was unable to overshadow prolonged slowdown signals. The crude prices opened on a negative territory following a batch of downbeat releases from Eurozone region after preliminary reading of PMI indicators including manufacturing and services sectors hit its lowest levels in several months which suggested a steeper recession in the troubled Eurozone economies that could further worsen due to ongoing debt problems and austerity measures taken to address the troubled finances. Spain already reported a contraction in the past three months and for a second consecutive quarter while Chinese HSBC Manufacturing PMI though it improved slightly in April but stayed in contraction region. Manufacturing and PMI data in general often offer insight into the economic health which in turn command future forecasts of global demand strength that is already faltering.

WTI Crude oil for June delivery dropped 77 cents, or 0.7%, to $103.11 a barrel on the New York Mercantile Exchange. Brent oil for June settlement dropped 5 cents to end the session at $118.71 a barrel on the London-based ICE exchange.

Wall street & Equity Markets Review

U.S. stocks dipped sharply on Monday’s session as investors sold equities and other riskier assets on concern over global recovery and Eurozone worries as well as French elections which may lead to a looming shift of policies in the European third largest economy. Adding to gloomy trades, the lack of quarterly results announcements from big corporate which managed to spark some rallies last week, also press reports over Wal-Mart Stores which suggested that the firm’s executives are involved with Mexican officials in carrying out a vast bribery scheme. Starting the market bearishness, the stocks opened on a negative territory following global markets after Chinese and Eurozone’s PMI data showed that slowdown/contractionary conditions persisted in the first quarter. Traders showed a negative reaction on French presidential elections as the first round results revealed an upper hand for the Socialist competitor Hollande against the current president Nicolas Sarkozy. According to Socialist Party candidate, there will be a reconsideration in EU austerity agreement that was signed by Eurozone’s leaders a few months ago which may return all European efforts to address debit crisis back to square zero.

The Dow Jones industrial average ended down 102.09 points, or 0.8%, at 12,927.17.

The S&P 500 index declined 11.59 points, or 0.8%, at 1,366.94.

The NASDAQ composite Index fell 30 points, or 1%, at 2,970.45.

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