Weekly Update / April 23rd – 27th
Macroeconomic Outlook
Last week closed positively since both indexes closed positively due mainly to:
- Strong Quarterly Results from companies
- Less relevance in regards to the risk factors that have been influencing the markets lately
Geopolitical tension has been reduced from:
- That punctual attach from the USA over Syria
- New tariff barriers have not been announced from both USA & China
- The Technology sector has recovered following Netflix results
The increase in commodity prices which has induced a drop in bond prices
- 7/8 basis points increased in both American and German bonds
We expect that markets to continue with a positive evolution from the past two weeks
- Mainly because of a smaller relevance of geopolitical risks and more focus on the macroeconomics and business results
Macroeconomic Data
- We do not expect them to be outstanding but solid enough to favour the financial markets
- Relevant Macro Data
o Consumer Confidence in USA
o Business & Consumer Confidence + PMIs in the Eurozone
- Will follow the trend from recent weeks
o Won’t touch the highs attained during this year, but data will remain within fairy good levels which will confirm the expansive economic cycle that both USA and the Eurozone are enjoying.
o USA GDP / Previous – 2.9% – Forecast – 2.2%
- Normal to be weaker in the first trimester in USA and then recovers in the second one
- Not a brilliant macro but good enough not to damage the markets
o ECB Meeting on Thursday
- Draghi will keep its expansive monetary policy due to
- Protectionism
- Strengthening from the Euro against the US Dollar
- Triple P Strategy in a monetary policy that is giving good results
- Persistent
- Patient
- Prudent
- Hence, the macro environment can be a support for the upswing in financial markets along with the positive quarterly results reported from companies
o Companies that have reported results from the S&P 500 so far have announced an increase in the profit per share of 18 %, higher than the 17% expected
o Solid outlook from the biggest American banks last week
o We expect this positive climate to hold this week
- In USA big technologies company such as Alphabet, Google, Amazon or Facebook among others report results this week
- Good results are expected
In summary, geopolitical risks (protectionism, trade wards…) cannot be forgotten. However, they hold less importance and focus this week on the good business results. That will confirm the validity of the current cycle of economic expansion and will offer support for prices so that markets may remain in the bullish trend of the last weeks.
Technical Outlook
USD Index
Daily Chart
It is possible to appreciate how the USD Index is not only below the 200 EMA but also broke below the weekly support that has been retesting in the recent weeks and which has not been successful so far. In the short term is facing a bearish trend line caused by its recent devaluation.
It did not break the support which has been holding on for weeks, and now it is facing the key moment between a strong support and a strong resistance. We don’t mind where it breaks this week. We’ll wait for a retest for confirmation.
USDJPY
Daily Chart
Moving into the USDJPY, it has just bounced from a monthly bullish trend after doing a fake breakout and consequently bouncing back. A bullish trend could be considered since there are not big resistances ahead except its 200 EMA and the recent bearish monthly trend. In the short term, there are two resistances not very strong but that may cause a small retracement. However, the monthly support is stronger than the resistance it is locked up between.
This week it opened on the edge right below the resistance, so a close on Monday above it may confirm the bullish trend line.
GBPUSD
Daily Chart
GBPUSD has taken a strong change of direction. From breaking up the resistance and having a clear path upwards to heavily break the support that once was a resistance, and opening the chance for a bearish trend. We´ll wait for a retest as confirmation of the downturn.
Crude Oil
Daily Chart
Recent political events, like the recent missile attack to Syria, have created volatility in the markets and consequently, the price of oil has been on the rise. After holding to the trend line and breaking above $65 it is possible to see a retest of the recent resistances it just broke above. Without more resistances ahead, our analysis hint for the next target at $70 per barrel.
So, as expected, on Tuesday it retested both supports it previously broke. Firstly, with the daily low it retested the down trend support and with the closing price second one. Here, it confirms the retest and instantly goes up leaving the door open to $70.
DAX
Daily Chart
Regarding technical, it just broke the resistance it was holding it from weeks. Now, after a clear retest, a bullish position can be taken.
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