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Greenback and Stocks Rise on Improving Risk Appetite

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US Equities

US stocks rose slightly on Wednesday, as global tensions eased and risk appetite was favored. Some popular US companies from different sectors are showing solid earnings, which is boosting the stock market positive outlook. U.S. President Donald Trump and Japanese Prime minister Shinzo Abe held a news conference yesterday, where they confirmed that they will strengthen trade consultations and aim on expanding investments and trading between the two countries. Today Novartis (NVS), P&G (PG), and Philip Morris (PM) earnings are due.

USD

The dollar index gained for the second consecutive day due to the weakness in other major currencies after economic reports. The US dollar gained in early trading against the Japanese Yen after the news conference by both Japan’s prime minister and US president.

EUR

The euro was almost steady yesterday after the Consumer Price Index YoY ticked slightly lower, but the MoM readings showed some good improvements. The Core CPI MoM, came in as expected at 1.4% up from 0.4% last month. A steady positive outcome in the Eurozone economic indicators will support the European Central Bank in shifting its monetary policy.

GBP

The British pound suffered on Wednesday, after weaker than expected inflation numbers. The currency traded at four days low against the dollar. The cable was being supported in early trading this week, on optimism by investors that if the Jobs report and the inflation numbers showed some strength, the Bank of England will hike interest rates in May. The Jobs reports showed weaker wages and CPI YoY for March came out at 2.5% versus 2.7% expected, these  numbers might not support a move in interest rates in May.However, inflation is still above the 2% target. In terms of data, retail sales numbers are due today.

CAD

The Canadian dollar weakened yesterday against the United States Dollar, after the Bank of Canada kept interest rates unchanged at 1.25%. The chairman confessed that the wage data and inflation numbers are encouraging, but interest rates needs to remain below the neutral level for a while. He added also that having the NAFTA resolved, will boost investor’s sentiment.

Gold

Gold traded at 1 week high, as investors are diversifying their portfolios and positioning to avoid risks from any development in the Chinese and US trade war. Investors will continue to consider gold as a safe investment to hedge against rising inflation or market uncertainty and tensions.

Oil

Oil prices rose on Wednesday to the highest since late 2014 on a declined crude inventories report from the United States and the continued “output cut” plan by the OPEC and its allies. The West Texas Intermediate traded at a high of 68.87 after report by the Energy Information Administration showed that the crude inventories fell by 1.071 million barrels last week.

The most important economic events:

GMT Country Event Expectation Previous
8:30 UK Core Retail Sales (MoM) (Mar) -0.4% 0.6%
8:30 UK Core Retail Sales (YoY) (Mar) 1.4% 1.1%
8:30 UK Retail Sales (YoY) (Mar) 2.0% 1.5%
8:30 UK Retail Sales (MoM) (Mar) -0.5% 0.8%
12:30 US Initial Jobless Claims 230 233
12:30 US Philadelphia Fed Manufacturing Index (Apr) 20.8 22.3
12:30 CA ADP Nonfarm Employment Change   32.7 
23:30 JP National Core CPI (YoY) (Mar) 0.9% 1.0%

                                 

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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