US stocks ended the session slightly lower, after bouncing-off four-week lows. US indices fell at the beginning of the trading session, continuing the sell-off that began late on Wednesday. However, major indices found support below the 200-day moving average which helped to push the prices back up near the open levels.
The US Dollar Index, DXY, traded slightly lower against a basket of currencies, retreating from a four-month high as investors took profits ahead of key jobs data. The dollar is now in the positive territory for the year, erasing all the losses of the first quarter. The dollar is being supported by the expectations that the Federal Reserve will continue to raise interest rates as other banks might need more time to tighten their monetary policy. Traders will be looking carefully for the jobs report, as further improvement in wage growth will provide support to the US dollar.
The EURUSD continues to find support near the 61.8% retracement of the last move from $1.1555 to $1.2555, and the 200-day exponential moving average. In terms of data, the unexpected slowdown in Eurozone inflation that was shown in the CPI figures yesterday, added pressure on the currency. If the economic indicators continue to weaken, the European Central Bank will face difficulties in taking the decision of reducing stimulus.
The British Pound drifted lower yesterday as the Services PMI came out less than anticipated. Analysts expected the figures to rebound to a minimum of 53.5 after dropping to the lowest in almost two years in March. The soft economic indicators from the United Kingdom reduced the chances of an interest rate hike in May from 90% to 10%.
Gold continues to find support near the $1300 psychological level as investors wait for the employment report from the United States. Gold is close to post its third consecutive weekly loss. The World Gold Council said yesterday that the demand for gold posted its weakest start to the year since 2008.
Oil prices climbed to a three-day high as geopolitical risks escalated from possible new U.S. sanctions against Iran. President Donald Trump set May 12 as a deadline for the European leaders to fix the nuclear deal. In response to that, the Iranian Foreign Minister said that this is totally unacceptable. Oil markets will remain in uncertainty as investors will be waiting for the deadline. U.S. Baker Hughes oil rig count is due today.
The most important economic events:
|8:00||EU||Services PMI (Apr)||55.0||55.0|
|9:00||EU||Retail Sales (YoY) (Mar)||1.9%||1.8%|
|12:30||US||Average Hourly Earnings (MoM) (Apr)||0.2%||0.3%|
|12:30||US||Nonfarm Payrolls (Apr)||189||103|
|12:30||US||Unemployment Rate (Apr)||4.0%||
|14:00||CA||Ivey PMI (Apr)||60.2||59.8|
|17:00||US||U.S. Baker Hughes Oil Rig Count||825|
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.