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24.04.2019 Daily Bulletin
UK finance minister Philip Hammond said on Wednesday he was looking for candidates to replace Mark Carney as the next governor of the Bank of England. Carney's tenure at BoE's helm has twice been extended to steer the economy through the Brexit process. Carney became BoE boss on July 1, 2013, and is set to leave the post on January 31, 2020.
Citing security sources, the Daily Telegraph reported that Britain will block the Chinese tech giant Huawei from all core parts of the 5G network and limit its access to non-core parts. Huawei faces immense scrutiny as the US tells allies not to use its technology because it could be spying for the Beijing government.
Labour accused PM Theresa May of not offering any concessions cross-party Brexit talks. The government hopes to avoid taking part in European parliamentary elections next month by reaching a compromise with the opposition. The talks resumed on Tuesday between a team of May's ministers and opposition's shadow ministers.
US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are set to travel to Beijing for perhaps one of the last rounds of trade talks beginning on April 30, the White House said on Tuesday. The WH said Chinese Vice Premier Liu He, who has been leading Chinese trade delegations, will travel to Washington for more discussions from May 8 on.
After reaching the year's record highs, oil prices began to fall on Wednesday after Arab OPEC members said they would increase production to cover for the shortfall resultant from the US ending of waivers in sanctions on Iran.
Canada's central bank is meeting and it is largely expected to hold its benchmark interest rate on hold later on Wednesday.
In Germany, the Ifo business climate index is will be in the center of markets' attention.
Strong macroeconomic reading proved that the US economy did better in Q1 than anticipated. An increased interest in the greenback pressed the parity price yesterday 1.1200 underneath in the European session yesterday. Better-than-expected new home sales data for the US and the consumer confidence at -7.9 for the Eurozone in April helped the bearish movement. The parity price is swinging near the upper band of the falling channel. 1.1200 still holds a strong support, but if the price falls, that level will be broken and 1.1180 and 1.1150 will be in sight. German Ifo business climate index will be a decisive data for the day's trading. If the readings match the expectations, we will see a recovery to 1.1220. Then, 50.0 Fibonacci retracement level at 1.1250 will be second strong resistance.
The Pound slipped further down as May's government failed to make substantial progress in cross-party talks with the opposition Labour Party. Leader Corbyn said the government had to make changes in its approach as both Number 10 hopes to avoid participation in the European Parliament next month. The currency pair is trading right on the 50-day moving average, at a three-month low. Meanwhile Finance Ministry's search for candidates to replace BoE boss Carney has already turned heads for likely names. As the bearish sentiments weigh on the Sterling, the parity will test 1.2900. More weight will push the Pound to 1.2880. In the case of a rebound, investors will want to see if the price can exceed 1.2950. Although dim, chances of any positive news from party talks should help it climb back to 1.2980. For the much Brexit-tied pair, there is no important data during the day.
Support: 1.2900 - 1.2880
Resistance: 1.2950 - 1.2980
BoJ kicked off its two-day monetary policy meeting. All major indicators point out weaker economy in Japan. But the policymakers will most likely decide to keep bank's policy unchanged, and rather downgrade only their assessments. Published earlier Japan's corporate services price index came in line with expectations same as all industries activity index. Leading index is at 97.1, below the expectations 97.4. Better-than-expected shape of the US and Chinese economies in Q1 added a positive bias to the Dollar. However, despite slightly expanded wavering, the parity price keeps hovering in 111.70–112.00 range. Due to the lack of significant macroeconomic releases, the parity price is exposed to the geopolitical sentiment. No sharp movements are expected until BoJ's statement. Then, in the bearish scenario, 111.60 and 111.40 will be followed by 111.00 and 110.80. In the case of positive outcome, 112.00, then 112.20 and 112.40 will be watched.
Support: 111.80 –111.40–111.00–110.80
Gold prices dipped on Wednesday, leading for a fifth straight week of losses. The fall is caused by strong company earnings in the US that pushed the indices to record highs and a rise in Asian shares held up by defiant Chinese Q1 growth. The precious metal remains close to the oversold area for well over a week now with bears still pushing it down. For the intra-day trade investors should find support at 1268 whose precinct was tested earlier. A stronger pushdown should land gold at 1265, that is a low last seen at the end of last year. For a rebound, we will look at 1276 and later 1280.
Support: 1268 - 1265
Resistance: 1276 - 1280
API reported last week crude oil stocks at 6.900M, compared to -3.096M in previous week. The Brent oil price eased below 78.00 after the release and after Saudi Arabia declared to increase crude production in order to fill the shortfall caused by end of US waivers in sanctions on Iranian oil. IEA said that markets are "adequately supplied" and that "global spare production capacity remains at comfortable levels." The price started a day with a downward gap. As every Wednesday, the US is set to publish crude oil inventories. A significant rise to 1.255M from last -1.396M is expected. If the inventories match the forecasts, the downward bias will continue with 77.60 and 77.30 on the horizon. 77.00 will be the next. In the opposite scenario, 78.00 and 78.20 will be expected. After that the price will try to reach recent highs close to 78.50.
Published yesterday, sentiments showed loss of the customer confidence in April for the Eurozone with -7.9, compared to -7.0 forecast and the previous figure at -7.2. Today all the eyes are on German data. German Ifo business climate slid to 99.2 vs 99.9 forecast. Business expectations and current assessment are also below the expectations, at 95.2 and 103.3, respectively. The data will weigh on the price through Wednesday. The German index is currently hesitating close to 12 300 in the overbought area. 12 150 and 12 000 will act as support. In the case the price rises above 12 300, 12 430 and 12 500 will be taken into consideration.
Support: 12 150–12 000
Resistance: 12 430–12 500