Fundamental Analysis Morning Market Review 04 May 2021
Morning Market Review:
EUR is showing moderate gains against USD, developing a “bullish” signal formed the day before, when EUR managed to reverse the emerging downtrend. USD received support at the end of last week thanks to the upbeat macroeconomic statistics on the dynamics of personal income and spending in the US for March, which once again confirmed the high rates of recovery of the national economy. However, so far this only strengthens the focus of attention on the US Fed, which is expected to take more decisive actions aimed at curbing inflationary pressures. EUR was supported on Monday by strong macroeconomic statistics from Germany. Retail Sales in March rose by 11% YoY after falling by 6.6% YoY in February. Analysts had expected negative dynamics to remain at –3.1% YoY. On a monthly basis, sales growth accelerated from +2.7% MoM to +7.7% MoM, also beating market forecasts of +3.0% MoM.
GBP maintains multidirectional trading dynamics against USD, staying at 1.3900 and offsetting the “bearish” end of last week, when investors were actively buying USD amid optimistic macroeconomic data. In turn, market participants are still expecting a reaction to this data from the US Fed. The regulator prefers to maintain the status quo, attributing the rapidly growing inflation to the high rates of recovery of the national economy. Macroeconomic statistics from the US released on Monday somewhat curbed the enthusiasm of USD “bulls”. ISM Manufacturing PMI in April fell from 64.7 points to 60.7 points, while analysts expected it to rise to 65 points. A similar index from Markit also dropped from 60.6 to 60.5 points with a neutral outlook.
AUD is showing ambiguous performance against USD during today’s Asian session, following up on macroeconomic publications from Australia that were released at the opening of trading. Some support for the instrument is provided by statistics on Home Loans, which in March increased by 3.3% MoM after falling by 1.8% MoM in February. Yesterday, the AUD/USD pair showed a steady growth, which was largely due to the technical factors of the correction of USD. The dynamics of the instrument was also influenced by not the most confident macroeconomic statistics from the USA on the level of business activity in the manufacturing sector, which seems to be losing its initial impetus to growth. AUD, in turn, received slight support from inflation data and continued growth in commodity prices. RBA Commodity Index SDR jumped 34.7% YoY in April after rising 27.2% YoY in March. Analysts expected acceleration in the dynamics of the indicator, but expected only +28.3% YoY.
USD is developing corrective dynamics against JPY, testing the level of 109.00 for a breakdown. After the last week’s active growth of USD, which was caused by strong macroeconomic statistics and the increasing yields of US Treasury bonds, the positions of USD at the beginning of the week are under pressure. In addition to technical factors of long profit fixation, the pressure on USD is exerted by uncertain statistics on business activity in the manufacturing sector, as well as some market disappointment with the actions of the US Fed. The regulator is still taking a wait and see attitude, only hinting at the possibility of reducing the quantitative easing program before the start of the interest rate hike.
Gold prices are showing an uptrend, quickly retreating from the local lows, updated last week. The instrument, which also contributed to the strengthening of other precious metals, was supported by corrective sentiments in USD, as well as by a decrease in the yield of US Treasury bonds. The quotes were further supported by the latest statistics on manufacturing activity in the US, which showed a slowdown in growth in April. This week, investors will focus on Friday’s statistics on the US labor market, which is likely to help more accurately assess the ongoing processes in the American economy. In addition, traders again hope for some more coherent reaction from the US Federal Reserve.