Technical Analytics Report

Morning Market Review 28 April 2021


Morning Market Review:


EUR has been declining against USD during today’s Asian session, retreating from the local highs, updated at the beginning of the week, when the pair was trying to consolidate above 1.2100. Investors are fixing long profits ahead of today’s publication of the results of the US Fed’s meeting, as they expect to hear updated forecasts regarding the timing of the start of monetary tightening. Traders are also worried about the speech of the European Central Bank President Christine Lagarde, who is in a more difficult position, given that the European economy is noticeably lagging behind the United States in terms of recovery. Noteworthy European macroeconomic statistics are due on Thursday with the April eurozone business sentiment report, and Germany is to release its labor market update.


GBP is significantly decreasing against USD at today’s morning trading session, leveling the results of the timid growth, which was observed with the opening of the week. Market participants are closing part of the existing long positions, preferring to wait for the publication of the final minutes of the two-day meeting of the US Fed, which is expected to shed light on the nearest prospects for the regulator’s monetary policy. Investors will closely follow the rhetoric of the Fed’s Chairman Jerome Powell and will be disappointed if he repeats his earlier words about “balance of risks” and “close monitoring of the economic situation”. Some pressure on GBP is exerted by the BRC Shop Price Index published today. In March, the indicator again showed a noticeable decline of 1.3% YoY after a decline of 2.4% YoY.


AUD is developing “bearish” trend against USD during today’s trading in Asia, returning to last Friday’s levels and trying to consolidate below 0.7750. Noticeable pressure on the instrument is exerted by the correction of USD ahead of the publication of the US Fed’s meeting minutes. Markets do not expect noticeable changes in the vector of monetary policy, but they are counting on tougher rhetoric from the regulator, which would reflect the high pace of recovery of the American economy after the coronavirus crisis. On Wednesday, weak national macroeconomic statistics put additional pressure on AUD. The Consumer Price Index for Q1 2021 slowed down from 0.9% to 0.6% QoQ, which turned out to be worse than the neutral forecasts of analysts. The RBA Trimmed Mean CPI dropped to 0.3% QoQ over the same period, which is also worse than market forecasts at 0.5% QoQ. In annual terms, the inflation rate increased from 0.9% to 1.1% YoY, but fell short of the optimistic estimates at 1.4% YoY.


USD continues to grow actively against JPY, receiving additional support ahead of the publication of the final minutes of the two-day meeting of the US Federal Reserve. Demand for the safe JPY remains weak, given the continued excitement in the market regarding the pace of global economic recovery. On the other hand, investors fear a new wave of coronavirus infection in Japan, given the alarming statistics on the incidence in certain prefectures of the country. The day before, the Bank of Japan held a meeting on the interest rate, following which, as expected, the regulator kept the parameters of the monetary policy unchanged. At the same time, the Bank of Japan increased its own forecasts for GDP growth in the current fiscal year from +1.8% to +2.4% YoY.


Gold prices are declining during today’s morning trading session, building on the correctional momentum that formed the day before. The instrument is under slight pressure ahead of the publication of the results of the US Fed’s meeting, which, as many expect, will bring some tightening of the regulator’s rhetoric regarding economic stimulus measures. So far, the prospects for reducing quantitative easing programs are discussed, but even this will be enough for the markets. In addition, this week investors will pay attention to the publication of data on the dynamics of US GDP. Forecasts assume that the US economy will grow 6.5% YoY in Q1 2021 after increasing by 4.3% YoY over the previous period.

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