Investment Bank Outlook 29-04-2021
RBC Capital Markets
Overnight, USD has stabilised, consolidating the small losses (0.3% in DXY terms) that came in the immediate wake of the FOMC announcement. Similarly, US 10yr yields have settled around 4bp lower. The FOMC statement was almost entirely unchanged from the previous version and the reaction largely reflects some disappointment that Powell did not drop stronger hints on the start of tapering in the press conference. When asked, he simply said “it's not time yet.”
From here on, we go back to watching data for clues on when this might change. USD’s soft tone is also helped a rally in tech stocks (NASDAQ future +1.0%) after strong results from Apple and Facebook. Subsequent to the Fed, overnight news flow has been limited.
Day ahead: The first estimate of US Q1 GDP is the highlight of the day’s releases (see USD below). German April CPI data may shift expectations for tomorrow’s Eurozone release (see EUR). Otherwise, the calendar is packed with a steady stream of relatively minor releases (see table below). All of China’s April PMI releases are out overnight (official and Caixin, manufacturing and non‐manufacturing). US Q1 earnings announcements are due from Amazon and Twitter
Citi
No surprises from the Fed or President Biden overnight have seen markets take this as a green light for further gains. Positive tech earnings overnight too have supported equity indices comparatively more than risky FX, but nonetheless, we see a number of pairs testing/eyeing key levels including GBP, AUD and EUR. Ahead, further USD weakness is expedted by CitiFX Strategy, with the narrative turning back towards reflation trades and stability in rates space for now.
Data today should not derail the narrative either, with USD jobless claims, Q1 GDP and core PCE likely to be overlooked given the Fed still sees “some time” before “substantial further progress”.
EUR looks to Germany CPI and unemployment, as well as Eurozone economic confidence data. These prints could be interesting at the margin, but again unlikely to materially move the market. Lastly, EM sees a TRY inflation report as the only point of note.
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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.