Market Brief
During the overnight session the Japanese unemployment rate came in slightly under the previous reading to be expectations with a 2.6% print. The Japanese ratio of job openings to applicants increased by 0.01 points to 1.22, marking a stable availability of jobs per individual applicant.
Recent hawkish comments from some ECB members have added to speculation that QE will end in early Q3 with a first-rate rise coming potentially as early as July. It’s too early to tell, but the signs are already in place to suggest that we could get a turnaround Tuesday in European bonds after ECBs Kazaks comments kept with the more hawkish narrative.
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The US session is likely to offer the most market moving data points, starting with the release of the US durable goods orders. Following this we get the Conference Board consumer confidence report. If we get good news the US dollar is likely to remain supported although traders will be looking at the daily RSI and expecting a turn at some point.
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Durable goods orders are expected to partially recovery from the drop in March, but markets will be looking to see to what extent geopolitical uncertainties and supply bottlenecks will restrain activity going forward.
The Conference Board measure has not fallen by as much as the University of Michigan survey which showed an unexpected rise in consumer sentiment in April.
The S&P500 chart above shows that the US markets found some support from the 4200 big figure and in context to the rest of the price action, there would be buyers near the previous significant lows. If this is a weekly demand zone we could be back up at 4600 in the near future, though the market is likely to react at the next FOMC meeting.
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Yesterday’s risk-off tone supported the US dollar, resulting in GBPUSD falling along with the euro. The daily RSI on the GBPUSD chart is now oversold and the 1.2700 level could act as interim support. Sterling was also under pressure against the euro. The US benchmark yields still haven’t topped out at 3% but have recovered after a small dip. So, a little rip in the EURUSD could be undone today. At the European open the UK public sector net borrowing figures for March came in slightly lower than expected at £18.1bn, but the ONS said borrowing in the 2021/22 full financial year was £151.8bn which is higher than the OBR envisaged last month.