Apr 20, 2017 - Market Update

Short recap

Asia started in red but turned to green as oil recovered a bit

Europe opening higher

ECB officials see stimulus measures as appropriate in the light of low inflation pressures

Beige book – economy modest to moderate growth, inflation in check, lack of sufficient low-skilled workers and issues with workers fluctuation

Akzo Nobel struggling with pushy take over bid from PPG

Rio Tinto stays positive despite drop in iron production and lower prices

Bombardier upheld by court, Ontario can not cancelled the train order

AstraZeneca looking to deliver in immune/oncology field

Keystone XL pipeline not an easy deal for TransCanada despite Trump support

As farmers in Nebraska may bring more clouds

BlackRock benefiting from higher volumes in ETFs

While short of revenue estimate

FTSE 100 testing lows despite Europe higher

Earnings season

US corporates doing well

Morgan Stanley with higher bond trading than Goldman Sachs

Proving that Goldman is loosing the market share

Today:

Visa – should benefit from higher volume but FX conversions may hurt

Philip Morris – should benefit from better sales of cigarettes and their alternatives

Verizon – results to be effected by strong competition in wireless and Yahoo acquisition

Bonds

Investors still sitting in bonds ahead of FR elections

And keeping the yields low

GE-FR spread hit the high of 79 bps

10-yr Trys yield at 2.20%

10-yr Bund yield at 0.19%

FX

DXY – close to key levels

Support at 99.26 (61.8% Fibo), 99.00 rising trendline and 200 DMA (98.97)

USDJPY – close to support at 108.50

Below 200 DMA at 108.86

And descending trendline

EURUSD – support at 1.0706 (38.2% Fibo)

Resistance: 1.0750, 1.0760/70 (descending triangle trendline), 1.0830 (Feb high), 1.0840 (200 DMA + descending trendline)

FR elections to set the direction as triangle is closing

GBPUSD – Is it heading to 1.3000/35 ?

French election the crucial test

If market positive outcome (Macron to second round, Le Pen disappointing)

Sterling may benefit

Commodities

Oil dropped yesterday on build up in gasoline inventories and smaller drop in US stockpiles

Refinery demand strong = lower inventories of oil

But refineries producing lots of gasoline = stocks rising as gasoline demand is low

Drop was also supported by removing of risk premiums as some geopolitical risks faded off

Oil market not to go higher for now

Short side speculators driving the market overall

Resistance USD 51.50 (50.0% Fibo)

Support USD 49.60 (61.8% Fibo)

Data

US: Initial Jobless Claims – to stay close to lows

US: Philadelphia Fed Manufacturing – likely to ease further

Powell (Fed) speaking at 1200 GMT

Carney (BoE) speaking at 1530 GMT

Upcoming:

Apr 23 – French presidential elections

40% still undecided

Official results at 1800 GMT

Exit polls from midday but on BE and CH media only

More precise estimates around 1600 GMT

Apr 29 – EU Summit to sign off the Brexit negotiations guidelines

May 7 – French presidential elections 2^nd round

May 25 – OPEC/Non-OPEC meeting

Should you have any questions feel free to contact me anytime.

Good luck Champs!

Mr Hawk

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