Apr 24, 2017 - Market Update

Short recap

Europe higher

Markets need to digest the move and get ready for ECB and Trump policies (tax, Obamacare)

FR elections 2^nd round – Macron/Le Pen

Prediction Macron winning over Le Pen 60/40 (seems to be sufficient margin not to have a nasty surprise)

Will see whether French are also as serious about rejecting nationalism and far-right ideas as Dutch were

Would be a strong signal to the world in the light of Trump/Brexit like efforts

US tax reform details to be revealed this week

Obamacare on the table on Wed again

South Korea joining a military drill lead by US

Fitch downgraded Italy to BBB (one grade), outlook stable

European stocks to benefit, capital flow to come back

Positive on Value stocks and banks

British Telecom taking accounting scandal in Italy seriously

Credit Suisse looking at capital increase

Not only banks and financial companies relocating out of London

But also EU’s pharma regulatory office too

Valeant ready to launch psoriasis treatment, likely in 2^nd half of 2017

Canadian oil sands still facing tough times on low prices of oil

As the capital intensive extraction is not attractive

Earnings season

This week will be busy, so let’s warm up a bit with:

Teck Resources – should benefit from rising coal prices and expected rebound in demand for steel

T-Mobile US, Halliburton, Whirlpool, Kimberly-Clark reporting among others

Bonds

FR elections relief reflected in higher yields

But majority of the move already priced in

GE-FR spread below 50 but still not down to normal levels

As market sees risks of Macron gaining majority in Parliamentary elections to support his policies

US yields – what will be the reaction if Trump delivers?

Are EU yields going to move up as well?

10-yr Trys yield at 2.32%

10-yr Bund yield at 0.33% (jumped from 0.20% level)

EURUSD

Short term – relief

Long term – situation in Italy, rising spreads

FR – Parliamentary elections (majority for Macron – a big question)

Support - 1.0840/50 – strong area with (200 DMA at 1.0836)

Resistance - 1.0933 (61.8% Fibo) on daily chart

Some sell levels coming around 1.1000

EURUSD weekly

Would like to bring to your attention that EURUSD didn’t get through the resistance (High 1999 at 1.0915) decisively

USDJPY – support 109.86 (23.6% Fibo)

Resistance 110.94 (38.2% Fibo)

DXY – below 99.26 (61.8% Fibo)

But supported by declining trendline

200 DMA at 99.00

Commodities

Gold – staying neutral under longs liquidation

Support 1272 (descending trendline)

200 DMA at 1252

Data

Kashkari (Fed) speaking at 1530 GMT

Upcoming:

Apr 27 – ECB meeting – Draghi will be in the spotlight defending the QE continuation with taper may be around mid-2018

Will need to talk down the taper at an earlier stage

Would correspond to three year cycle as Fed had

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

May 7 – French presidential elections 2^nd round (Macron/Le Pen – 60/40)

May 25 – OPEC/Non-OPEC meeting

Jun 11/18 – French Legislative (Parliamentary) elections (a big question mark for Macron to gain majority)

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

Good luck Champs!

Mr Hawk

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