European Open: RBA hold, Gold Bulls Eye Break of 1800
Matt Simpson May 4, 2021 1:43 AM
The RBA held interest rates at 0.1% and announced they will discuss whether to retail their 3-yr bond target. And gold appears poised to break above 1800 as bulls square up to this milestone level once more.
- Australia's ASX 200 index rose by 37 points (0.53%) and currently trades at 7,065.80
- Japan's Nikkei 225 index has risen by 62.08 points (0.21%) and currently trades at 29,053.67
- Hong Kong's Hang Seng index has risen by 71.09 points (0.25%) and currently trades at 28,428.63
UK and Europe:
- UK's FTSE 100 futures are currently up 18.5 points (0.27%), the cash market is currently estimated to open at 6,988.31
- Euro STOXX 50 futures are currently down -1 points (-0.03%), the cash market is currently estimated to open at 3,999.25
- Germany's DAX futures are currently down -18 points (-0.12%), the cash market is currently estimated to open at 15,218.47
Monday US Close:
- The Dow Jones Industrial rose 238.38 points (0.7%) to close at 34,113.23
- The S&P 500 index rose 11.49 points (0.27%) to close at 4,192.66
- The Nasdaq 100 index fell -61.041 points (-0.44%) to close at 13,799.72
FTSE 100 continues to falter at 7,000
After a positive start following Wall Street’s lead, Asian equities are mixed. The ASX 200 is the strongest major benchmark, up 0.5%, followed by the Hang Seng at 0.25%. Equities across China and Japan are lower, with the SEC and CSI300 down around -0.8%.
As for the FTSE 100, bulls continue to challenge (yet fail to keep prices above) 7,000. Without wanting to sound like a broken record, the fact it is struggling at this milestone level without managing to test the April high at 7019 makes this a hard index to be bullish on and two bearish pinbars have formed at recent highs. Over the past 8 sessions it has failed to recoup the 2% loss sustained two weeks ago, so it appears what we have on our hands is a very, slow grinding top (that can’t seem to top out). But, when such moves unravel they can do so quickly, so we continue to watch for the potential for the FTSE to roll over. Perhaps a break below 6929 could finally trigger some bearish follow-through.
FTSE 100 (-0.38%) 09 April 2021:
+ 4.29% - AstraZeneca
+ 4.21% - Smurfit Kappa
+ 3.17% - Hikma Pharma
- 7.00% - Barclays
- 4.03% - Ocado
- 3.23% - Flutter Entertainment
Commodities: Oil reaffirms support, gold and copper eye new highs
Gold looks keen on breaking above 1800 after rising 1.3% yesterday and stopping just shy of this key level. The 20 and 50-day eMA’s acted as a springboard for gold prices yesterday, after last week’s bearish outside candle failed to hold below key support at 1760. The double bottom pattern from 1676 remains in play and its projects a target around 1835, the daily trend structure suggests we could be facing a breakout sooner than later.
- A break above 1800 confirms a breakout and brings the 1835 level into focus (double bottom measured move).
- The bias remains bullish above last week’s low, but if this breakout is to have legs, we wouldn’t expect it to retest yesterday’s low first.
- As a small flag is forming on the four-hour chart, a break above 1800 could allow us to increase the ‘invalidation point’ to the lows of the flag (currently around 1785).
Copper futures printed a bullish engulfing candle yesterday, suggesting the swing low is in place at 4.4350. Overnight trade has seen prices remain in the top third of yesterday’s range, so we’ll be keeping an eye on a potential breakout above 4.5510 to suggest trend continuation.
Oil prices remain supported after Iraq’s oil minister said he expected oil prices to remain above $65, and the OPEC+ production cuts should help keep prices within normal levels. Support has been found between the 10 and 20-day eMA’s for WTI and it printed a two-bar bullish reversal yesterday.
Forex: Dollar recovers some of yesterday’s PMI losses
The US dollar index (DXY) has recouped about half of yesterday’s losses sustained when US PMI data was softer than expected. Still, whilst the report still contained some punchy numbers, traders were clearly positioned for something better.
USD is the strongest major and up against all its peers in overnight trade, gaining 0.4% against the Swiss franc, and around 0.22% against the British pound, Australia dollar and New Zealand dollar.
The British pound remains firm after the UK announced a £1 billion trade deal with India. GBP/JPY produced a two-bar bullish reversal yesterday and found support at its 10-day eMA, and show the potential to retest the 152.55 high (and perhaps even beyond). EUR/GBP produced a bearish engulfing candle although the 50 and 20-day eMA are currently providing support. A break beneath them brings the 0.8655 high into focus.
Up Next (Times in BST)
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.