US open: stocks lack direction ahead of FOMC minutes

US futures point to a subdued start as investors look ahead the release of FOMC minutes. EUR/USD trades at a two week high & oil extebds gains ahead of EIA data.

USA (2)

US futures

Dow  futures -0.1% at 33401

S&P futures -0.1% at 4070

Nasdaq  futures -0.1% at 13563

In Europe

FTSE +0.6% at 6868

Dax -0.3% at 15178

Euro Stoxx  -0.4% at 3940

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Futures slip but economic optimism remains

US futures are pointing to relatively flat start to trading as investors lack direction ahead of the FOMC minutes due to be released later.

The S&P reached a fresh all time high in the previous session before closing mildly lower. Even so the mood in the market remains optimistic amid the impressive vaccine rollout, supportive fiscal and monetary policy and strong economic data.

Where next for the S&P?

S&P 500 has seen a remarkable recovery from the post pandemic low, breaching 4000 last week and hitting a fresh all time high in the previous session at 4081.

The S&P500 remains within the ascending channel dating back to early November, it trades above its 50 & 100 sma in a bullish trend.

The S&P 500 is consolidating around 4070 and the RSI is just easing a little lower after almost breaching overbought levels.

There appears to be room for this rally to run further until the RSI hits overbought territory. Bulls will look to 4100 prior to 4200.

A pullback within the uptrend is also possible with support seen at 4057, the price gap April 5 before 4030 and 4000.

FOMC minutes in focus

Investors will scrutinize the minutes from last month’s Fed meeting for clues over what policy makers are thinking over inflation. Inflation expectations ramped up firmly in the market amid the vaccine rollout and Biden’s stimulus. Treasury yields jumped 23% in March. Even so, Fed Chair Powell stuck to the dovish hymn sheet.

There are signs that the bond market rout is starting to calm. Yields in the benchmark 10 year treasury traded at 1.,64%, after climbing as high as 1,78% last week. Will the minutes also show the dovish tone from Fed Powell – which would mark a sharp contrast to the IMF’s more upbeat assessment. US GDP is expected to rise to 6% in 2021.

Any hint in FOMC minutes that the Fed could be looking to tighten policy sooner, could send yields higher once more.

FX – EUR rises on upbeat PMI data, FOMC awaited

The US Dollar is edging lower as US treasury yields continue to fall. Yields are easing again despite upbeat US data. Investors look to FOMC minutes for further impetus.

EUR/USD – trades higher amid follow through buying from yesterday’s vaccine news & on upbeat PMI data. Eurozone Composite PMI March 53.2 vs 52.5 in the preliminary reading. German composite PMI 57.3 vs 56.8 previously. Yesterday it was reported that Spain, Italy, Germany and France expect to have heard immunity by the end of June.

GBP/USD -0.05% at 1.3825

EUR/USD trades +0.13% at 1.1896

Oil extends gains ahead of EIA data

Oil is extending gains for a second straight session, boosted by global economic recovery optimism and better than forecast API stockpile data.

The IMF upgrading its global economic growth forecasts, strong US macro data and expectations that Europe will ramp up its vaccine programme in the coming weeks are boosting oil prices higher.

API data revealed that US crude stocks were down by 2.6 million barrels in the week ending April 2. Attention will now turn to official government crude inventory data.

US crude trades +0.7% at $59.82

Brent trades +0.9% at $63.24

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Looking ahead

15:00 CAD Ivey PMI

15:30 EIA Crude oil stock change

19:00 FOMC minutes

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