Market Focus

U.S. equities climbed to a record high amid solid corporate earnings and confidence that the Federal Reserve will remain accommodative even as robust growth takes the world’s largest economy back to pre-pandemic levels.

The S&P 500 rose after notching its first weekly decline since mid-March. Most of the main 11 industry groups gained, with energy and consumer-discretionary shares jumping the most. Small-cap stocks in the Russell 2000 outperformed the broader market. The U.S. 10-year Treasury yield hovered around its 50-day moving average. Copper, seen as a barometer of growth, surged to the highest in a decade.

Investors this week will focus on corporate earnings and U.S. economic data even as the Fed primes them to expect no change to policy at their two-day meeting ending Wednesday. While emerging economies from India to Brazil are grappling with a Covid-19 surge or renewed curbs, the developed world is on a firmer recovery path with a faster pace of vaccination.

Data on Thursday may show U.S. gross domestic product increased at a 6.9% annualized pace from January through March after a more moderate 4.3% rate in the previous quarter. Other reports this week may show a pickup in consumer confidence and robust personal spending. Recent indicators cemented economic optimism, with durable goods orders rebounding in March and output at manufacturers and service providers reaching a record high in April.

European stocks advanced Monday, as gains for banks and travel companies offset losses for food companies and utilities. The dollar was little changed after initially falling to a two-month low. It was still on course for the biggest monthly drop this year.

Main Pairs Movement

The Canadian dollar touched a five-week high, while the Australian dollar topped all Group-of-10 peers Monday, as a key index of commodities climbed to the highest since June 2018. A gauge of the dollar hit the lowest in two months as the Federal Reserve is set to begin a two-day meeting that ends Wednesday with a decision that could provide clues on its tapering stance.

Among G-10 peers, the Australian, Canadian, and New Zealand dollars outperformed amid a surge in copper and iron ore prices; the yen and euro led losses.

EUR/USD -0.1%; earlier climbed to 1.2117, the highest since Feb. 26. Short-dated risk reversals ease with gamma around EUR2.6 billion of 1.20 strikes and EUR2 billion of 1.19 strikes rolling off Wednesday.

AUD/USD advanced 0.8% to 0.7803; NZD/USD rose 0.5% to 0.7238. Pair likely capped by ~AUD1.1 billion of 0.7830 options expiring Tuesday, according to DTCC data. GBP/USD +0.2%; rose as much as 0.4% to 1.3929; a move through 1.40 is likely.

Technical Analysis

EURUSD (4 hour Chart)

EURUSD slightly move in the day market which girds in a tiny horizontal channel, trading at 1.2086 as of writing. As the latest CFTC report, the EUR net speculator’s positioning increasing sharply. For RSI side, indicator show 59 figure at the moment, suggest a bullish momentum in the short run. Furthermore, 15 and 60-long SMAs indicators are remaining ascending trend. Therefore, we still optimistic for the next bullish momentum base on the current thread. However, there has a pursuant resistance at 1.2106 on the north side. If the euro penetrate the resistance, we believe the euro would hold the bull movement ahead.

Resistance: 1.2106

Support: 1.2071, 1.199, 1.192

AUDUSD (4 Hour Chart)

The Aussie dollar has remained on an upward track to post strong daily gains around 0.78 level which amid weakness greenback and benefit by booming commodities price as it commodities-linked characteristic. In the absence of worth nothing news, the pickup witnessed in copper prices provided a boost to the Aussie. For the technical side, the RSI indicator has risen to 68 figures which suggests a bullish guideline. On average price view, 15 and 60-long SMAs indicators are both sprawling upward trend.

Overall, we expect the market still has room for the upper side if the greenback remaining weakness and the rising price of the commodities marketplace. Elsewhere, we see there has strong resistance in a short distance on 0.783 around. Moreover, unstoppable bullish sentiment will drive RSI too quick to over-bought thresholds that might spur some sell-off orders to the market.

Resistance: 0.783

Support: 0.775, 0.7695, 0.7656

USDCAD (Daily Chart)

Just like other commodities-linked currencies, the loonie is also driven by weak greenback and inflation expectation of the commodities market. As of writing, the loonie tumbled during the North American session, reaching the lowest level since March 18th and also the multi-year low. Pair broke 1.246 then close around 1.2394 level. From the RSI perspective, the indicator has dropped to 30 figures which pretty close to the over sought barrier. Moreover, 15 and 60-long SMAs indicators have a death cross in recent days.

Integrity all spots, we foresee the market will reverse currently a movement in short term as trigger the critical support level. On the slip side, if the market successive tamp down over nadir level, there will extend the plummet momentum and sentiment because there lacks a price cluster support.

Resistance: 1.246, 1.2491, 1.2587

Support: 1.238