April 26, 2021 12:47:44
Headlines
* USD claws back losses after weak opening in a big week
* US stock futures are flat with European stocks muted
* Bitcoin bounces nearly 10% after hitting seven-week low
USD bears started the week in fine fettle pushing the greenback to near two-month lows. But risk has backed off slightly and yields on US bonds have picked up, so the dollar has caught a bid. EUR/USD traded with a 1.21 handle early in the session but is facing some technical resistance around this level.
US equity futures are treading water today along with other global stock markets ahead of a huge week of earnings. Tesla report tonight before FAAMG earnings hit the wires from tomorrow.
Market Thoughts – Guidance crucial for stocks to go higher
Investors are unsurprisingly cautious today ahead of major global companies from GE to Facebook reporting quarterly earnings this week. The FOMC also meet on Wednesday while President Biden speaks to Congress about some of his proposed policies and tax plans.
For stock markets, analysts expect S&P500 firms to report the strongest quarterly earnings progress since 2018. Indeed, of the 123 companies that have released so far, 85% have come in above analysts estimates. Having hit highs in anticipation of this progress, as we’ve said before, it is guidance that will be crucial in sustaining the current high valuations and if we are to see another strong leg higher. There is a lot priced in right now.
Chart of the Day – Dollar fighting a tough battle
The world’s reserve currency has regained some of its early losses today with the EUR/USD intraday pivot around 1.2080. If we lose this then we can see further losses back to 1.2035. The weakness in the dollar has seen commodities push higher with copper notably surging to the highest in a decade on expectations supply will tighten as the global economic recovery gains traction.
With prices currently trading just below the 100-day moving average, the dollar index (USDX) struggled to push through the mid-March lows last week which are now acting as resistance around 91.31. A break above here may negate the bearish trend from the end of last month, but any major moves may not be seen until after the FOMC is out of the way. Otherwise the trend is for lower prices.
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