Markets mixed as focus turns back to politics

This article was last updated on April 16, 2022

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With the reaction to Friday’s shockingly low nonfarm payrolls and surprisingly positive unemployment rate drop having run its course, the focus of traders has turned to weekend and upcoming political developments.

The Nikkei gained 0.7% overnight while The FTSE is flat this morning, US index futures are down 0.1% with the Dax down 0.3%. WTI crude oil is up 0.7%.

In currency trading, GBP is rebounding against both USD and GBP. EUR is underperforming its peers as the French election race narrows. CAD, Gold and JPY are steady and AUD slipped under $0.7500.

Over the weekend, fears of a trade war between the US and China faded as Presidents Trump and Xi agreed to trade talks over the next hundred days to try and rebalance their relationship a bit. They also are looking at options of what to do about North Korea with the US moving a carrier group into the seas off the Hermit Kingdom. Syria also remains in ‎focus between Friday’s US missile strike and this week’s visit to Russia by Secretary of State Tillerson.

EUR is down against its peers with traders seeing that once again just as one potential flashpoint fades, another pops up. Just as Greece has come to terms with its lenders on the next wave of reforms, France’s election race has tightened up. Far left candidate Melanchon has been making gains lately and it now looks like a four-way race for two second round spots with first round voting less than two weeks away.

It’s a light day for economic news in North America today. Canada housing starts could cast more attention on the hot Toronto housing market. Fed Chair Yellen speaks in the late afternoon with traders looks for any reaction to last Friday’s employment numbers.

Even though the last blast of winter has faded, the ski sector could attract attention with ‎Aspen Resorts agreeing to acquire Intrawest for $23.75 per share or about $1.5 billion in cash.

Chart Signals: Oil rallies as USD and EUR extend Friday’s moves

There is quite a bit of interesting technical action today. Crude oil and the US Dollar have continued to climb, building on Friday’s gains. Meanwhile, GBP has held support and started to bounce back. The US NDAQ, gold and US SPX 500 are all struggling in the wake of failed breakout attempts last week.

North American and European Indices

US 30 continues to consolidate between 20,500 and 20,750 recently trading near 20,670 just above its 200-day average near 20,610. RSI remains stuck below 50 indicating flat to slightly downward momentum.

US SPX 500 remains stuck in a sideways trend between 2,315 and 2,400. RSI sitting on 50 and a symmetrical triangle between 2,340 and 2,365 confirm sideways momentum.

US NDAQ 100 is still stuck below 4,540 following a failed breakout attempt last week but with the RSI holding 50 and the index holding above support in the 5,380 to 5,400 area, this appears to be a rest stop within an ongoing uptrend.

UK 100 continues to form a head and shoulders top trading below 7,400 and failing to retake the extension of a broken uptrend line near 7,360. Initial support in place near 7,300 followed by the pattern’s neckline near 7,260.

Germany 30 keeps drifting downward within a 12,100 to 12,325 trading range, but remains in a long-term uptrend above 12,000 round number support and its 50-day average near 11,925. RSI suggests a pause underway within an ongoing uptrend.

Commodities

Gold is back sitting on $1,250 after an attempt to break out over its 200-day average near $1.260 failed. RSI is rolling over indicating upward momentum fading but channel support remains in place near $1,240 with more possible at the 50-day average near $1,235.

Crude Oil WTI continues to climb upward with support rising toward $52.00 from $51.00 and the price advancing on $52.60 with next potential resistance near $53.55 then $54.45. Rising RSI indicates upward momentum still accelerating.

FX

US Dollar Index is breaking out again today, building on Friday’s big rally by clearing the 101.00 hurdle. Rising RSI indicates increasing upward momentum. Next potential resistance near 101.55 then 102.00 with next support near 100.60.

USDJPY is starting to turn upward again, clearing 111.25 a Fibonacci level to confirm an upswing that started with a successful retest of 110.00 round number support. RSI climbing toward 50 indicates downward pressure weakening with an upturn in momentum pending. Next potential resistance near 112.40 also a retracement test.

EURUSD is testing $1.0585 a Fibonacci level with resistance falling toward $1.0600 confirming Friday’s big selloff. RSI under 50 and falling indicates increasing downward pressure. Next potential support near $1.0540 then the $1.0500 round number.

EURGBP remains in a downtrend trading near 0.8530 below its 50 and 200-day averages which recently completed a Death Cross near 0.8590. RSI under 50 confirms distribution. Next potential support near 0.8500 then 0.8460.

GBPUSD successfully retested $1.2355 support and has bounced back toward $1.2400. RSI levelling off near 50 indicates sideways momentum. Next upside tests possible near $1.2420 the 50-day average then $1.2465 and $1.2500.

USDCAD continues to roll over with resistance falling toward $1.3425 and the pair slipping down toward $1.3380. RSI indicates flat to slightly positive momentum, needing to fall under 50 to signal a downturn. Next downside tests near $1.3340 then $1.3270 near a previous low and the 50-day average.

CADUSD is still bouncing around between $0.7425 and $0.7500 as it base builds in the $0.7410 to $0.7540 range. RSI holding 40 indicates downward pressure easing but it needs to clear 50 to signal an upturn.