Currencies

Potential bottoming out of the pair

 It could be a potential bottom for the pair after 6 straight days lower that saw the AUD/USD pair move from the 200 days MA at 0.7812 to the low of 0.7532 hit on 27th April 2018. The AUD/USD traded to the lowest level since December 12, 2017. That low on the daily chart, bottomed at the 0.7530 which was a familiar swing level from November and December 2017. At that time, the price fell and stalled at 0.7535 and 0.7531. It broke and tried to stay below in December but that break failed after three days and it took more than 5 months to reach that level once again. The Australian dollar can be a good buy from these levels.

Euro bounced from 50% Fib

The euro weakness was brought about by the fact that the ECB kept the rates on hold and also refused to give a timeline for the tapering and ending of the QE. The strong incoming data from the Eurozone towards the end of last year signaled that the end of the QE was close and it was also speculated that the QE would be ended by the close of 2018 and then the ECB would focus on hiking rates in the beginning of the coming year. But that anticipation had damped down over the last few weeks as the incoming data has got progressively weaker and last week, we saw the ECB President Draghi sending out a note of caution that the central bank is watching the situation and the economy closely. We are also going to see the NFP employment report. After the weak report from last month, the dollar bears will be hoping to again see a weak data which would again act as a trigger for further strength in Euro.

Equities

Strong earnings outlook

Apple Inc. is estimated to report earnings on 1st May 2018 and the outlook for Apple's earnings looks strong in the upcoming quarter with market forecasting earnings to grow by nearly 29% to $2.70 per share, while revenue is expected to increase by almost 16% to $61.27 billion. Annual growth rates are almost as nearly as strong, with earnings expected to climb by roughly 25%, on 14% revenue growth.

Completion of Bear Gartley pattern

Rising European yields are likely to pressure corporate earnings. France’s economy slowed more than expected in the first quarter as companies and households held back on spending, adding to concern that France may be experiencing the start of a downturn. Also, it has completed a Bearish Gartley formation which indicates bearishness.

Metals

Rising inventories suggest bearishness

In a signal of plentiful metal on spot markets, China's top copper smelters lowered their floor treatment and refining charges (TC/RCs) paid by miners for copper concentrate by 10.3% for the second quarter of 2018. Cancelled warrants – metal waiting to leave warehouses – as a share of total inventories in global warehouses on the LME now stands at just 12.8%. Overall LME stocks have soared 90% this year to 388kt last week. Rising inventories suggest bearishness.

 Ease in geo-political tensions

Gold ended the week lower weighed down by a stronger dollar, elevated U.S. Treasury yields and easing geo-political tensions. The upcoming week will be crucial for dollar and gold prices as FOMC Interest rate decision and Non-farm payrolls Numbers are due. Given the rising expectations that the Fed could end up with an additional 3 rate hikes this year, a signal from the central bank that this may indeed be the case, will undoubtedly support the dollar, subsequently pushing the yellow metal lower. After the weak NFP report from last month, the dollar bulls are hoping to see a rebound in the data and if that begins to appear, we could see the dollar gain further strength which would weigh on gold prices. Moreover, the US administration led by Mr. Mnuchin is to meet with Chinese trade representatives in order to negotiate and potentially reach an agreement on trade. Meanwhile, tensions eased on the Korean peninsula after a historic Korean summit on Friday, where North Korea agreed to denuclearize and sign a peace treaty later this year with South Korea. All these factors suggests that gold could continue its trend lower with prices targeting the bottom of its 2018 range.

Supply concerns to drive prices up

The primary industrial use for Palladium is catalytic converter in automobiles. Gasoline-powered vehicles use palladium. China is a massive user of palladium in the auto sector followed by the United States. With automobile sector environmental standards getting stricter, palladium prices are likely to strengthen. Supply concerns are also there after the US imposed sanctions on Russia. Investors’ worries increased when Rusal (HKEX:0486) owner Oleg Deripaska was included on the sanctions blacklist. Rusal, the biggest aluminum producer outside of China, owns a 28-percent stake in Norilsk Nickel, the world’s biggest palladium producer. We believe Palladium prices are likely to rally.

Energies

Bullishness due to Potential Iran sanctions

Crude Oil markets are extremely bullish as Venezuela is in a mess, Iran is at risk of sanctions and demand for crude holds strong on the back of strong global economic growth. Chevron is evacuating it executives from Venezuela following arrest of its two employees in Mid-April. This has created fears of further erosion in Venezuelan oil production since foreign multinationals are the mainstay of current production scenario. Moreover, uncertainty with regard to Iran is also heating up the market as the 12th May, 2018 deadline on whether to restore US sanctions is fast approaching. On the whole oil markets are in a flux and generally this ends up well for the prices. With Asian demand very strong and OPEC-led production cuts, oil prices are likely to retain a bullish overtone.

 

Source: Matrix PR