Profit booking activity in major markets has caused most risk assets to trade in the red. Investors await macro data updates for short term profit opportunities ahead of the Easter weekend as most markets close for the week today.
Summary: Global market is seeing both equity and forex markets bleed in red on profit booking activity ahead of Easter weekend. US Wall Street last night ended on a dovish note as declines in healthcare shares outweighed positive influence from the positive US & Chinese macro data and chip sector gains on Apple-Qualcomm deal. Dovish cues from Wall Street put significant bearish pressure in Asian markets, and this was further aggravated by profit booking activities in all major risk assets and benchmark index futures. This resulted in major indices, equities and forex pairs closing in red in all major Asian stock exchanges. European markets saw a subdued opening on cues from the international market and traded with slight positive bias in early market hours, but fell sharply following disappointing Euro area macro data. As major markets across the globe are closed tomorrow on account of good Friday, dismal macro data outcome influenced a downward price rally and profit booking activity which resulted in most assets losing all gains made earlier this week. Risk-averse investor sentiment and profit booking activity caused major forex pairs to trade in red as well.
Precious Metals: Gold and Silver gains slight positive bias during European market hours as investors took to profit booking activity in all significant risk assets across major Asian and European markets. As dovish cues began to influence investor sentiment across all major markets, precious metals found some momentum. But gains are limited as investors have held back from placing major bets owing to Easter weekend.
Crude Oil: Crude oil price continues to trade positive today as EIA weekly crude oil stockpile data from the US saw a draw in inventory data following the draw in API weekly data. A drop in US crude oil stockpile amid ongoing supply crunch from the Middle East on escalating political tensions, OPEC enforced production, and supply cuts serve as factors providing vital support to crude oil bulls in the market. However, gains are limited amid cautious investor sentiment ahead of Easter weekend.
USD/JPY: The pair has been trading range bound across the Asian and European market hours today. Profit booking activity ahead of Easter weekend has caused major risk assets to trade in red today. This provides some level of positive support to JPY. While profit booking activity in forex markets have provided some support for USD, there isn’t any major update or headlines that could cause high demand for safe-haven assets. As both JPY and USD have equal support, the pair is trading range bound with slight price fluctuations to either side of the pair.
On The Lookout: The main focus of investors continues to remain on geopolitical events. But there hasn’t been any progress in all three major geopolitical events this week. The price action this week has been influenced entirely by macro data updates, earnings updates and short term headlines in local markets. As mentioned in yesterday’s article, profit booking activities are ablaze across all major markets today. Investors have held back from creating new bets post profit booking, and this has resulted in major risk assets trading near intraday lows post sharp declines from earlier trading sessions. European market saw a mixed macro data outcome. While the Euro area and German PMI’s were in red, French PMI and UK retail sales data were positive. Geopolitical events are currently in a neutral stance with proceedings so far ending on a positive note. Also, Positive earnings reports from Unilever and Nestle in Europe provided some level of positive fundamental support to risk appetite in the market. This has resulted in the overall long term investor sentiment and risk appetite remaining positive. The profit booking activities today are unlikely to influence any change in long-term price trends. Investors are now waiting for US and Canadian macro data updates for short-term trading cues as the trading session comes to a close for the week in most major global markets including the US market.
Trading Perspective: Profit booking activities and dovish cues from international market are likely to influence bearish price action in US Wall Street today.
US Futures: US benchmark index futures trading in the international market are seeing subdued price action in European market hours. Profit booking activities and investor’s choice to hold back from placing major bets suggests that US Wall Street will see a flat opening and range-bound price action for most of the session. Union Pacific, Honeywell, Dover, and American express company earnings updates are also in investor’s radar as they await short-term trading cues ahead of Easter weekend.
EUR/USD: Despite opening on a positive note, the pair fell sharply influenced by profit booking activity and disappointing German and European PMI updates. Post the PMI-induced-decline, the pair has entered consolidative price action near the mid-1.12 handle. Investors now await US retail sales data, Initial jobless claims, business inventories and flash PMI updates for short-term profit opportunities and directional trading cues.
USD/CAD: The pair is seeing range-bound price action in favor of the US dollar as positive crude oil price in the global market continues to provide some level of fundamental support to CAD bulls. Investors await macro data updates for short-term profit opportunities and directional trading cues as today’s calendar is well packed with high impact updates. Canadian calendar will see the release of retail sales data while the US calendar will see the release of retail sales data, initial jobless claims, business inventories, and flash PMI updates.