one royal market analysis

Tuesday, 12 April, Market Overview

Weekly Fundamental Reports in the US  

In the US, all eyes will be on the Consumer Price Index which will be released on April 12th and will concern the month of March. Published by the US Department of labour statistics, this report is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. A reading below 0.5% will be considered bearish for the USD, whereas a reading above this estimated number will be considered bullish for the USD. Another important report for traders and for its impact on the market is the Michigan Consumer Sentiment Index.

This report, released by the University of Michigan, is a survey of personal consumer confidence in economic activity. Consumer energy can translate into greater spending and faster economic growth. A stronger labour market helps turn the Fed hawkish.

Actual figures beating 58.8 tend to be USD bullish. Finally, the Retail Sales report for March will be released on Thursday, April 14th. This report measures the total receipts of retail stores. Monthly percentage changes reflect the rate of changes in such sales. Changes in retail sales are widely followed as an indicator of consumer spending. A reading below 0.6% will be considered bearish for the USD, whereas a reading above the estimated number will be considered bullish. 

Weekly Fundamental Reports in the Eurozone  

In the Eurozone, all eyes will be on the ECB Deposit Rate Decision, which will be released on Thursday, April 14th. It is the interest rate paid on the surplus liquidity that credit institutions may deposit overnight in an account with a national central bank that is part of the Euro system. The deposit rate is announced by the European Central Bank.  

If the ECB is hawkish about the inflationary outlook of the economy and raises the interest rates, it seems bullish for the EUR. In contrast, if the ECB has a dovish view and keeps or cuts the interest rate, it is seen as negative for the EUR. 

Weekly Fundamental Reports in England 

In England, all eyes will be on the Consumer Price Index for March released on Wednesday, April 13th. The purchasing power of GBP is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. A reading below 6.7% is seen as negative for the GBP, whereas a reading above the estimated number is seen as bullish for the GBP. 

Weekly Fundamental Reports in Canada  

In Canada, all eyes will be on BoC Interest Rate Decision, which will be released on Wednesday, April 13th. If the BoC is hawkish about the inflationary outlook of the economy and rises the interest rates to 1% it will be considered bullish for the CAD. In the same manner, if the BoC has a dovish view on the Canadian economy and keeps the ongoing interest rate (0.5%) or cuts the interest rate, it will be bearish for the CAD. 

Technical outlook  

USD/CAD and WTI: 

On Monday, USD/CAD managed to go above 1.2600 level. Oil prices have undermined the optimism of the loonie and directed this pair to move towards 1.2650. On Tuesday, the major extended its gains and overstepped Monday’s high at 1.2641. A break above 1.2650 will accelerate the bullish momentum and direct this major towards its next resistance at 1.2734. On the other hand, a break below 1.2600 will direct the major to the supports level at 1.2585, and then at 1.2511. 

A push of 240 million barrels of oil supply through the collective effort of the US administration and the International Economic Agency (IEA) is expected in the next six months. This is equivalent to 1.3 million barrels per day (over the next six-month period), which is enough to offset a shortfall of the 1 million barrels per day of the Russian oil supply. Meanwhile, the increase of positive cases of Covid-19 in China has restricted the movement of materials and machinery, which has limited the demand for oil in a country that is considered one of the biggest importers of oil. This news helped to understand the plunging of WTI price by 3%, on Monday. A break below 92.36 will accelerate the bearish momentum and direct it to the next support level at 87.05. However, if the price continues to vary above 95.00, the next resistance level will be 102.97. 

EUR/USD and GBP/USD: 

A break below 1.0860 for the EUR/USD, will direct this pair to April 8th low at 1.0835 at first, then direct it to the next psychological level at 1.0800. On the upside, a break above 1.0900 will direct this pair to 1.0940, and then at 1.0980. 

The GBP/USD is oscillating in a wide range of 1.2989-1.3056 since Monday, struggling hard to secure 1.3000. A break above April 5 high (at 1.3167) will direct the pair to trade at the trendline place from March 23rd (at 1.3300 mark). On the downside a drop below Friday’s low (at 1.2982) will drag the assets towards the November 2nd low (at 1.2854), followed by the round level support at 1.2800. 

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