What we are looking at today:

  • USD on pause: A USD corrective trend is still intact, however, markets are on paise this morning. However, a further fall in US bond yields would weigh on USD/JPY. 
  • Indices consolidate in Europe: With a relatively quiet Wall Street session, European indices are lacking intent this morning. It may take the US session, with the growth revision to spark markets into life again.
  • Crypto continues to hover: There has been little decisive movement on cryptocurrencies in the past week. 
  • Data trading: US data is again in focus today with the revision to Q1 GDP getting the main focus. A slight upward revision to -1.3% could be seen, but anything more than that would be risk positive. Pending Home Sales will also be watched after the big disappointment in New Home Sales.


There is a sense of calm that has temporarily taken over major markets. Bond market volatility has been reducing over recent days and with a rather unremarkable set of Fed minutes, there is a lack of intent that has set in. The Fed minutes were pretty much an exercise in confirmation, with all participants agreeing that a +50bps hike in May would be appropriate and most looking for the same in June. However, with no mention of +75bps hikes, there was little to spook the markets.

Subsequently, markets were fairly settled into the close last night and this sense of calm has continued into today’s session. There is a slight edge lower on US bond yields which are weighing on USD/JPY especially, but little or no direction elsewhere on major forex. Indices are trading slightly mixed (European indices are slightly higher whilst NASDAQ futures trade slightly lower). The only surprise of note comes in the precious metals were silver and, to a lesser extent, gold trade lower. Aside from this, markets appear to be looking for a catalyst.

For data traders, perhaps the catalyst will come from the economic calendar, with the focus on US Prelim GDP. A slight positive revision to the Q1 Advance GDP reading of -1.4% could be seen. Jobless Claims are doing little to change the narrative of a tight labor market. However, after Tuesday’s dramatic miss on New Home Sales, the focus will turn to the outlook for Pending Home Sales. The expectation is for deterioration to -10% year on year.   

Today's news

Market sentiment is settled today: The slightest hint of USD weakness as US bond yields have drifted lower early today. Indices are mixed, with mild gains on European indices and US futures also beginning to edge higher.

Treasury yields drift lower: Moves are subdued but are slipping slightly lower, with yields on 2s and 10s down by c. -2 bps.

Fed minutes confirm existing views: Markets are fully anticipating a 50bps hike in May and June, and the FOMC minutes all but rubber-stamped that this would happen. The key takeaway was what was not in there. No mention of +75bps hikes suggests that the Fed is not minded getting any more aggressive in hiking.

Cryptocurrencies remain uncertain: The recent big sell-off has settled into consolidation over the past week. There are daily fluctuations in Bitcoin but lack intent. Support at $28,600 is holding, but moves above $30,000 continue to falter.

Economic Data:

  • US Prelim GDP (at 1330BST) The first revision to Q1 GDP is expected to show a very slight positive upward revision to -1.3% (from -1.4% Advance GDP)
  • US Weekly Jobless Claims (at 1330BST) Claims are expected to reduce slightly to 215,000 (after the jump up to 218,000 last week) 
  • US Pending Home Sales (at 1500BST) Sales are expected to decline by another -0.8% in April with a year-on-year decline of -10% (worsening from -8.2% in March). 

Major market outlook

Broad outlook: Sentiment is settled inequities, whilst a mild USD underperformance is forming as the European session develops.

Forex: USD is looking set to slip lower again. JPY is outperforming slightly. 

  • EUR/USD retreated yesterday but found support almost bang on the 1.0640 breakouts. If this continues to hold and the market can build higher then this will be positive for recovery momentum. Despite this, resistance is building at 1.0750/1.0800 (the old March/April lows and this week’s reaction high). Recovery uptrend support sits at 1.0620 today.
  • GBP/USD has recovered again following the sharp retreat on Tuesday which seriously questioned the recovery uptrend. Despite this, the resistance at 1.2600/1.2640 is being tested again and the reaction around there will be a key gauge for how sustainable recovery can be. Support is building at 1.2435/1.2470. 
  • AUD/USD has just seen the rally stalling in recent days. If this continues it will breach the recovery uptrend. However, with the daily RSI unwound to 50 and the rally just stalling this morning, this is a key moment in the recovery. Support around 0.7000/0.7055 also needs to hold. Initial resistance is 0.7125 above which opens 0.7160 whilst 0.7265 is the key lower high. 

Commodities: Precious metals recoveries have lost momentum in the past 24/26 hours. Oil continues to trade with a positive bias and tests the resistance of the seven-week range.

  • Gold looked to be building strongly with a move above $1858 but a pullback into the $1830/$1850 support band has been seen. This is seriously testing the recovery uptrend and how traders now react around here will be a key gauge as to whether there is a new outlook of buying into weakness. Below $1830 would be a bull failure. Resistance is now at $1870 initially.
  • Silver has never really managed to break the shackles of the resistance at $22.10 and the market has just drifted back in the past 24/36 hours. The important support is at $21.60 and this is key to the continuation of the recovery, being the first higher low. Initial resistance is now at $22.20. 
  • Brent Crude oil has been edging higher to put pressure on the resistance of a now eight-week trading range between $99/$116. However, the moves are tentative for now and momentum suggests caution in chasing a move higher. The market needs a decisive close above $116.15 with strong momentum for confirmation of a breakout. This would open a move towards the $120s and the next resistance is at $124.40. Initial support is at $111.90/$113.00.

Indices: Wall Street is looking more positive after another rebound into the close last night, but European indices are slipping back early today. 

  • S&P 500 futures have edged through resistance at 3970/3982 overnight but for now, the move is still fairly tentative. Despite this though there has been a subtle shift in sentiment in the past few sessions where intraday weakness is being bought into. The five-week downtrend is coming under pressure today, but the key resistance lies overhead around 4100. Support is initially at 3913 from yesterday’s low.   

S&P 500 futures

  • German DAX continues to hold up well, but as yet is unable to push on with the resistance at 14,260/14,320 acting as a key barrier. However, the support around 13,845/13,860 is building near term, and intraday weakness seems to be finding buyers now. 
  • FTSE 100 has consolidated over the past 24 hours. The recovery is just on pause for now but the bulls will be keen to push back above yesterday’s high of 7562 otherwise it will become the latest of a series of lower highs in the past six weeks. There is a slight positive bias to momentum and moving averages. Initial support is at 7493 but a breach of 7427 would see the market swinging lower again.

Support and Resistance

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