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Market Outlook

Trump to set the plan

The previous week was chaotic.

President Trump raised the threat of trade war once more this time alarming China and India with reciprocative taxes a week later imposing the same on steel imports. He however reprieved Mexico and Canada until the point that NAFTA talks are closed. On the other hand reports emerged of North Korea conveying readiness to talk also Trump and NK leadership is set to meet in May.

Gold was under tension after declining at $1340/oz. Friday’s NFP added to the chaos as the data revealed clashing signals, average hourly wage a leading inflation indicator was falling off while job growth continued to be powerful. Economists are more convinced by now that US is a Goldilocks economy. Goldilocks economy is one that has low inflation, strong jobs growth, rising asset prices and steady GDP growth. Gold broke through the 1319 support to hit a low of 1312.70 after the jobs data got released but later recovered to close at 1323.

EURUSD started the week firmly after Merkel got reelected as the German chancellor and Italian elections left with no stresses. On Thursday EURUSD was briefly given a breakout by ECB’s monetary statement which stated ECB not intending to broaden the asset purchases, what’s more it is this hawkish tone just endured all through the ECB press conference. Doves finally regime supreme when Draghi addressed the press and said asset purchases would continue, EURUSD was sold off heavily to end the week at 1.2303.

GBPUSD had a rather non remarkable week as it continued to amble around the 1.3800 mark.

USDJPY rallied towards the end of the week as bits of gossip about Trump and NK meeting in May began going rounds, enhancing the risk sentiment that debilitated Yen against dollar. USDJPY broke the down trending resistance line at 106.50 to close the week at 106.80.

USDCAD touched 1.30 last week before Trump’s very late olive branch to hold up until the point that NAFTA talks are done to choose whether to force taxes on Canadian imports.

Gold will look to the agenda set for the coming week to choose the course it takes as it's stuck in the 1305-1340 range. Trump’s meeting with NK would be a risk on event while reciprocative tariffs from China and EU would be a risk off event. Next week will have the US inflation and retail sales date getting released on Tuesday and Wednesday respectively. With Friday’s NFP data being non conclusive about the inflation, Tuesday’s data would be of greater implication.

EURUSD continues to be knocked out by its impotence to clear the 1.25 handle with 1.22 giving it strong support under. EURUSD should be expected to trade within this range with a positive inclination.

GBPUSD is flat on the back with lack of Brexit news. Next week is thin on economic data releases from UK and GBP should look to global developments for direction. GBPUSD has resistance at 1.3910 and support at 1.3600.

USDJPY should trade with a stronger inclination after breaking the downtrend in position since January. With North Korean stress lessening and trump set to talk to NK in May and tariff war set to get awful Yen should weaken against the US dollar. Resistance for USDJPY comes in at 107.50 and support should be found near 106.20.

USDCAD was weak and is very close to the support at 1.2800, a level to hold on to for another attempt at 1.3000.