CURRENCIES:

Gold Price Analysis (XAU/USD):

• Current Sentiment: Bearish
• Recent Trends: Prices fell for the second consecutive session, nearly erasing gains from Monday’s rally.
• Market Behavior: Gold has been trading sideways for the past two weeks, indicating market indecision.
• Key Levels:
  • Resistance: $2,355; breaking this could lead to $2,415.
  • Support: $2,280; breaching this could see a drop to $2,260 and possibly $2,225.

USD/JPY Analysis:

• Recent Performance: Prices rose, surpassing the resistance at 154.65.
• Potential Outcomes:
  • Bullish Scenario: Price could approach 158.00 and may test the 160.00 level, though intervention by Tokyo could reverse gains.
  • Bearish Scenario: If prices drop, support might be found at 154.65 and 153.15, with potential further declines towards 152.00.

EUR/USD Forecast:

• Current Performance: Slight decline, threatening key support level.
• Critical Support: 1.0750; a decisive breach could lead to a pullback towards 1.0725 and 1.0695.
• Resistance Levels:
  • Immediate Resistance: 1.0790 followed by 1.0820, aligning with a medium-term downtrend.
  • Further Gains: Could advance towards 1.0865, representing the 50% Fibonacci retracement of the 2023 drop.

STOCK MARKET:

Inflation Concerns: Acknowledges it will take longer than expected to lower inflation to desired levels.

Current Economic Policies: No pre-set path for policy, suggesting flexibility in response to economic changes.

Supply Chain and Economic Growth: Noted improvements in supply chains have cooled inflation but may not continue; slower economic growth needed to reduce demand and inflation.

Recent Statements by Fed Officials:

• John Williams, New York Fed President: Advocates maintaining current policy levels, emphasizing stability.
• Neel Kashkari, Minneapolis Fed President: Suggests rates might stay at current levels longer than anticipated; open to hikes if inflation nears 3%.

Federal Reserve’s Recent Decisions:

• Interest Rates: Maintained at 5.25%-5.50%, the highest in 23 years.
• Monetary Policy Impact: Described as “moderately restrictive,” balancing the risk of premature rate cuts against the necessity of sustained restrictive measures.

Economic Observations and Forecasts:

• Inflation Trends: First three months showed stagnation in inflation reduction after declines in the latter half of the previous year.
• Future Rate Adjustments: No cuts expected until there’s confidence in sustainable movement towards a 2% inflation rate.

Collins’ Economic Outlook:

• Labor Market and Wage Growth: Monitoring for non-inflationary wage increases and a balanced job market.
• Productivity Insights: Recent boosts in productivity seen as temporary adjustments, not long-term gains.

Click here to open account and start trading.

With day trading being perceived as one of the most profitable side gigs, a good majority of new day traders are scrambling to learn how to get started. Granted that the financial markets are constantly changing, there are so many basic concepts for traders to grasp. From pips, lot sizes, technical analysis to economic calendar, things can become overwhelming. And this is where copytrading helps. 

What is copy trading? 

Copytrading is a form of social trading where new day traders can systematically replicate the trades from the seasoned traders. By doing so, beginners in day trading can benefit from the expertise of others as they continue to develop their learning process in the financial markets. 

You can copy the trades of another trader with similar risk profile as yours 

On copytrading platforms, you will be able to see a list of signal providers with varying trade strategies, risk appetite, leverage levels trading in all types of CFD assets. Signal providers are ranked based on their performance, so it is easier for beginners to follow someone right for their capital size and risk appetite, while figuring out what is right or wrong when trading in a selected market. 

A trader can also follow multiple signal providers to compare different strategies. All he has to do is simply allocate a certain amount of funds to copy from one signal provider, and another sum to copy from another signal provider. 

Save your eyes with less screen time, let copy trading automate this 

Whenever the chosen signal provider executes a trade, the same trade is automatically replicated in all his copiers’ account, with the same proportion to the allocated funds respectively. Copiers do not have to keep an eye on the market 24/5, but rather sparingly monitor the performance of the copied trades. From there, adjustments can be made accordingly, such as adding or removing traders from their portfolio, or changing the capital allocated to copy a particular signal provider. 

However, success in the past is no guarantee of the future 

Sure, the past performance of a signal provider says something about the skill and knowledge, but change is the only constant as far as financial markets are concerned. It is therefore important for copiers to do your own research when selecting signal providers to copy, as past performance cannot guarantee future results. 

Copytrading as a win-win situation for seasoned and new traders alike 

For a seasoned CFD trader, here is an extra income stream for you. You can simply become a signal provider and lead other new traders to profit from the market together. By doing so, not only you make profits from your trading strategy, but also receive profit sharing based on the trading gains from the copiers that you attract. A win for you, and another win for the new traders too! 

For the new traders, check out also what is CFD trading and how does it work. 

How to copy trade in 2024

As a client of VT Markets, you can simply login to the VT Markets app and create a Copy Trading Account with the following steps: 

• Select “Live Account”.
• Fill in the credentials required and click “Next”.
• Select “Copy Trading” as your account type.
• Verify your ID.

Do note that each user can only create one Copy Trading Account, however the good news is when you do have it, you can be both a copier and a signal provider at the same time. 

For the beginners: Be a copier 

To find suitable signal providers, first you will have to identify which asset you are trading. From there, just choose “Top Traders” of the relevant trading symbol and you will be shown the Signal Provider list. You can also use the pre-set filters to choose signal providers, they include Win Rate, Annual Return, Star of the Month or Low Risk and Stable Returns. Alternatively, simply customise the filter options based on your own risk profile. 

For the seasoned traders: Be a signal provider 

On the other hand, you can also become a signal provider as long as you have a Copy Trading Account with VT Markets. Signal providers can adjust profit sharing ratios at any time, and such ratio will be applicable to new copiers only. 

Start copy trading with VT Markets 

It is obvious that copy trading is a helpful tool for day traders to kick start their journey in the financial markets. With the trades being automated by simply replicating trades of signal providers, beginners in day trading can have more time to learn other aspects of the market in greater depths. So, wait no more, try the copy trading technology with VT Markets now. 

Open a live account

CURRENCIES:

Key Insights on Trading Sentiment:

• The charm of following the crowd in trading, such as buying during hype and selling in panic, is acknowledged, but seasoned traders often benefit from a contrarian approach.
• Contrarian trading insights, gathered from tools like IG client sentiment, reveal crucial moments when the market’s extreme optimism or pessimism may indicate a turning point.

USD/JPY Analysis:

• Current IG data shows a bearish sentiment with 65.61% of clients net-short, indicating a short-to-long ratio of 1.91 to 1.
• A potential rise in USD/JPY is suggested by the prevailing bearish sentiment, although recent changes in position ratios suggest a possible trend reversal.

EUR/JPY Analysis:

• A bearish sentiment is predominant with 69.73% of clients net-short, leading to a short-to-long ratio of 2.30 to 1.
• While the market remains generally pessimistic about EUR/JPY, a decrease in sellers suggests potential for price increase, albeit with some uncertainty regarding trend direction.

GBP/JPY Analysis:

• The sentiment is also bearish with 65.45% of clients predicting a decline, and a short-to-long ratio of 1.89 to 1.
• Although the market is net-short, indicating potential for price increase, a significant decrease in bearish positions on a weekly basis leads to a more neutral market outlook.

Strategic Trading Approach:

• It’s emphasized that while contrarian signals are insightful, they should not be used in isolation. Effective trading strategies should integrate these signals with comprehensive technical and fundamental analysis to capture the full dynamics of the market.

STOCK MARKET:

Overview of Market Conditions:

• Despite ongoing inflation and the risk of high interest rates, the stock market has shown resilience, partly due to better-than-expected first quarter earnings.
• The S&P 500 is reporting a 5% growth in earnings per share for the first quarter, the highest year-over-year increase since Q2 2022 and exceeding the expected 3.2% growth.

Insights from Industry Experts:

• Jean Boivin of BlackRock notes that strong Q1 earnings are supporting stock values even amid high interest rates and elevated market expectations.
• Scott Chronert and the Citi equity strategy team reinforce a bullish stance on S&P 500 fundamentals despite the challenges posed by the Federal Reserve and economic conditions.

Performance of S&P 500:

• The S&P 500’s performance is significantly attributed to robust earnings growth, which has spurred an approximate 8% rally this year.
• First quarter net profit margins are reported at 11.7%, surpassing the five-year average of 11.5% and reflecting a trend of cost-cutting rather than revenue growth.

Sector-Specific Strategies:

• Significant cost-cutting in Big Tech was pivotal in 2023, and similar strategies are now being adopted by companies outside the tech sector.
• Ohsung Kwon from Bank of America highlights that cost reductions in traditional sectors are expected to boost margins and contribute to a broader market rally.

Future Earnings Projections:

• Despite a general expectation for downward revisions, 55% of companies have projected lower EPS for Q2 than analysts anticipated, which is below the 10-year average of 63%.
• Analysts have increased their earnings forecasts for the S&P 500 by 0.7% through the first month of Q2, marking a positive deviation from the typical trend over the past 20 years.

Market Outlook:

• DataTrek’s Jessica Rabe and Nicholas Colas describe the current positive estimate revisions as a bullish development for the market.
• They argue that without a significant external shock, it is unlikely that US large cap stocks will experience a major decline.

Click here to open account and start trading.

Political shifts may sometimes present unprecedented opportunity. Learn how in this article.

When elections are looming, politics take the center stage. It’s hard for anyone to ignore the buzz, especially the US elections. These events can really shake up the global markets, creating some exciting opportunities for traders.

Case point: Here’s how much you’d make in the S&P 500 if you invested since Biden took office

If you had invested $1,000 in the S&P 500 when Joe Biden became president in 2020, your investment would have increased by about 23.7% by now. During Trump’s presidency, the S&P 500 had higher average yearly gains of 14.5%, with a total increase of around 67% over his four years in office.

This shows there’s money to be made during these uncertain times.

What’s at stake in the 2024 US elections?

As the 2024 presidential race heats up, you might want to keep a close eye on Trump administration’s Dollar Devaluation plans. Plans to devalue the U.S. dollar by pressuring other countries to adjust their currency values represent the start of a trade war.

What are the implications? We can’t predict the future, but we can speculate.

The markets can be unpredictable: With the latest sticky US inflation numbers and rising tensions in the Middle East, the idea of ‘devaluing’ the dollar is bound to shake up trust in it as a reserve currency, triggering global financial market volatility and boosting inflation.

The Fed’s future: If the Federal Reserve lowers interest rates in 2024, Trump may interpret it as the deep state aiding Biden. And if Trump gets re-elected, he’s unlikely to retain Jerome Powell as Federal Reserve chairman after his term ends in 2026. It’s hard to predict what this will mean for the independence of US monetary policy.

You might also be interested to see: U.S. Dollar Responds to Fed Chair Powell’s Hawkish Stance and Rising Treasury Yields

Geopolitical risks on the rise: Trump is threatening a 10% across the board tariff and 60% on China. Such aggressive trade tactics could escalate geopolitical tensions, particularly with countries targeted for currency adjustments.

A mammoth crash ahead?: Biden’s got 2 policy proposals that might make Wall Street and investors start eyeing the exits. One of them? He’s talking about quadrupling the share buyback tax to 4%. Now, if that happens, companies will think twice about buying back their own shares, which could put a damper on earnings multiples, especially when stocks are already riding high.

Adverse conditions for Dow, S&P 500, and Nasdaq Composite: Another thing that might throw the Dow, S&P 500, and Nasdaq Composite for a loop is if they decide to hike up the peak marginal corporate tax rate from 21% to 28%, along with bumping the corporate alternative minimum tax rate from 15% to 21%.

How to trade during election periods (Irrespective of country, these strategies work wonders!)
Some see politics as noise to block out; savvy traders see it as an edge to exploit.

Don’t get lost in the noise

Regardless of the election decision, your goal is to make prudent, profitable trading decisions.
Nobody knows for sure where the markets could go next, but there are steps you can take to be prepared for what’s to come and protect your trades.

Don’t put all your eggs in one basket! Diversify.
Given the increased volatility and uncertainty in currency markets, traders should consider diversifying their portfolios to spread risk across different currencies and assets.

History repeats itself, so do market patterns during election cycles.
According to the presidential election cycle theory, the markets typically thrive during the latter half of a presidential term, as the sitting president ramps up efforts to stimulate the economy in hopes of securing another term in office.The stock market and global currencies could see similar price swings just like they did in previous US elections. So keep your eyes peeled on the market patterns.

Stay informed, stay in the know
Keeping tabs on market news and the economic calendar is key for traders…but that doesn’t mean you have to be glued to your trading desk all day. Download the VT Markets app to get real-time updates anytime, anywhere.

Also, using derivatives like CFDs to make moves in the market could give you an upper edge.

You don’t need to own the underlying assets, you capitalise by purely speculating.
In volatile markets, where prices can quickly change direction—you can also access a wide range of markets, from forex to precious metals, taking advantage of changing news and political shifts.

It takes less than 5 minutes to open your CFD trading account here.

If the election years and economic outlook are making you nervous, here are 4 reasons why traders flock to safe-haven gold during global political tensions.

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Gold is essential for your diversification strategy. Learn how to protect your portfolio.

With recent occurrences such as geopolitical tensions and climate change, the markets have become more unpredictable than ever before. This can be tricky for anyone trying to build a well-balanced trading portfolio to reduce risks for consistent gains.

So, what can traders do to build more resilient portfolios in volatile markets?

Everyone knows of the adage, “Don’t put all your eggs in one basket”— Now, the big question is… which basket then?

The sudden rise of chaos in the market brightened the appeal for safe-haven assets. Many traders have included greenbacks, mutual funds, and government bonds… but there’s one reliable asset that has proven to stand against the test of time.

Low and behold, it’s gold.

The Golden Touch

Before we delve into why gold is a great portfolio diversifier, it’s important to first understand how to go about your diversification strategy.

Diversification involves putting your money in a variety of assets that typically do not react in the same way or at the same time to market volatility.

Because gold is not tied to any specific currency, this helps protect your portfolio against dollar devaluation and fluctuations in exchange rates.

During the financial crisis in 2007 – 2009, we witnessed one of the worst shocks to the US economy. The US stock markets crashed. The housing bubble had burst. Unemployment climbed.  As we were on the brink of total market collapse, investors sought shelter in gold. The demand for gold spiked and continued to climb, doubled in value, reaching new highs*.

*PS. This is a cautionary lesson of why we need to diversify our portfolios. 

3 bright reasons why gold is now your best bet to protect profits and limit losses

Central Bank’s Sustained Purchase of Gold

According to a report from the World Gold Council (WGC) on January 31, 2022 was a huge year for gold. Central banks and other institutions snapped up around 1,082 tonnes of the precious metal, setting a new record. The trend continued into 2023 with the second-largest purchase ever recorded, totaling 1,037 tonnes.

When central banks buy lots of gold, it can become scarce. This often happens during times of political tension when people see gold as a safe bet. As more people rush to buy gold, its price goes up. Now could be a wise time for you to put your money on the precious yellow metal before it’s too late.

Tensions Boost Gold Prices

Remember the impacts of the 2022 Russia-Ukraine Conflict?

The Dow Jones Industrial plunged 1.76% while the S&P 500 lost 1.55%. Nasdaq 100 dropped 1.59% at the end of the day, entering bear market territory. U.S. stocks were under pressure, along with major Europe stock indexes. However, gold prices continued to surge and held most of its gains at the market close.

For the majority, this is a tragedy. While we don’t wish for the tensions to escalate, gold has once again proven its status as a safe haven. Industry experts believe that only a sharp reduction in geopolitical tensions or the unlikely event of an interest rate hike by the Fed will cause demand for gold to decrease.

If history is a guideline, this leads us to the next point as the Middle East conflict intensifies.

Gold Prices at All Time High

Gold’s rapid rise was driven further when Iran launched over 300 drones, missiles on Israel, in response to April 1’s suspected Israeli strike on the Iranian consulate in Damascus, Syria.

On 17 April 2024, gold prices surged above 2,400.

Want to stay in the know? Follow the latest XAUUSD gold price on the app.

Weaker US Dollar Ahead

The US dollar and gold typically have an inverse relationship: when the US dollar rises, gold prices tend to fall, and vice versa.

According to Jim Wyckoff, senior analyst at Kitco Metals (quoted by Reuters):

What’s really telling about the strength of gold is the US dollar index and Treasury yields are climbing, yet gold continues to rally strongly. That’s very indicative of strong safe haven demand.

Plus, there’s a fast and easy way to add precious metal to your portfolio: Gold CFDs

By trading gold CFDs, you can…

• Get more flexibility to enter and exit the markets (Higher liquidity)
• Actively take control of your financial decisions – your trades, your way!
• Amplify potential gains with just a small deposit. Unlock the power of leverage.      

… all while gaining the same market exposure.

Make sure you trade with a broker you can trust. If you’re new to VT Markets, you can start trading precious metals with a 50% welcome bonus.

CURRENCIES:

Gold Prices on Pause: Anticipation is high as traders wait for the upcoming Federal Reserve announcement and U.S. job data, causing gold prices to enter a holding pattern.

Modest Decline Observed: Monday saw a slight drop in gold prices, with traders remaining cautious and avoiding significant positions before key economic events later this week.

Volatility Expected: The market anticipates increased volatility surrounding the Federal Reserve’s decision and guidance, likely to be released Wednesday afternoon.

Technical Levels to Watch:

• Support Level: The $2,320 trendline support is critical for stabilizing the market and curbing further declines.
• Potential Bear Attack: If prices fall below $2,320, sellers might target the $2,295 mark, with a possible extended drop to $2,260, representing the 38.2% Fibonacci retracement of this year’s gains.
• Resistance and Bullish Scenario: Should gold rally from its current level, resistance is foreseen at $2,355 and $2,395—the latter being a significant trendline from the all-time high. A break above these could push prices toward $2,420 and potentially retest last week’s peak.

STOCK MARKET:

Stock Market Challenges: Despite better-than-expected earnings for the first quarter, the stock market is struggling to achieve consistent gains due to rising Treasury yields.

Impact of Treasury Yields: The increase in Treasury yields is now seen as a systemic issue for equities, reminiscent of 2023 when higher yields caused significant stock market declines.

10-year Treasury Yield: It has risen over 40 basis points since the beginning of April, reaching 4.63%, its highest since November 2023. Concurrently, the S&P 500 has dropped about 3%.

2-year Treasury Yield: Recently approached 5%, a critical level that previously impacted stocks negatively; currently at 4.98%.

Federal Reserve’s Role: Market expectations have shifted dramatically from anticipating nearly seven rate cuts in 2024 to just one, largely due to recent strong inflation data.

Click here to open a live account and start trading today.

Pictured: Your dream lambo

Can day trading make you rich? Are all the stories portrayed over social media true, that day traders would all be sipping pina coladas at the beach all day everyday, changing their Lamborghinis as they wish? With the right skills and experience, day trading can be lucrative and lead to significant financial gains even when you have capital as small as $100.

But here’s the catch – it is a skill to be acquired over years of experience.

So What is Day Trading?

Day trading is a strategy in financial markets where traders buy and sell a certain class of asset within the same trading day – occasionally just within a matter of a few minutes. The goal is to simply capitalise on short-term price movements in the market. Typically, day traders close out all positions before the market closes to avoid unmanageable risks and price gaps, just so that sleep is not lost by worrying about how the trade will go next.

Some key aspects of day trading include:

• Short-Term Nature: No holding positions for months or years, only holding positions for minutes to hours within the same day.
• High Frequency: Many day traders execute multiple trades per day, looking for small but consistent opportunities to profit from the market.
• Use of Leverage: Day traders often use leverage (borrowed money) to increase their buying power, which can amplify both gains and losses.

How Difficult or Risky is Day Trading?

As mentioned, the use of leverage magnifies the high returns. However at the same time it also creates significant risks. For a beginner in trading, it is common to go through a phase of financial losses, especially when risk management skills and psychological resilience is yet to be developed.

Is Day Trading a Scam?

It is, and it is not. Typically, day trading is perceived to have the image of a scam because new day traders failed to practice risk management leading to huge losses by over leveraging. Thereafter, such losses cannot be recovered except by sourcing new income from either becoming a better trader in the future or other channels of income, such as taking up a job, freelancing or working on a side hustle.

Another aspect of “scam” is when a day trader chooses to trade on a platform with little to none credentials. These are brokers that would entice traders to deposit money on a perpetual basis, and once a certain amount of deposit is hit, the broker would disappear into thin air, never to be found again. Therefore, it is important for a day trader to choose a trusted platform to start the journey.

OMG! So What is the Best Day Trading Platform?

Those who have been in the financial markets as long term investors may have heard about platforms such as Webull, Robinhood, Fidelity, eTrade and ThinkorSwim. These are platforms regulated by the United States, and there is this restrictive practice called the pattern day trading (PDT) rule.

A Quick Glance at Pattern Day Trading

The PDT rule is a regulatory guideline in the United States applicable to its stock market traders aiming to curb excessive risk-taking, protecting traders from the potential significant losses.

In general, traders who executed three day trades within five business days would be identified as a pattern day trader and would be required to maintain either $25,000 or they will not be allowed to day trade for a period of ninety days. 

Sounds like a harsh requirement? That’s because it is. 

How Much Money Do I Need to Start Day Trading? Must it be $25,000?

Not necessarily. With VTMarkets, it is much more flexible where you can start day trading with a minimum deposit of just $100. For a new trader, it is highly recommended that you test the platform out by trading on the demo account first.

Day Trading with a Variety of Asset Classes

Day trading is also not just limited to the stock market. VTMarkets give you a wide range of choices which include:

• Forex: Buying and selling currency pairs within the same trading day, aiming to profit from short-term fluctuations in exchange rates. The forex market operates 24 hours a day, five days a week, allowing traders to engage in trading activities during any session: Asia, Europe, or North America. Major currency pairs include EURUSD, USDJPY, GBPUSD, USDCHF, AUDUSD, USDCAD and NZDUSD. 
• Indices: Collections of stocks that represent a segment of the stock market, such as the S&P 500, Dow Jones Industrial Average, NASDAQ Composite, FTSE 100, DAX, or Nikkei 225. Day trading of indices simply capitalises the price movements within the same trading day. 
• Energy: This sector includes commodities such as crude oil, natural gas, gasoline, and gas oil. 
• Precious metals: Gold, silver, copper, platinum, and palladium are precious metals traded as commodities and are typically traded in the form of derivatives such as CFDs. In particular, gold is popular among day traders due to its liquidity.

Candlestick Chart Patterns are a Huge Part of Day Trading

Regardless of which asset class chosen, candlestick chart pattern is the bread and butter for a day trader. This is also known as technical analysis, whereby traders seek to understand price patterns and market dynamics, thereby executing trade strategies using such timely and actionable insights in the markets being traded. Candlestick chart patterns helps with risk management while maximizing opportunities for profit within the same trading day,

OK, I’m Convinced. How to Get Started in Day Trading Now?

As someone new to day trading, the first step is to start demo trading with VT Markets. Once you are familiar with the platform, and gain confidence in your trading knowledge, you can also start trading in a live market environment. 

New to VT Markets? Open a demo account or start live trading!

CURRENCIES:

Federal Open Market Committee (FOMC) and Non-Farm Payrolls (NFPs):

• Impact on USD: The upcoming week will see crucial inputs from the FOMC and NFPs, with significant implications for the U.S. dollar. Expectations are leaning towards stable interest rates with no cuts anticipated until later this year due to persistent high inflation.

Company Earnings Reports:

• Apple and Amazon: Earnings season continues with Apple and Amazon set to report. Recent tech earnings have shown volatility, with significant price movements in stocks like Tesla and Meta.
• Other Notable Companies: Additional earnings expected from AMC, Pfizer, Moderna, Block, and Coinbase.

Currency Insights:

• USD/JPY Outlook: The Japanese Yen remains weak, with pressures mounting for intervention as exchange rates approach critical levels.
• EUR/USD and Gold Outlook: Key economic data from the Euro Area and upcoming gold trends will also be in focus, influencing these markets.

Market Indices and VIX Metrics:

• FTSE 100 Performance: A more than 5% increase since mid-April, driven by a weaker Sterling and increased M&A activity, suggests further potential gains.
• VIX Trends: A decrease in the VIX index reflects a recent risk-on market sentiment, although geopolitical tensions could reintroduce volatility.

Economic Data Releases:

• Euro Area and German GDP and Inflation: Important releases could sway the EUR currency pairs.
• U.S. Economic Reports: ISM reports and the U.S. Monthly Jobs Report are also scheduled, providing further insights into the economic landscape.

STOCK MARKET:

Labor Market Update:

• April Jobs Report: The labor market remains a focal point, with the April jobs report expected to show the addition of 250,000 nonfarm payroll jobs. Unemployment is projected to stay steady at 3.8%. These figures highlight the resilience of the labor market amidst higher interest rates.

Big Tech Earnings Reports:

• Apple and Amazon: Both tech giants are scheduled to release their earnings this week, with significant market movements anticipated. Apple has seen a decline in its share value this year, while Amazon has experienced substantial growth.
• Meta and Alphabet: Previous reports from Meta and Alphabet showed divergent trends, influencing stock performances distinctly. Alphabet reported strong earnings and a new dividend program, boosting its stock, whereas Meta saw a decline after its earnings announcement.

Additional Earnings Reports:

• Other Major Companies: Earnings from AMD, Coca-Cola, Eli Lilly, McDonald’s, Novo Nordisk, Starbucks, and Super Micro Computer are also expected. These results will further shape market sentiment and stock performances.

Market Sentiment and Corporate Earnings:

• S&P 500 Trends: Currently, with 46% of the S&P 500 companies having reported, earnings growth is slightly above expectations. However, the overall stock market reaction has been mixed, indicating that investors are looking for more than just earnings beats.

Economic Indicators:

• Consumer Confidence and Sector Activity: Updates on job openings, activity in the services and manufacturing sectors, and consumer confidence are also scheduled for this week, providing deeper insights into the economic environment.

Click here to create a live account and start trading now.

Pictured: You enjoying the beautiful sakura beneath a pastel blue sky

While the entire of Japan has been seeing the Sakura blossom throughout April, the Japanese Yen continued to depreciate following the announcement from the Bank of Japan on maintaining its current interest rate. With that, the JPY/USD fell to a 34-year low of 156, a price level last seen in May 1990. 

Impact of the Weakening Japanese Yen 

Export 

From the perspective of export business, the weakening Yen helps large Japanese companies with global operations, as the value of their repatriated overseas profits also would increase accordingly. 

Tourism 

The weak Japanese Yen increases the buying power of foreign tourists, boosting the country’s already established status as a popular destination, and even exceed pre-pandemic levels. Combined with the cherry blossoms happening from March to May every year, the streets of Kyoto are filled with more tourists than ever. Bloggers speak about how visiting Japan feels cheaper than other first world countries such as Switzerland, Australia or New Zealand, and this is particularly true for tourists whose income are denominated in the US Dollar or Euros. 

If you must ask whether this is a good time to take a vacation to Japan, the answer is a resounding yes. Book that flight, pack your bags, go – while the cost is still relatively low. 

Day-to-Day Consumption 

On the downside, a soft yen makes imports of energy and food more expensive, hitting domestic consumers hard. Although in March 2024, big companies in Japan agreed to raise wages by 5.28%, which is also the heftiest in 33 years, consumption remained soft and there is much more room for the Japanese Yen to improve. 

What’s Next for the Bank of Japan (BoJ)?  

BoJ governor Kazuo Ueda has stated that the overall policy settings of Japan will remain accommodative, meaning there will not be a major interest hike unless inflation runs hotter than expected. The key point to be observed will be whether consumption recovers. 

Will JPY Remain Weak or Recover? 

That will largely depend on the trajectory of the interest rate gap. 

From the Perspective of JPY 

What governor Ueda said seems to indicate that the rate gap between JPY and USD will remain wide. If such measures were to be maintained, it is no surprise that the selling momentum of the JPY will continue, while strengthening the USD. 

From the Perspective of USD 

On the flip side however, there is a slight rebound of the JPY after Fed chairman Jerome Powell indicated that the US central bank will maintain its plan of cutting rates three times in 2024 despite bumpy inflation. Such dovish move by the US Fed will tighten up the rate gap later in 2024 and would support the strength of the JPY.