Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.
Please refer to the table below for more details:
The above data is for reference only, please refer to the MT4/MT5 software for specific data.
If you’d like more information, please don’t hesitate to contact [email protected]
On Wednesday, S&P 500 futures and Dow Jones Industrial Average futures both fell, by 0.2% and 0.2%, respectively, while Nasdaq 100 futures remained flat, up 0.06%. The drop was attributed to the Federal Reserve’s decision to increase rates by 25 basis points and concerns over contagion in the regional bank sector. PacWest’s shares plummeted more than 50% after news broke that the California bank was assessing strategic options, including a possible sale. Other regional banks, such as Western Alliance and Zions Bancorporation, also experienced sharp declines.
During a post-meeting press conference, Fed Chair Jerome Powell indicated that the committee viewed inflation as unlikely to decrease rapidly, making it inappropriate to cut rates. Stocks closed lower on Wednesday, with the Dow dropping 0.8%, the S&P 500 losing 0.7%, and the Nasdaq Composite declining by approximately 0.5%. Upcoming key economic reports, including Thursday’s initial jobless claims and Friday’s April payrolls report, will help inform the Fed’s next steps.
In addition to economic reports, investors will be closely watching several companies’ earnings releases, including Moderna’s results before the opening bell on Thursday, and after-market earnings from Apple, Lyft, DraftKings, and Coinbase.
Data by Bloomberg
On Wednesday, all sectors experienced a 0.7% decrease, with the energy sector seeing the largest decline of 1.92%. The financial sector followed closely behind, falling by 1.19%. The information technology and materials sectors also experienced significant declines of 0.83% and 1.11%, respectively. Other sectors, such as healthcare, communication services, and utilities, saw smaller declines ranging from 0.11% to 0.31%. The consumer staples and real estate sectors both fell by 0.79% and 0.59%, respectively, while the consumer discretionary and industrials sectors saw declines of 0.71% and 0.38%, respectively.
Major Pair Movement
Data by VT Markets MT4
On Wednesday, the US dollar fell against major currencies including the euro, yen, and sterling following the Federal Reserve’s meeting where Chair Jerome Powell raised the bar for further tightening to combat high inflation despite the restrictive policy and increasing financial and economic risks. Powell reiterated that inflation remains high and the labor market tight, leaving the Fed’s policy options open. The ISM non-manufacturing index was large as forecast, with prices paid remaining high and new orders likely driven by export orders surging.
Investors are now awaiting Friday’s employment report to assess whether ADP’s report of 296k jobs in April versus March’s 142k is valid or whether other factors like falling job openings and rising layoffs point to a decline in non-farm payrolls forecasted at 180k. In addition, jobless claims are set to be released on Thursday, while the European Central Bank is expected to hike rates twice by year-end.
Meanwhile, the dollar index and Treasury yields dropped to new session lows after the Fed replaced the line suggesting further rate hikes with watching incoming data to determine if more hikes “may be appropriate.” Sterling managed a 0.78% gain despite coming off 11-month highs, while EUR/USD rose by 0.56% after approaching April’s trend highs. There was also news from the Kremlin claiming Ukraine had attempted to kill President Putin in a drone attack, introducing a new risk curve ball.
Technical Analysis
EUR/USD (4 Hours)
The EUR/USD pair reached a high of 1.1091 after the Federal Reserve raised interest rates to 5.00-5.25%, the highest since 2007. However, the dollar then recovered as the Fed signaled a potential pause in further tightening. Data released on Wednesday showed the Euro area’s unemployment rate unexpectedly dropped to 6.5%. The European Central Bank (ECB) meeting, where a 25 basis points interest rate hike is expected, will likely overshadow upcoming data releases, including the final readings of the HCOB Services and Composite PMI and the Euro area’s March Producer Price Index.
Following the ECB meeting, attention will shift to the US Non-Farm Payrolls (NFP) on Friday. The ADP Employment report showed an increase in private payrolls of 296,000 in April, surpassing expectations. Q1 Unit Labor Costs and the weekly Jobless Claims are also due on Thursday.
Based on technical analysis, the EUR/USD pair is continuing to move higher and has been able to break above the 1.1000 level, with an attempt to reach the 1.1100 level. Currently, the price has moved higher, pushing the upper band of the Bollinger band to a higher level. It is anticipated that the EUR/USD will reach the resistance level at 1.1095. The Relative Strength Index (RSI) is currently at 66, indicating that the market is bullish on the EUR/USD.
Resistance: 1.1095, 1.1129
Support: 1.1054, 1.1018
XAU/USD (4 Hours)
Gold (XAU/USD) prices continued to climb, reaching $2,026.80 per troy ounce, as the US dollar weakened ahead of the Federal Reserve’s monetary policy announcement. The US reported positive job creation numbers with the private sector adding 296,000 new positions in April, double the market’s expectations, and the ISM Services PMI printing at 51.9 in April, higher than anticipated. However, the S&P Global downwardly revised the US Services PMI and Composite PMI. Wall Street remains in wait-and-see mode, with the three major indexes in the green, while Treasury yields retreat for the second day, adding pressure on the US dollar. Analysts expect the Fed to hike rates by 25 basis points and signal a pause in its tightening cycle, but most anticipate Chairman Jerome Powell to leave the door open for additional tightening depending on macroeconomic data.
The technical analysis suggests that XAU/USD is showing signs of moving lower after reaching a high of $2,084. The price is currently inside the Bollinger Band and below the upper band, indicating the potential for a downward movement. Additionally, the Relative Strength Index (RSI) is currently above 70, indicating that XAU/USD is overbought.
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On Tuesday, stock markets experienced a sharp decline due to concerns among traders about contagion in the regional banking sector ahead of the Federal Reserve’s rate decision. The Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite all fell for a second consecutive session. Bank shares also declined, with the SPDR S&P Regional Banking ETF dropping more than 6%. Traders were questioning the stability of smaller regional financial institutions, including PacWest and Western Alliance, which declined by 27% and 15%, respectively.
The Federal Reserve’s two-day policy meeting, which began on Tuesday, is expected to result in the announcement of another quarter-point rate hike on Wednesday. Traders are pricing in a roughly 85% chance of a rate hike. Investors will be looking for clues about whether the Fed will keep rates steady after this meeting or further tighten monetary policy to fight inflation. Additionally, the U.S. Treasury warned on Monday that the country may hit the debt ceiling sooner than expected, which weighed on market sentiment.
Data by Bloomberg
On Tuesday, all sectors in the stock market experienced a decline of 1.16%. Among the sectors, energy was hit the hardest with a decline of 4.28%, followed by financials at 2.30%. Real estate and communication services also experienced significant drops of 1.74% and 1.78%, respectively. The remaining sectors also showed negative results, with consumer staples down 0.32%, health care down 0.49%, and information technology down 0.93%. Consumer discretionary was the only sector to show a slight increase of 0.16%.
Major Pair Movement
Data by VT Markets MT4
The US dollar index declined on Tuesday as below-forecast JOLTS and plummeting regional bank stocks caused Treasury yields to fall, resulting in renewed recession fears. The dollar lost ground against the yen, euro, and Swiss franc, while high beta currencies suffered. USD/JPY fell 0.67% as the S&P regional banking index dropped around 7% to its lowest level since May 2020. EUR/USD recovered from its risk-off lows and gained roughly 0.29% despite disappointing eurozone bank lending data, the first fall in core inflation since January 2022, and an unexpectedly large 2.4% drop in German retail sales. The focus is now on Wednesday’s ISM non-manufacturing and ADP releases, followed by the Fed’s announcement, which is expected to include a 25bp hike. The Fed will also have the Q1 loan officer survey and ongoing banking concerns to ponder beyond inflation and labor data.
Technical Analysis
EUR/USD (4 Hours)
The EUR/USD rose, breaking a two-day losing streak and reaching 1.1000, due to risk aversion in the market following a decline in stocks on Wall Street. The US JOLTS report showed lower-than-expected numbers. The Eurozone’s inflation rate in April increased slightly, with the core HICP dropping to 5.6%. The ECB is expected to raise interest rates on Thursday, with a 25 basis points hike predicted, but there are concerns about the potential risks of a 50 bps hike. The Q1 Bank Lending Survey revealed tight credit standards and a slowdown in credit demand. The Fed will make its decision on monetary policy on Wednesday, with a 25 basis points rate hike expected.
Based on technical analysis, the EUR/USD pair has experienced a slight upward movement and has successfully reached our previous resistance level. The current price is now situated above the middle band of the Bollinger band and is trying to reach the upper band. It is anticipated that the EUR/USD will reach our resistance level at 1.1026. The Relative Strength Index (RSI) is currently at 56, indicating that the EUR/USD is in a bullish mode.
Resistance: 1.1026, 1.1068
Support: 1.0984, 1.0962
XAU/USD (4 Hours)
The price of spot gold (XAU/USD) rose to a three-week high of $2,019.33 per troy ounce as the US dollar weakened due to disappointing US data and falling government bond yields. Stock markets fell amid concerns about the banking system, leading to increased demand for the safe-haven metal. The European Central Bank’s Bank Lending Survey showed a fall in demand for credit and tightening lending standards for companies. A group of US lawmakers urged the Federal Reserve to halt its rate hikes amid concerns about job losses and small businesses. The JOLTS Job Openings survey showed a decline in vacancies and an increase in layoffs, while Factory Orders rose slightly in March. US Treasury yields also fell as investors sought safety.
Based on technical analysis, the XAU/USD has moved back up and reached the resistance levels. It is currently situated at the upper band of the Bollinger Band and attempting to push even higher. The Relative Strength Index (RSI) is currently at 67, indicating that the XAU/USD may continue to rise and is currently in a bullish mode.
On Friday, the Dow Jones Industrial Average saw an increase, achieving its best monthly performance since January. The blue-chip index finished 0.8% higher, with the S&P 500 and the Nasdaq Composite also recording gains. The Dow rose by 2.5% for April, while the S&P 500 recorded a 1.5% monthly gain. More than half of S&P 500 companies have reported earnings so far, with 80% of those companies beating expectations, according to data from FactSet. As investors prepared for the Federal Reserve’s May policy meeting to begin, stock futures saw modest declines on Monday night.
During the regular trading session on Monday, the Dow, and Nasdaq Composite both experienced losses of about 0.1%, while the S&P 500 finished slightly below its flatline. Investors were focused on the bank sector after JPMorgan Chase won the weekend auction for troubled First Republic Bank. Additionally, investors will be monitoring data related to job openings, factory orders, and light vehicle sales, among other things. Companies such as Uber, Pfizer, and Molson Coors are set to report earnings before the bell, followed by Ford, Starbucks, Advanced Micro Devices, and Caesars Entertainment after the market closes.
Treasury Secretary Janet Yellen warned that the US may run out of measures to pay its debts as early as June 1, which investors are also watching for news on the debt ceiling.
Data by Bloomberg
On Monday, there was a slight decline of 0.04% in all sectors of the market, except for Health Care, which saw an increase of 0.59%, and Industrials and Utilities, which both saw a rise of 0.55% and 0.21%, respectively. Information Technology and Consumer Staples also saw minor gains of 0.18% and 0.09%, respectively. However, Real Estate and Consumer Discretionary both saw significant losses of 0.92% and 1.06%, respectively, while Energy experienced the largest decline of 1.26%.
Major Pair Movement
Data by VT Markets MT4
On Monday, the dollar index rose by 0.45% following the release of inflationary ISM data and JPM’s acquisition of FRC, which provided relief for the US bank crisis. This increase in the dollar index has increased the likelihood of a Fed rate hike on Wednesday, with a slightly higher probability of one more in June. This rise in the dollar index has also threatened to reverse the previous downtrend caused by the US banking crisis, which saw USD/JPY rates and risk-off-driven dive. However, USD/JPY soared on Monday, extending sharp gains following Friday’s dovish BoJ meeting.
EUR/USD fell by 0.4% after testing the 21-day moving average on Friday and last week’s lows. If the U.S. JOLTS and Wednesday’s ISM non-manufacturing and ADP reports favor a more hawkish Fed, there is an increased risk of an overbought top triggering a more significant correction of the March-April bank crisis-driven rally. Sterling experienced a 0.6% loss, but it remained above Friday’s lows by the 21-DMA. Meanwhile, IMM specs are the most net long EUR/USD since November 2020, expecting Fed rate cuts to begin while the ECB continues to hike later this year.
Technical Analysis
EUR/USD (4 Hours)
The EUR/USD pair experienced fluctuations on Monday and closed lower near an intraday low of 1.0963. The US dollar gained support from rising government bond yields and positive macroeconomic figures, including the April ISM Manufacturing PMI improving more than anticipated. Wall Street also saw gains, following news that JP Morgan rescued First Republic Bank assets with approval from the US regulator. Germany will release March Retail Sales and the Eurozone will unveil the preliminary estimate of the April Harmonized Index of Consumer Prices. The week will continue with the Fed and ECB’s monetary policy decisions and end with the US Nonfarm Payrolls report.
Based on the technical analysis, the EUR/USD pair has moved lower and broken below the 1.1000 level. Currently, the price has moved slightly higher after reaching the lower band of the Bollinger band, with expectations of moving higher and targeting the middle band. It is anticipated that the EUR/USD will reach the resistance level at 1.1013. The Relative Strength Index (RSI) is currently at 47, indicating that the market is neutral for the EUR/USD.
Resistance: 1.1013, 1.1068
Support: 1.0962, 1.0913
XAU/USD (4 Hours)
Gold (XAU/USD) prices were volatile on Monday, falling to $1,977 per troy ounce during the Asian session before recovering to $2,005.98 ahead of the US stock market opening. Thin volumes exacerbated movements, with most major financial markets closed for Labour Day. The US Dollar surged during the American session after the US published upbeat data, including March Construction Spending, which rose by 0.3% MoM, and the April ISM Manufacturing PMI, which printed at 47.1, beating expectations despite still signaling contraction. The rising US government bond yields also supported the dollar, with the 10-year Treasury note currently yielding 3.55%.
Meanwhile, the stock markets rose following news that JP Morgan took over the troubled First Republic Bank, which collapsed after customers withdrew over $100 billion in March. The Federal Deposit Insurance Corporation (FDIC) backed the deal, calming fears.
Based on technical analysis, XAU/USD is still moving in consolidation mode reaching the high and low. XAU/USD has the potential to move back higher as the price is moving toward the middle band after getting the lower band of the Bollinger band. The Relative Strength Index (RSI) currently stands at 47, suggesting a neutral trend in XAU/USD.
This week, market participants await the release of highly awaited economic reports, which will highlight key indicators such as Rate Statements in the US and Australia, as well as Employment Change in the US and Canada. These reports have immense significance as they enable traders and investors to make informed decisions and stay ahead of the market.
ISM Manufacturing PMI | US (May 1)
The US ISM Manufacturing PMI fell to 46.3 in March 2023, the lowest since May 2020.
Analysts expect a reading of 46.6 for April 2023.
Reserve Bank of Australia Rate Statement (May 2)
During its April meeting, the RBA held its cash rate steady at 3.6%, in line with market expectations. This marks the first pause in the current hiking cycle, which began in May 2022.
For April, analysts expect the central bank to keep the rate unchanged at 3.6%.
ISM Services PMI | US (May 3)
The US ISM Services PMI dropped to 51.2 in March 2023 from 55.1 in February 2023, the slowest growth in three months.
For April, analysts expect a reading of 50.6.
FOMC Meeting and Funds Rate | US (May 3)
The Fed raised its funds rate by 25bps to 5% in March 2023.
Despite a slower inflation rate, analysts anticipate that the central bank will continue to raise interest rates, with another 25bps hike to 5.25% in April 2023.
European Central Bank Main Refinancing Rate (May 4)
Most ECB policymakers agreed to raise key interest rates by 50bps to 3.5% last month, though some members would have preferred not to increase them until the financial market tensions had subsided.
The ECB is set to deliver a 25bps rate hike in its May meeting, with further increases expected to be implemented in subsequent meetings.
Employment Change | Canada (May 5)
The Canadian economy added 35,000 jobs in March 2023, while the unemployment rate remained unchanged at 5% for the fourth consecutive month. This is near the record low of 4.9% seen in June and July 2022.
For April 2023, it is anticipated that job creation numbers will drop slightly to 25,000. The unemployment rate is expected to be at 5.1%.
Employment Change | US (May 5)
The US economy created 236,000 jobs in March, the least since December 2020. Meanwhile, the unemployment rate edged down to 3.5% in March 2023.
Analysts expect the US to create 190,000 jobs in April 2023, while the unemployment rate will be at 3.5%.
On Thursday, the US stock market closed higher due to solid earnings from Meta Platforms, which boosted tech-related companies. The Dow Jones Industrial Average increased by 1.57% to 33,826.16, the Nasdaq Composite rose 2.43% to 12,142.24, and the S&P 500 climbed 1.96% to 4,135.35. It was the best day since January for the Dow and S&P 500 and since March for the Nasdaq. Meta shares surged by 13.9% following its better-than-expected quarterly revenue report, and several analysts raised their price targets for the company. Other tech-related companies such as Amazon, Alphabet, Microsoft, and Apple also experienced gains.
Despite weaker-than-expected GDP data, which suggested that the Federal Reserve could wrap up its tightening campaign soon, the stock market continued to rise. The US economy grew 1.1% in the first quarter, while economists had predicted an expansion of 2%. Honeywell, an industrial bellwether, rose by more than 4% due to its better-than-expected quarterly report. However, Caterpillar, another barometer of the global economy, fell by around 0.9% as investors feared a build-up in inventory suggested a slowdown in demand. The Dow and S&P 500 were slightly above their flatlines for the week-to-date, while the Nasdaq gained 0.6% over the same period. However, the Nasdaq has lagged month-to-date, shedding 0.7%, while the Dow and S&P 500 rose 1.7% and 0.6%, respectively, since April began. The Fed is expected to announce its latest policy decision next week.
Data by Bloomberg
On Thursday, all sectors in the US stock market experienced gains, with the communication services sector leading at 5.53% and the energy sector having the smallest increase at 0.44%. The consumer staples and healthcare sectors had modest gains at 1.04% and 0.51%, respectively, while the information technology sector rose by 2.17%. Overall, the stock market increased by 1.96%.
Major Pair Movement
Data by VT Markets MT4
On Thursday, the US dollar index remained mostly unchanged, increasing by only 0.08%, as the market focused on strong performances by tech companies with better-than-expected earnings reports. Investors are also looking ahead to the end of the week and the end of April and next week’s FOMC meeting, which could provide new direction from the Fed after a slowdown in interest rate hikes.
During the Asian session, the EUR/USD pair rebounded above 1.1030 with support from buying interest at the psychological level of 1.1000, aided by a correction in the US Dollar Index (DXY). The Federal Reserve is expected to raise rates by 25bps next week, followed by two 25bp cuts by the end of the year, while the ECB is fully priced for a 25bp hike in its May 4 meeting, followed by two more 25bp hikes by September, with no real rate cuts until 2024. The UK’s inflation rate of 10.1% presents a challenge for the BoE, but the sterling’s uptrend seems less strong than that of the EUR/USD pair. Late weakness in the equity market and oil prices may increase demand for the yen and dollar, leaving high beta pairs such as AUD/USD vulnerable unless upcoming US data alleviates concerns of a recession.
Technical Analysis
EUR/USD (4 Hours)
The EUR/USD is set to close flat on Thursday, hovering above the 1.1000 level, with the Euro facing strong resistance around 1.1060. The undecided market is contributing to the slow moves around the pair, as traders await new data ahead of a busy week with the Federal Reserve (Fed) and the European Central Bank (ECB) meeting, as well as the US official employment report. The ECB is expected to deliver an interest rate hike next week, with the question being how much: 25 or 50 basis points. Data due on Friday, including Eurozone GDP estimates and Consumer Price Index data from Germany, France, and Spain, will be critical ahead of that meeting. The inflation figures will put pressure on the ECB to curb inflation, with interest rate markets showing the expected peak rate at 3.75%.
Based on the technical analysis, the EUR/USD pair has moved lower and broken our support level. Currently, the price has moved below the middle band of the Bollinger band, with expectations of moving lower and targetting the lower band. It is anticipated that the EUR/USD will reach the support level of 1.0987. The Relative Strength Index (RSI) is currently at 50, indicating that the market is neutral for the EUR/USD.
Resistance: 1.1050, 1.1072
Support: 1.1016, 1.0987
XAU/USD (4 Hours)
The US Dollar bulls were supported by the United States’ preliminary Gross Domestic Product (GDP) data for Q1, which capped the upside attempts in XAU/USD price yet again. Although the headline US Q1 GDP number missed estimates, resilient personal consumption, inventories accumulation, and higher inflation component grabbed investors’ attention, ramping up the odds of a 25 basis points (bps) Fed rate hike next week. The details of the report triggered a fresh rally in the US Treasury bond yields across the curve, with the benchmark 10-year US Treasury bond yields recapturing the critical 3.50% level, reducing the demand for the safe-haven US government bonds and XAU/USD price. However, the risk-on flows allowed XAU/USD price to finish the day almost unchanged. Investors now look forward to the US Core PCE Price Index data for a fresh directional move in the XAU/USD price, as well as the end-of-the-week flows and repositioning ahead of next week’s Federal Reserve policy announcements, which could influence the US Dollar valuations and XAU/USD price action.
Based on technical analysis, XAU/USD reached back below the $2,000 level showing that the market is still in consolidation mode. XAU/USD has the potential to move back higher as the price is moving toward the middle band and try to reach the upper band of the Bollinger band. The Relative Strength Index (RSI) currently stands at 54, suggesting a neutral but bullish trend.
Please note that the component stocks in the stock index spot generate dividends. When dividends are distributed, VT Markets will make dividends and deductions for the clients who hold the trading products after the close of the day before the ex-dividend date.
Indices dividends will not be paid/charged as an inclusion along with the swap component. It will be executed separately through a balance statement directly to your trading account, the comment for which will be in the following format “Div & Product Name & Net Volume ”.
Please note the specific adjustments as follows:
The above data is for reference only, please refer to the MT4/MT5 software for specific data.
If you’d like more information, please don’t hesitate to contact [email protected]
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