Fundamental Analysis
Given last week’s consolidation trend on Wall Street, this week should turn out to be quite interesting. According to data from FactSet Research, companies in the S&P 500 Index are expected to show first-quarter earnings growth of 12.3%, and revenue increasing by 6.5% from the first quarter of 2010. The 30 companies in the Dow Jones Industrial Average are expected to post an earnings increase of 13% and a 6.7% growth in sales from last-year’s first quarter. For the week ending April 8, the Dow was basically flat, rising just 4 points. The Nasdaq Composite Index and the S&P 500 both shed 0.3% for the week.
One potential source of market volatility was eliminated late Friday, when an 11th-hour budget agreement among congressional Democrats, Republicans and President Obama averted a government shutdown at midnight. But oil could rattle the markets. The price of crude oil continues to rise as unrest continues in Libya and other nations in North Africa and the Middle East, imposing sharply higher fuel costs on commercial transportation and sending gasoline to near $4 a gallon in many parts of the U.S.
One notable currency pair in the Forex Market is the AUD/USD. The Australian dollar was trading close to a record high against its U.S. counterpart earlier on Monday, as higher commodity prices and interest rate differentials supported the currency. The pair hit 1.0539 during late Asian trade, the daily low; the pair subsequently consolidated at 1.0559, easing down 0.05%.The pair was likely to find support at 1.0451, Friday’s low and short-term resistance at 1.0650.
Today’s Important Economic Announcements (GMT)
10:15 AM
USD
FOMC Member Dudley Speaks
4:00 PM
USD
FOMC Member Evans Speaks
4:40 PM
EUR
Buba President Weber Speaks
5:15 PM
USD
FOMC Member Yellen Speaks
EUR/USD
The pair finished the week higher and largely disregarded reports that Portugal is to seek monetary assistance from the EU/IMF and instead rallied after the ECB raised interest rates by 25bps to 1.25%. In addition to that, reports that IMF is secretly planning Greek debt restructuring did little to depress investor sentiment for the currency. As such, the move higher saw the pair post approximately 300pips of gains this week and move closer to the key 1.4500 level. During the press conference post the monetary policy decision, Trichet indicated that the ECB has not decided whether the recent hike in rates is the first of many. However the outlook remains bullish and it is widely expected that the ECB will raise interest rates again next quarter. In terms of technical levels, support is seen at 1.4395. On the other hand, resistance level is noted at 1.4492.
Stop Loss: 1.4390
Take Profit: 1.4492
Crude Oil
Crude Oil has breached the $110.42 level, its Sept 21’2008 high highlighted in our last analysis and now looks set to strengthen further in the days ahead. Crude-oil futures rose $2.49 to close Friday at $112.79 a barrel on the New York Mercantile Exchange on concerns about fighting in Libya and the possibility of a U.S. government shutdown. Nevertheless, we are currently targeting the $115.00 level and then the $117.90 level and possibly higher. Its weekly RSI is bullish and pointing higher supporting this view. On any pullback, support lies at the $112.27 level. A reversal of roles is likely to occur at that level and turn the commodity back up again. All in all, with the resumption of its long term uptrend activated, further strength is expected in the coming days. Look for the black-gold to reach $113.6 on its way towards $115.
Stop Loss: 112.27
Take Profit: 113.6
Written by SolidityBrokers.com