Home > Daily Market Recap for 12/04/2021: Strong JPY and GBP, at the Start of the Trading Week

Daily Market Recap for 12/04/2021: Strong JPY and GBP, at the Start of the Trading Week

The trading week ahead is full of FOMC members delivering speeches, and so the U.S. dollar is likely to move. In Europe, the vaccination campaign picked up significantly, with record numbers over the weekend. 

The equity markets ended up last week on a strong note – once again. The Dow Jones index closed the week at record highs, above 33,700 points, and other indices followed suit as well.

Despite a strong performance in America, the European markets opened the new trading week with losses. As such, the Spanish index is down around 1%, and so is the FTSE100.

Commodities remain stuck in tight ranges. The price of oil still hovers around the $60 level, and gold remains well bid above $1,700.

Daily Analysis

From an economic data point of view, this is a regular Monday. CAD traders should be on the watch later in the trading day, as the Bank of Canada’s Business Outlook Survey is due. This is a highly respected survey as it projects the future economic conditions and hints at future moves in the policy rate.

Markets to Watch

S&P500, EURJPY, USDJPY – markets in focus today.

S&P500

The S&P500 is the benchmark for other indices in the world, and it closed the previous week on a bullish note. The market broke higher from an ascending triangle in late March, and there is still room to go until the measured move is reached. As such, investors will likely bid for equities in the week ahead, as similar patterns formed on other indices too.

EURJPY

The JPY pairs are one of the most interesting in 2021 so far. The EURJPY seen above is moving in a rising wedge since November 2020, pushing at the highs. However, the rising wedge is a bearish pattern, and the pair recently hesitated above 130. A double top may be in place, plus a bearish divergence with the RSI. The focus now shifts to the lower edge of the pattern, and a break there signals further weakness.

USDJPY

The 110 level proved to be too strong a resistance for the USDJPY pair. Sure, the market traded above, but the lack of momentum has put pressure on the pair, and now it sits at dynamic support. Moving forward, the attention shifts to the lower edge of the rising channel. A move below 109 might spell trouble for the pair and suggests further strength for the JPY.

Winners and Losers

The GBP pairs trade with a bullish note at the London’s opening and the rally may continue by the time the MPC member Tenreyro speaks later today at a webinar hosted by the Institute for International Economic Studies. On the weak side, the AUD looks vulnerable after the dovish message sent by the RBA last week.

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