Oil, S&P in new 2016 highs – ECB in focus today

Oil seems to be the main driver for risk at the moment (despite increasing costs for companies) and as the Crude Inventories came out lower than expected due to falling output, oil rallied with WT Crude testing the $44-level before finding offers and has overnight continued on the bid sending the black gold to highest levels since Nov 2015. S&P500 also printed new 2016 highs on back of better than expected US Existing Home Sales and the good sentiment continued in the Asian session with the Nikkei gaining around 2.5% and on a technical level clearly breaking free of the Ichimoku cloud, indicating further upside. In FX markets, the Euro sold off in general ahead of the ECB meeting Thursday afternoon.

WTI Crude Continuous Chart

OIL-chart-20160421

This morning, we saw the Swedish Riksbank announcing interest rates and added more stimulus to the economy with 45billion Kronor added to the quantitative easing program, emphasising that the global outlook remains uncertain. EURSEK spiked lower on the announcement, but has been trading higher in the aftermath as the Riksbank was not as hawkish as some market participants had been expecting. EURSEK is down 0.3% in the time of writing.

UK will be in focus at 1030CET, where the March Core Retail Sales will be announced. Markets are expecting a MoM/YoY figure of -0.1%/4.4%/ vs. -0.4%/3.8% in February. The GBP was on the offer yesterday and Cable took a double whammy on the somewhat mixed UK employment figures and solid US Housing figures. The pair failed to sustain higher and is now back in the Wedge formation on a daily chart, with the 76.4% Fibo retracement acting as current resistance at day highs before the 100-DMA coming in around 1.4440.

GBPUSD Daily

20160421 GBPUSD.Daily

 

Following the UK figures, the ECB will release interest rates at 1245CET, where we expect unchanged benchmark rate at 0.0% and a deposit facility rate of -0.4%. The press conference at 1430CET will be the main event today, where Draghi will address the markets and which actions to take in order to keep prices stable within the Euro zone. The agenda has been set and especially details concerning the CSPP and the TLRTO II will be of interest. The EUR has sold off overnight and has the past several session (back to Trichet) been selling off while the ECB chairman is on the stand. We do not exclude a similar price action today, but will recommend not trading on the news as markets usually are very spiky and liquidity can be low.

EURUSD Daily

20160421 EURUSD.Daily

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