Good morning and welcome to episode 598 of ‘Talking Bull’. In this video/podcast we cover the main headlines and what to expect from the day ahead.
We take a technical look at key markets that are likely to be impacted by today’s events. Also, we participate in a ‘Gun to the head’ challenge where each of us calls a live trade. These will expire at 9pm tonight and we will keep track of the progress over time.
We hope you enjoy it!
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Joe made 0.58R on GBPUSD, Jamie made 0.45R on Platinum and Steve was stopped on Bitcoin.
We have included an illustration based on a £1000 account. This will follow the combined return of our morning trades by risking 1% of the trading capital per trade. The 1% risk is a variable monetary amount and will rise and fall based on the success of the calls.
We are currently up 123.75% collectively since we began recording Talking Bull on the 30th October 2019.
US Manufacturing index at 18-month low
The US ISM manufacturing index retreated to 55.4 for April from 57.1 in March which was significantly below consensus forecasts of 57.6 and the lowest reading since October 2020. There was a small net slowdown in the rate of growth in orders and production while employment growth slowed sharply with only slight gains in jobs.
Order backlogs increased at a slower rate on the month and there was a slight easing in cost pressures with the prices index edging lower to 84.6 from 87.1 in March.
US bond yields test 3.0%
Although the US ISM data was weaker than expected, there were further losses in US Treasuries on Monday.
The 10-year yield advanced to touch 3.00% and the highest level since December 2018 as markets fretted over underlying inflation pressures.
Dollar holds near 20-year high
The dollar has maintained a strong overall tone in global markets amid expectations of aggressive Fed tightening.
Despite pressure for a correction, the dollar index remained close to a 20-year high.
Reserve Bank of Australia hikes interest rates
Following the latest policy meeting, the Reserve Bank of Australia (RBA) increased interest rates 25 basis points to 0.35%.
Consensus forecasts were for a smaller RBA increase to 0.25%.
The bank noted that inflation had increased more than expected and a further increase is expected in the short term, although it still expected that there would be moderation over the medium term.
The Australian dollar spiked higher following the decision, but retreated from highs.
Euro-zone inflation at fresh record high
The headline Euro-zone CPI inflation rate increased to a record high of 7.5% for April from 7.4% previously and in line with consensus forecasts, while the underlying rate increased more than expected to a series-high of 3.5% from 2.9% in March.
Comments from ECB officials will continue to be watched closely.
China reservations increase
China’s manufacturing PMI index dipped to 47.4 for April from 49.5 previously and slightly below forecasts while there was a much steeper retreat in the non-manufacturing index to 41.9 from 48.4 and compared with market expectations of 46.0.
The data maintained concerns over the Chinese economic outlook and also hampered risk appetite.
Ukraine fears continue
Overall concerns surrounding escalation in the Ukraine conflict have remained an important market element.
Markets remain nervous ahead of the Russian victory day on May 9th with strong pressure for President Putin to be able to demonstrate some clear victory by that date.
The EU has also not been able to reach consensus on banning oil imports from Russia.
15.00: US JOLTS job openings
Key events over the next week
May 4th: Federal Reserve policy decision
May 5th: Bank of England policy decision
May 6th: US employment report
May 6th: Canada employment report
Gun to head challenge – Update
Today’s trade idea
Have a great week everyone.