Markets Consolidate as Momentum Fades
US Stock indices closed close to flat yesterday as the previous 3-day momentum faded in relatively quiet markets. The Dow edged just 0.08% higher on the day with the S&P also gaining 0.13% whilst the Nasdaq pulled back 0.1%. There was a bit more action in FX markets with the dollar gaining 0.26% on the index, the Yen once again took the brunt of the move, but the Aussie also pulled back after another ‘neutral hold’ from the RBA. US treasury yields were also quiet, the 2-year gaining 0.6 basis points to trade at 4.828% and the 10-year losing 2.8 basis points to 4.461%. Oil prices retreated, Brent finishing at $83.16 per barrel and WTI at $78.38 per barrel and Gold lost 0.3% to close the session at $2,315 an ounce.
Cable in Focus Ahead of the Bank of England
Cable came under pressure in what were relatively quiet trading conditions yesterday as traders look ahead to tomorrow’s conclusion of the latest Bank of England meeting. The market is fully expecting the MPC to hold firm on rates at 5.25%, however, some are looking at next month for the first rate cut with 2 cuts (53 basis points) now priced in by the end of the year. There is an anticipation that communication from the MPC will be slightly more dovish and there will be a big focus on this week’s voting with many expecting to see at least one more member vote for a cut this month. The pound is now trading around the 1.2500 mark against the dollar and given a very quiet event calendar and holiday markets ahead, traders are expecting it to be rangebound ahead of tomorrow’s rate announcement, but then see volatility increasing sharply once the market has a bit more direction from the bank midway through the London session.
Calendar is Bare for the Trading Day Ahead
Asian markets are expected to open in a very moribund fashion today, with one of the quietest macroeconomic event calendar days ahead of them. Investors and commentators alike are struggling for much direction today after a flat finish on Wall St and a bare event calendar for all three sessions ahead. In addition to a lack of fresh inputs, the spectre of a holiday-affected trading day tomorrow with most of Europe enjoying May Day celebrations could lead to a long and boring day for markets. Of course, it is just these kinds of days that can catch the unwary off their guard and it would just take a fresh update out of the Middle East or dare we say a round of intervention to really spark markets. There are a couple of notable events in the US session later with Fed members, Cook and Jefferson as well as the results of the 10-year Bond auction, but once again, expect quieter trading conditions today.
