Weekly Market Outlook: US earnings and economic data in focus

April 12, 2021 11:00

With most stock markets around the world trading at record highs, all eyes now turn to the US earnings season. Can corporate earnings confirm the economic recovery? This week we hear from heavyweight banking giants such as JP Morgan, Goldman Sachs, Bank of America, Citigroup and others. 

As the US economic recovery has been the driver of the risk-on flows into stock markets and some commodity currencies, Tuesday’s US CPI (Consumer Price Inflation) report will be one to watch.

Traders will also be focused on Fed Chairman Jerome Powell’s speeches this week, as well as the Reserve Bank of New Zealand rate statement on Wednesday, the Australian employment report and the US retail sales report on Thursday.

You can learn more about some of the global themes affecting the markets in this selection of education articles:

Weekly Forex Calendar

Source: MetaTrader 5 trading platform provided by Admirals

 

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Trader’s Radar - US Inflation & Retail Sales

It’s a big week for the US dollar with a range of different economic news announcements due. This includes:

  • Tuesday 13 April 1.30 pm BST - Consumer Price Inflation (CPI)
  • Thursday 15 April 1.30 pm BST - Retail Sales

The US dollar was in demand during the first quarter of the year as investors looked towards the Federal Reserve increasing interest rates sooner rather than later. However, much of that momentum has now waned. 

This week’s news announcements could kick start the momentum once again, depending on the numbers in which economists are forecasting a rise in both CPI and Retail Sales. 

AUDUSD and NZDUSD could be currency pairs to watch with the additional volatility from the Australian employment report and Reserve Bank of New Zealand rate statement this week 

Source: Admirals MetaTrader 5, USDX, Monthly - Data range: from Nov 1, 2004, to Apr 11, 2021. Performed on Apr 11, 2021, at 7:00 pm GMT. Please note: Past performance is not a reliable indicator of future results. 

 

For the first quarter of the year, the US dollar has been rising. This is evident from the last 3 bullish monthly candles in the monthly chart of the US dollar index above. So far this month, the price has already fallen towards the middle price of last month’s candle. 

This now becomes an interesting area as buyers may start to consider ‘buying low’ once again. However, much may depend on this week’s news announcements and the sentiment surrounding the US dollar. A further deterioration in sentiment could see the index fall back down to the horizontal support line of the long-term monthly trading range. 

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Corporate Trading Updates and Stock Indices

Most stock markets from around the world are trading at record highs, fuelled by the optimism from the coronavirus vaccine rollout and government spending. Investors may want to see this being translated into corporate profits sooner rather than later. 

This is why the start of the US earnings season this week, could affect the overall sentiment in the stock market. Here is a list of just some of the earnings announcements this week:

  • Wednesday 14 April - JP Morgan, BlackRock, TomTom, Goldman Sachs
  • Thursday 15 April - PepsiCo, Bank of America, Citigroup 

Source: Admiral Markets MetaTrader 5, SP500, Daily - Data range: from Jul 23, 2020, to Apr 11, 2021, performed on Apr 11, 2021, at 6:30 pm GMT. Please note: Past performance is not a reliable indicator of future results. 

 

Past five-year performance of the S&P 500: 2020 = +16.17%, 2019 = +29.09%, 2018 = -5.96%, 2017 = +19.08%, 2016 = +8.80%, 2015 = -0.82%.

As highlighted in previous market outlooks, the moving averages on the chart of the S&P 500 stock market index above, has provided some guidance on the turning points in the market. The uptrend is still confirmed with the 20-period (blue), 50-period (red) and 100-period (green) exponential moving averages all moving higher. 

However, price is now much more overextended from these moving averages which may lead to a weakening of the momentum towards the upside. The lower timeframes will provide key clues as we move into US earnings season.  

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  4. The Analysis is prepared by an independent analyst, Jitan Solanki (analyst), (hereinafter “Author”) based on their personal estimations.
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