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US500 set for major breakout as week comes to an end

Summary:

  • US dollar steadies, 10Y Treasury yield gets back below 3%, oil moves nowhere
  • Manufacturing PMI brings slight relief to the NZ dollar, Orr’s remarks set aside this time
  • SP500 (US500 on xStation5) could be ready for a major technical breakout

It’s been a quiet session across major currencies with the EURUSD moving literally nowhere, but still trading above a 1.19 mark. The Asian session did not bring any macroeconomic releases of note except one from the New Zealand economy regarding manufacturing PMI. It of course rarely tends to be a market mover albeit it could heal the domestic currency at least to some extent following the really hideous week. It came at 58.9 making an impressive improvement from 52.2 seen in March. The details show that the most visible increases were witnessed in new orders and production which could be a little bit surprising given global trends in these two particular figures (both have come off their highs lately according to the Markit data). The April’s number turned out to be the sturdiest reading in 2 years.

Nonetheless, as one could have expected, the NZ dollar barely responded to this print, though it’s trading currently far above its this week’s lows. On the other side, US dollar softness seen during the past hours along with a slide in the US 10Y yield again below 3% may have also contributed to a bounce in the kiwi. Over Asian trading hours we got the RBNZ governor Orr coming out with his already well-known remarks, and saying that a lower NZD in the aftermath of the meeting is a good thing as well as expressing his pleasure that markets have finally understood that rates will remain low for a considerable period of time. While an overwhelming majority keeps focusing on the NZDUSD there is another pair worth looking at.

link do file download linkThe EURNZD has been moving nowhere recently, but it could change given an enormous slump in the NZ dollar in general. Until the pair keeps on hovering above 1.7270/00 sellers are unlikely to throw in the towel waiting for a possible retreat. Source: xStation5

Meanwhile, far more interesting things are panning out on Wall Street where the main index SP500 (US500) might be finally geared up for a major breakout opening up a way for subsequent gains in the upcoming weeks. Let us notice that the earnings season is coming to an end, and essentially we have been already offered the most relevant reports (there are still several ones left, but they should not change the overall backdrop anyway). The bottom line is that US companies have exceeded analysts’ expectations on average by quite a large margin recording a decent annual rate of revenue growth, thus from this angle one cannot be taken by surprise seeing the US stocks climbing their highest levels since mid-March. Technically speaking the US500 could be setting the stage even for its new all-time high, and it has not to be a pipe dream at all.

link do file download linkThe US500 appears to be on the verge of its new bull market once this week candlestick closes well above 2680 points. Source: xStation5

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