Global macro overview for 25/04/2018

On the Wednesday's macro calendar, it is in vain to look for any important data releases, so the financial markets will focus on the rise in the US bond yields and the consequences for risky assets and the US Dollar, where investors simply have too many short positions. The bonds are still trading close to the level of 3.0%, although only a breakout through 3.05% can cause more havoc. Especially for emerging markets, this will be a very bad news, as higher yields on debt in the US mean a decrease in the relative attractiveness of investments in emerging markets, where the risk premium is higher.

The market sentiment was further undermined by Wall Street's thump in reaction to disturbing information from leading companies. Manufacturer of construction equipment Caterpillar warned that good results for the first quarter may be the pinnacle of its capabilities, and the 3M manufacturing company before the disappointment with results defended only thanks to tax cuts. In recent weeks, the key argument of market optimists in the discussion against panic under the influence of protectionism and geopolitical tensions was the strength of the global recovery that is still promising. That is why news from US companies is at their worst, as they add to fears that risky assets can no longer defend themselves with the lucrative prospects of global growth.

Let's now take a look at the US Dollar Index technical picture at the H4 time frame. The market has broken through the swing high at the level of 90.93 and currently is trading at the highs again despite the overbought market conditions. The next important technical resistance must bee seek at the daily time frame and can be located at the level of 91.76. The immediate support is seen at the level of 91.09, but in the case of an extension to the downside, the next support is seen at the level of 90.93 and 90.75.


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