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DAILY ANALYSIS

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Forecasting Strategy for Short Term Trade

EUR/USD

The EUR/USD extended its free fall, which accelerated on April 22 after closing around 1.0831. The pair has since plunged more than 400 pips, hitting a fresh 5-year low around 1.0514 on Wednesday.  At 1.0564, the EUR/USD recovered some ground, aiming to finish the day with losses for the fifth consecutive trading day. Investors’ mood improved since the mid-North American session. Probably on the news from China, as Shanghai is about to ease lockdowns following a Covid-19 outbreak that hit the second largest Chinese city a couple of weeks ago, which threatened to disrupt the supply side component of the second biggest worldwide economy.

USD/JPY

The USD/JPY bounces from Tuesday’s lows and rallies above the 128.00 mark, attributed to an upbeat market mood as US Treasury yields grind higher in the North American session. The US Dollar Index, a basket of six currencies that measures the greenback’s value, is up 0.65%, sitting at 102.961, a tailwind for the USD/JPY as Wall Street’s close looms. China’s news that Shanghai might be about to “relax” Covid-19 zero-tolerance restrictions, alongside extensive testing in Beijing amid a coronavirus outbreak in the week, calmed market players. In the Asian session, the USD/JPY opened near Tuesday’s lows, around 127.20s, the pair recovered and rallied more than 150 pips, recording a daily high near 128.50.

GBP/USD

The GBP/USD dropped further and bottomed at 1.2502, a level last seen back in July 2020. The pair later trimmed losses, rising toward 1.2550. Despite moving off lows, it remains under pressure amid a strong US dollar. The greenback continues to rally across the board amid concerns about the global economic outlook, inflation and monetary policy tightening. US stocks bounced and turned positive again. The Dow Jones gains 0.83%.  WIRP suggests another 25 bp hike to 1.0% is fully priced in for the next meeting on May 5.

AUD/USD

On Wednesday, the Australian dollar prints modest gains after fluctuating in a 100-pip range as US equities finished with gains, reflecting an upbeat market sentiment throughout the North American session. The AUD/USD is trading at 0.7127. Wall Street closed with gains between 0.19% and 0.73%, while the greenback remains buoyant, as the US Dollar Index illustrates, up by almost 0.70% back above the 103.000 mark. US Treasury yields, led by the 10-year benchmark note, gained ten basis points and finished at 2.826%. During the day, the market mood fluctuated though it shifted positively in the overlap of the European/US sessions. China’s Covid-19 outbreak in the last two weeks has weighed negatively since the beginning of the week.

XAU/USD

Gold slipped to a more than two-month trough on Wednesday as the dollar rallied on expectations of aggressive monetary policy tightening by the U.S. Federal Reserve. Spot gold dropped 1.1% to $1.884.74 per ounce, after dropping to $1.881.45, its lowest level since Feb. 24. U.S. gold futures settled down 1% at $1.885.7. The Fed is expected to increase rates by 50 basis points at its May 3-4 meeting. Rising U.S. interest rates increase the opportunity cost of holding non-yielding gold, while also boosting the dollar, in which it is priced. The greenback is also seen as a rival safe-haven asset to gold during economic and political crises.

WTI

Oil prices saw modest gains on Wednesday despite a soaring U.S. dollar, which makes barrels more expensive and coronavirus outbreaks in China clouded the economic outlook in the world’s biggest importer of crude oil. Supplies remained tight in the world’s largest oil producer, the United States, as government data showed crude stockpiles rose modestly last week as fuel inventories declined.

Brent crude futures added 33 cents to end the day at $105.32 per barrel. U.S. West Texas Intermediate crude futures settled 0.3% higher at $102.02 per barrel. The U.S. Energy Information Administration said crude stocks rose by just 692,000 barrels last week, short of expectations.

#CSCO

Shares in Cisco Systems (CSCO) posted a good run in 2021 amid the market's rotation to "value" stocks tied to the U.S. economy reopening. The outlook for Cisco stock depends on spending trends for cloud computing infrastructure as well as corporate and telecom networks. Earnings for CSCO stock are due May 18. Cisco stock jumped 41% in 2021. Amid volatility in the tech-heavy Nasdaq, Cisco stock has retreated 19% in 2022. During the period, Cisco's second fiscal quarter, product orders increased 33% year-over-year, marking the third straight quarter of 30%-plus order growth. CSCO stock lower 1.59 (-3.12%) closed at 49.31 on Wednesday.

#KO

The Coca-Cola Company (NYSE: KO) is moving to new highs propelled by the surprisingly strong organic sales, doubling the estimates. On Q1 earnings release, the non GAAP EPS US$0.64, beat by US$0.06, the revenue US$10.5b, beat by US$670m, and the revenue growth 16.7% y/y. Meanwhile, organic sales were up 18%, far ahead of the 9.5% consensus estimates, with Latin America leading the growth with 39%. Operating margin grew as well, topping at 32.5% vs. 30.2% the last year. KO stock higher 0.51 (+0.78%) closed at 65.56 on Wednesday.

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