Market Overview

Markets remain in full risk on mode this week. DJIA gained 232.23 pts or 1.12% to close at 20996.12 overnight. S&P 500 also rose 14.46 pts or 0.61% to close at 2388.61. Both indices took out structural resistance at 20887.5 and 2378.36 respectively and should be heading for new record highs. Meanwhile, NASDAQ maintains its lead and closed at new record high at 6025.49, up 0.7%. Treasury yields also jumped with 10 year yield closing up 0.054 at 2.327. That compares to last week's low at 2.177 and structural resistance at 2.391. A break above 2.391 will pave the way for a test on 2.621 key near term resistance. Dollar stays weak against European majors though. But the dollar index is losing some downside momentum below 98.85 support.

European majors stay generally firm today, continuing to ride on the boost from French election result. Meanwhile, Dollar closely follow as strong risk appetite lifts Fed rate hike expectations. Meanwhile, markets are eagerly waiting for US President Donald Trump to announce his tax reforms. Commodity currencies are generally under pressure and decoupled from stock markets. In particular, Canadian Dollar is pressured by weakness in oil prices, as well as US's announcement of tariffs for lumber products.

The global financial markets were blessed by centrist Emmanuel Macron's win in the first round of French presidential election. CAC 40 gained 4.14% yesterday to close at 9 year high at 5268.85. DAX rose 3.37% to close at record high at 12454.98. In particular, CAC took out prior resistance at 5142.81 by a margin. DAX's break of prior resistance at 12390.75 was also solid. US indices followed with NASDAQ closing at record high at 5983.82, up 1.24%. DJIA and S&P 500 rose 1.05% and 1.08% resistance but are both kept well below recent highs so far. Asian equities follow with Nikkei trading back above 19000 handle.

Euro pares back some French election triggered gains, but stays broadly higher against all other major currencies. Meanwhile, Japanese Yen is trading as the weakest as markets are on risk on mode. Markets generally welcome the results of the election and centrist Emmanuel Macron's win in the first round is seen as a boost to the Euro. Forward Eonia bank-to-bank rates also imply a roughly 60% chance of a 10bps hike by ECB by the end of March 2018, up from just 20% chance last week. European stocks are trading broadly higher with CAC up 4.5%, DAX up 3.1% and FTSE up 1.9% at the time of writing. In other markets, Gold drops sharply to as low as 1266.0, down more than -1.3% today. WTI recovers mildly but fails to find follow through buying above 50 handle.

Euro soars across the broad today as markets are happy with the results of the first round of French presidential election. With 97% of the vote counted, centrist Emmanuel Macron and far-right Marine Le Pen secured 23.9% and 21.4% support respectively. And as generally expected, they will enter the second and final round of the French election, scheduled on May 7. Higher support for Macron is also seen as a sign of solid support for staying with Euro. Meanwhile, after accepting defeat conservative Francois Fillon and leftist Benoit Hamon called their supports to choose Macron over Le Pen. According to recent polls by Ifop, Ipsos and Elabe, Macron would easily beat Le Pen in a head-to-head run-off, by a wide margin.

Geopolitical tensions somewhat took a back seat last week. The headlines were filled by news of UK snap election, French election, and to a lesser extent US tax reform. Sterling ended the week as the strongest major currency after boosted by the news of snap election and prospect of a "softer" Brexit. Euro survived the terrorist attack in Paris and French election uncertainties to end as the second strongest one. Dollar ended the week mixed as markets seemed not too convinced by news of Trump administration's tax reform. Meanwhile, Canadian Dollar ended as the weakest one as dragged down by WTI crude oil's sharp fall and break of 50 handle. The result of French election on Sunday will be the first market mover this week.

Euro dips further today as markets are lighting up positions ahead of the first round of French presidential election this Sunday. Far right Marine Le Pen and centrist Emmanuel Macron are still tipped to come out as winners and head to the run-off on May 7. But yesterday's terrorist attack in Paris could stir up some uncertainties. In particular, far left leader Jean-Luc Melenchon has rather strong momentum in the past two weeks and emerged as a real contender. Euro would very likely suffer if Melenchon could slip into the run-off and take Macron's place. Both Le Pen and Melenchon are euro-sceptic, just at two different extremes. But the common currency could have a relieve rally next week if the election delivers no surprise.

Euro dropped notably against Dollar overnight after news of terrorist attack in Paris, just ahead of presidential election this Sunday. A shooting occurred on the famous Champs-Elysees shopping boulevard, resulting in death of one police and injuries of two others. The Islamic State group claimed responsibility for the shooting. The incident disrupts the election campaign as conservative candidate Francois Fillon cancelled his trip to the Alps to "first show our solidarity with the police". Far-left Jean-Luc Melenchon said urged people to "attend to our duties as citizens: no panic, we shouldn't interrupt our democratic process". Far-right Marine Le Pen said she was "deeply angry" on the shooting and sad for the victims. Centrist Emmanuel Macron said that "this threat, this imponderable problem, is part of our daily lives for the years to come."

Dollar trades mixed in early US session with notable weakness against Euro and Swiss Franc. The forex markets are relatively steady elsewhere, with Aussie and Loonie trading to recover while yen extends its pull back. US initial jobless claims rose 10k to 244k in the week ended April 15, slightly above expectation of 241k. Continuing claims dropped -49k to 1.98m in the week ended April 8, lowest since April 2000. Philly Fed survey dropped to 22.0 in April, down from 32.8, below expectation of 25.6. In other markets, US futures point to a mildly higher open and stocks could pare back some of yesterday's steep loss. Gold is hovering around 1280 while crude oil is heading to test 50 psychological level. .

Markets continue to trade generally calmly for the moment. US equities turned mixed overnight with DJIA losing another -118.79 pts or -0.58% to close at 20404.49. S&P 500 dropped -4.02 pts or -0.17% to close at 2338.17. NASDAQ, however, gained 13.56 pts or 0.23% to close at 5863.03. Asian stocks are steady in tight range as Nikkei and HK HSI recover with slight gain. US treasury yield also stabilized with 10 year yield closing up 0.023 at 2.202. Gold continues to feel heavy ahead of 1300 handle and dips through 1280 handle briefly. The selloff in WTI Crude oil is more apparent as it reaches as low as 50.09, comparing to last week's high at 53.76. In the currency markets, commodity currencies are trading generally higher. New Zealand dollar is given additional boost from inflation data. Japanese Yen, on the other hand, trades broadly lower with Dollar for today.

Markets are stabilizing from yesterday's sharp volatility. Major European indices are trading in tight range with DAX and CAC holding mild gains at the time of writing. US indices also open nearly flat and are bounded in tight range. In the currency markets, Dollar recovers broadly today but is staying deep in red against European majors for the week. Commodity currencies remain broadly weak too. Sterling remains the strongest major currency this week even though it's paring some gains against Dollar and other Europeans. In other markets, Gold is trading lower by at it continues to struggle to find buying to push through 1300 handle. WTI crude oil is also staying in consolidation.

Markets are generally trading in risk averse mode after UK Prime Minister Theresa May's surprised call for snap election. That also adds to the backdrop of geopolitical tensions in North Korea and Syria. DJIA closed down -113.64 pts or -0.55% at 20523.28. S&P 500 lost -6.82pts or -0.29% to close at 2342.19. Nonetheless, both indices are still trying to draw support from 55 day EMA. In Asian session, China leads other Asian markets lower as SSE composite index drops -40 pts or -1.23% at the time of writing. Hong Kong HSI is losing -150 pts or -0.63%. Nikkei, however, recovers and is trading up 0.2% at the time of writing.

Sterling jumps broadly today as currency markets respond positive to UK Prime Minister Theresa May's call for a snap election this June. GBP/USD powers through 1.2614 near term resistance and reaches as high as 1.2695 so far. GBP/JPY also took out 137.51 near term resistance which now suggests trend reversal. FTSE 100, however, is trading down -1.8% as stocks investments clearly dislike the uncertainties. Meanwhile, Euro also follows the Pound higher as markets are calm on French election. US Dollar, on the other hand, reversed earlier gains, against European majors but stays firm against commodity currencies.

Dollar and US equities came back from holiday stronger. The markets are looking through the geopolitical uncertainties in North Korea. Instead, they listened to comments from US Treasury Secretary Steven Mnuchin. Mnuchin conceded that completing tax reforms through Congress before August deadline was "highly aggressive to not realistic at this point". However, he noted that it would "probably delayed a bit" because of the healthcare. Meanwhile, he noted that the border-adjustment tax, seen as a sticking point among Republicans, could be excluded in the tax reform.

Worries on geopolitical tensions and US policies were the two main forces driving the markets in a holiday shortened week. Yen surged broadly and the relative strength to Swiss Franc argues that worries are mainly on the tensions in Korean Peninsula. The rally in Yen was also accompanied safe haven flows into US treasuries. Long term yields tumbled sharply to the lowest level this year, breaking key near term support levels. Gold surged to as high as 1290.7 and is having its sight on 1300 handle. WTI crude oil also extended recent rise before losing some momentum ahead of 55.24 resistance. In the currency markets, Dollar ended as the weakest major currency as talked down by US President Donald Trump, and dragged down by falling yields. Euro ended as the second weakest ahead of French presidential election and dragged down the Swiss Franc.

Dollar is recovering against European majors in early US session but stays weak against commodity currencies. The greenbacks is still trading as the weakest major of the week, troubled by comments from US President Donald Trump regarding it's strength. Released from US, initial jobless claims dropped 1k to 234k in the week ended April 8, below expectation of 245k. It's the 110 straight week of sub-300k reading, longest streak since 1970 and indicates a healthy job market. Continuing claims dropped 7k to 2.03m in the week ended April 1. PPI, however, dropped -0.1% mom March but accelerated to 2.3% yoy. PPI core rose 0.0% mom, and accelerated to 1.6% yoy. Both PPI and core PPI missed expectations. From Canada, new housing price index rose 0.4% mom in February. Manufacturing shipments dropped -0.2% mom. Release in European session, Swiss PPI rose 0.1% mom 1.3% yoy in March. German CPI was finalized at 0.2% mom, 1.6% yoy in March.

US Dollar tumbled broadly and is now trading as the weakest major currency after US President Donald Trump talked down the exchange rate. The Dollar index reaches as low as 100.01 so far. It's still holding on to 100 handle mainly thanks to the relative weakness of Euro, who's trading as the second weakest one. But this 100 psychological level looks vulnerable. Commodity currencies are broadly higher. Canadian Dollar maintains post BoC gains. Aussie is lifted by strong employment data. Yen pares back some gains but remains the strongest one for the weak on falling treasury yields. US 10 year yield closed at 2.296 and is now close to last week's low at 2.271. In other markets, Gold is staying firm at 1287 at the time of writing. But it's starting to feel a bit heavy ahead of 1300 handle, as risk aversion eases. WTI crude oil also retreats mildly and is back at around 53.

Canadian Dollar surges sharply on upbeat Bank of Canada statement. BoC left overnight rate target unchanged at 0.50% as widely expected. The central bank noted in the accompany statement that "recent data indicate that economic growth has been faster than was expected in the January MPR". Growth for 2017 through 2019 is expected to "remain above potential". Real GDP growth is projected to 2.5% in 2017, revised up from January projection of 2.1%. Inflation, however, is expected to dip in the months ahead but return to 2% target as the "output gap closes". And BoC concluded by noting that it "acknowledges the strength of recent data, some of which is temporary, and is mindful of the significant uncertainties weighing on the outlook."

The financial markets are clearly in risk averse mode on escalating geopolitical tensions. Gold jumps to as high as 1281.8 so far, comparing to last week's close at 1257.3, and is heading towards 1300 handle. WTI crude oil also extends recent rally to as high as 53.6, still on course to 55.24 key resistance. Safe haven flows into US treasury also pushed yield lower with 10-year yield losing -0.063 to close at 2.298. And 10-year yield is now having last week's spike low at 2.271 in sight. Reactions in stock were relatively muted as DJIA dipped to 20512.56 but closed at 20651, down just -0.03%. Though, notable weakness is seen in Nikkei as it's trading down -1.2% at the time of writing.

Euro recovers today as lifted by German investor sentiment data. Meanwhile, Dollar softens broadly after uninspiring comments from Fed chair Janet Yellen. German ZEW economic sentiment rose to 19.5 in April, up from 12.8, beat expectation of 14.8. That's also the highest level since August 2015. Current situation assessment rose to 80.1, up from 77.3, beat expectation of 80.1. ZEW President Achim Wambach said that the "German economic situation has proved fairly robust in the first quarter" And, that was highlighted by "solid figures for growth in industrial production, the construction sector and retail sales from February." Also, "consistently high labour demand has boosted private consumption." Eurozone ZEW economic sentiment rose to 26.3, up from 25.6, beat expectation of 25.0. Also from Eurozone, industrial production dropped -0.3% mom in February versus expectation of 0.1% mom rise.