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TALKING POINTS – GOLDMAN SACHS, CITIGROUP, US DOLLAR, YEN, S&P 500

  • Currency markets shrug at APAC stocks’ optimism before key event risk
  • Q1 earnings reports from Goldman Sachs and Citigroup in the spotlight
  • S&P 500 technical positioning continues to warn of looming downturn

Currency markets started the trading week in a muted fashion despite a positive tone on Asia Pacific bourses. Equities seem to be picking up a positive lead from Wall Street while the G10 FX space is looking ahead four days loaded with big-splash event risk before most exchanges shutter for Good Friday.

The Canadian Dollar narrowly underperformed, seemingly reflecting unease about a provincial election in Alberta. The Australian Dollar also drifted lower in a move that appeared to be corrective after the currency gained ground against all its top counterparts on Friday.

US BANKS BACK IN FOCUS ON GOLDMAN SACHS, CITIGROUP EARNINGS

From here, first-quarter earnings reports from Goldman Sachs and Citigroup are in focus. Traders will look to the releases – the headline metrics and the accompanying guidance – to inform global growth bets amid concerns about a broad-based downshift in the business cycle.

Upbeat results may echo Friday’s response to rosy figures from JPMorgan, sinking the anti-risk US Dollar and Yen while boosting sentiment-driven commodity bloc currencies. Outcomes closer to the disappointing release from Wells Fargo might paint JPM as an outlier and trigger the opposite response however.

What are we trading? See the DailyFX team’s top trade ideas for 2019 and find out!

CHART OF THE DAY – S&P 500 CHART SETUP STILL WARNS OF DOWNTURN AHEAD

S&P 500 price chart - daily

The S&P 500 rose to a six-month high last week but technical positoning continues to warn of topping. Prices have traced out a bearish Rising Wedge chart pattern reinfirced with acute negative RSI divergence, pointing ot ebbing upside momentum that might precede a downturn.

If the setup is confirmed on a daily close below the wedge floor (now at 2855) is likely to signal a broader risk-off shift in global capital markets. That would very likely set the stage for the anti-risk USD and JPY to score substantial gains against their major currency counterparts.

FX TRADING RESOURCES

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter