In trading and manufacturing the words supply and demand are fundamental to everything making sense. Too much supply and not enough demand and things go wrong, the same in vice versa. If the Chinese government continues to lock down seaports though, we know how much damage that causes globally, as we saw the effects in 2020 and are still suffering now.
By the London close, the EURUSD retraced today’s entire bullish surge which occurred after prominent ECB members talked up a rate hike as early as July this year. The EURUSD pushed through the 1.0900 level and then proceeded to take out the liquidity above the highs of last week. The full retrace happened after the European consumer confidence recovered slightly in April, though it is still standing at negative 16.9 points. The data beat market estimates of negative 20.0 points. The decline came to an abrupt halt after the prepared speech from Jerome Powell was released, which mentioned no further details about the Fed's monetary policy.
EURUSD further weakened on the back of the US jobless claims data for the week ending April 16th, which dropped by 2,000 to 184,000. Even though the number of claims dropped, it remained above the expected figure of 180,000. The 4-week moving average was 177,250, an increase of 4,500 from the previous week's revised average.
In today’s TA video I detailed how I was looking for a rejection of the 35,500 level in the Dow Jones, and it certainly appears to be evolving that way. The shares of Tesla Inc. saw significant gains at Thursday's opening bell after yesterday’s release of the carmaker's earnings results for the first quarter of 2022. These moves along with Apple and Microsoft’s rise today helped lift the US indices. Whether these levels can be sustained will no doubt depend on what the Central Bankers talk about at the IMF tonight and what happens in tonight’s earnings reports. In my video, I talk about how I am anticipating a reversal pattern, so we just must sit back and be patient now.
In the Tesla earnings report, we learned that the carmaker is still worried about supply chain disruptions, and across fin twit this week a lot of people have been commenting on the build-up of cargo ships parked up outside the main Chinese ports like Shanghai. Maritime Traffic images show heavy congestion due to tightening restrictions against the new wave of COVID-19 in the city. This disruption will inevitably be passed on down the chain.
The Tesla CEO has also been in the news following his major stake in Twitter and his open exploration of whether to start a tender offer, in a bid to acquire Twitter. Musk argues he is considering this option "given the lack of response by Twitter" to his original bid, stating that he is still offering $54.20 per share in cash. Twitter did announce today that they have received the proposal and that the Board is committed to conducting a ‘careful, comprehensive and deliberate review’. Twitter's board of directors adopted a poison pill defense to stop Musk from buying the company and there is no guarantee that Musk can get the finances to back the deal.
The price of oil increased today following yesterday’s US Energy Information Administration (EIA) data that showed the US commercial crude oil inventories decreased by 8.0 million barrels to 413.7 million barrels in the week ending April 15. Brent is currently in a relatively tight range between $105 and $113, with the price action indicating it will go higher and take out the swing high from the start of the week.