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Gold prices surged the most last week on Friday, closing with 0.70% gains. The rebound in gold came just after the US preliminary GDP report was released. Despite a strong upside surprise in the GDP, gold managed to jump higher, erasing the losses from earlier in the week.

Can XAUUSD Maintain this Upside?

Price closed at the 1285 handle on Friday. This is a level that we have been closely watching. Further upside could push gold to as high as 1290 levels. However, for the moment, it is best to remain on the sidelines. Price needs to reverse around the current levels to maintain the downside. But a failure to do so could see the precious metal reversing course and pushing higher above 1290.

Oil prices were down 2.9% on Friday. The declines came after news sources cited that Trump told OPEC to tame fuel costs. The sharp declines in oil prices came after crude oil surged earlier in the week. The import waivers to eight countries came to an end, cutting off Iran from the international oil markets. The supply concerns lead to higher oil prices.

Can WTI Crude Oil Recover from Friday's Losses?

WTI Crude oil fell to a three-week low by Friday's session, closing at $62.83. Price broke past the initial support at 64.55. The declines to $62.83 coincide with the minor resistance formed around April 3rd. There is scope for oil prices to rebound off this level and possibly maintain a sideways trend for a short period. Watch for a retest of $64.55 where resistance could form.

The euro was seen trading somewhat choppy on Friday. Prices initially fell to new lows of 1.1110 before recovering. By Friday’s close, the currency closed in the positive. A string of strong economic reports from the US was in stark contrast to the weakening fundamentals from Europe. Despite the small gains from Friday, the euro still remains weak.

Can EURUSD Maintain the Recovery?

After slipping to a fresh two-year low, the EURUSD closed with an outside bar on Friday. On the intraday charts, the currency pair closed above the support of 1.1140. If this support holds, we expect price to possibly retrace higher. The initial target to the upside is seen at 1.1226 where resistance could form, keeping the gains in check.

Daily Pivots: (S1) 0.7010; (P) 0.7036; (R1) 0.7064; More...

Intraday bias in AUD/USD remains neutral at this point. Consolidation from 0.6988 temporary low might extend. But upside should be limited by 0.7081 minor resistance to bring another decline. prior break of 0.7003 suggests resumption of whole fall from 0.7295. On the downside, break of 0.6988 will extend the fall from 0.7295 to 100% projection of 0.7295 to 0.7003 from 0.7205 at 0.6913. Decisive break there will indicate further downside acceleration.

In the bigger picture, with 0.7393 key resistance intact, medium term outlook remains bearish. The decline from 0.8135 (2018 high) is seen as resuming long term down trend from 1.1079 (2011 high). Decisive break of 0.6826 (2016 low) will confirm this bearish view and resume the down trend to 0.6008 (2008 low). However, firm break of 0.7393 will argue that fall from 0.8135 has completed. And corrective pattern from 0.6826 has started the third leg, targeting 0.8135 again.

General Trend:

• Chinese markets trade flat in early trade after recent gains; Financials rise ahead of upcoming earnings, tech shares under perform
• Shanghai Telecom Services index drops ahead of possible earnings from ZTE
• China brokerage firms under perform overall gains in Shanghai Financials index, some cite concerns about slower equity volumes
• DBS rises over 2% in Singapore on better than expected earnings
• Australian graphite producer Syrah Resources declines after production update, sees flat demand
• Lithium exposed Pilbara Minerals drops over 3% in Australia, Q3 sales volumes declined
• South Korea Kospi rises as government pledges to support exports for key sectors (including semiconductors)
• South Korean cosmetics firm Amorepacific cut forecast
• US/China expected to begin trade talks in China on April 30th (Tuesday)
• Aussie rises amid upcoming US/China talks and month-end demand; RBA meet next week (May 7th)
• China PBoC continues to skip its reverse repo operations, says month-end fiscal spending can offset reverse repo maturities
• Brent Crude Futures decline amid contract roll, extends decline from Friday
• Today is seen as another heavy day for HK/China earnings. Companies expected to report include ICBC, Bank of China, Jiangxi Copper, Sinopec, China Southern Airlines, Ping An Insurance, China Construction Bank, WH Group, ZTE, CHALCO and Great Wall Motor.
• China official PMI data due on Tuesday (April 30th)

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened slightly lower
• COL.AU Reports Q1 (A$) Rev 8.88B v 8.0Be
• ORI.AU To recognize negative A$191M (after tax A$134M) non-cash adjustment in H1
• (AU) Australia Coalition now trails Labor party 49-51 in election polling
• (AU) Australia sells A$300M v A$300M indicated in 3.25% June 2039 bonds, avg yield 2.224%, bid to cover 2.30x
• (AU) Australia Labor Party said to plan to take more conciliatory approach to China - Australian press

Japan

• Nikkei 225 closed all week for holiday
• (JP) According to recent survey 48% of Japanese are against sales tax hike scheduled for Oct - Japan press

Korea

• Kospi opened +0.2%
• (KR) South Korea Fin Min: Will prepare measures to boost exports for key sectors in May and June; Aware of view that policy interest rate need to be lowered to boost growth; will respond if FX volatility worsens, no plans to revise GDP target
• 090430.KR Reports Q1 (KRW) Net 123.5B v 152Be; Op 186.6B v 204Be; Rev 1.45T v 1.5Te; Overseas op profit -43.7% y/y

China/Hong Kong

• Hang Seng opened +0.4%; Shanghai Composite opened +0.1%
• (CN) China PBoC Open Market Operation (OMO): Skips reverse repo operations for 6th consecutive session: Net: CNY0B (nil) drain v CNY20B drain prior
• (CN) China PBoC sets yuan reference rate: 6.7310 v 6.7307 prior
• (CN) CHINA MAR INDUSTRIAL PROFITS YTD Y/Y: -3.3% V -14.0% PRIOR
• 0728.HK Reports Q1 (CNY) Net 5.9B v 5.7B y/y, EBITDA 30.2B v 26.5B y/y, Rev 96.1B v 96.6B y/y
• - (CN) China Pres Xi: over $64B of deals have been signs at the 'Belt and Road' forum
• BYD, 1211.HK Reports Q1 (CNY) Net 749.7M v 102.4M y/y, Rev 30.3B v 24.7B y/y
• (CN) China Ministry of Commerce (MOFCOM) Vice Min Wang: Working to cut China's negative investment list, will release new FDI negative list in H1 2019
• (US) US Treasury Sec Mnuchin: Reiterates trade negotiation with China are in 'the final laps" - US press

Other Asia

• DBS.SG Reports Q1 (S$) Net 1.65B v 1.5Be, Net interest income 2.3B v 2.1B y/y

North America

• DIS 'Avengers: Endgame' top movie in the N. American box office with $350M in sales, made $1.2B in global sales in opening week, both record highs
• GDI Reportedly nearing deal with Ingersoll-Rand - US Press
• APC Decides Occidental Corp's bid could lead to better deal than Chevron - Financial Press
• BA FAA may clear Boeing's 737 MAX to resume flight operations by late May or early June - Seattle Times

Europe

• (ES) Spain Snap Election Results: Socialists Party of PM Sanchez wins with 123 seats (97% of votes counted), will need to form coalition to get majority of 176 seats, likely with far left, anti-austerity Podemos

Levels as of 01:20ET

• Hang Seng +0.8%; Shanghai Composite +0.1%; Kospi +1.2%; Nikkei225 closed for holiday; ASX 200 -0.5%
• Equity Futures: S&P500 +0.0%; Nasdaq100 +0.1%, Dax +0.0%; FTSE100 -0.0%
• EUR 1.1145-1.1161; JPY 111.53-111.64; AUD 0.7037-0.7059; NZD 0.6653-0.6681
• Commodity Futures: Gold -0.1% at $1,287/oz; Crude Oil -0.5% at $62.97/brl; Copper -0.1% at $2.89/lb

Daily Pivots: (S1) 1.3440; (P) 1.3469; (R1) 1.3487; More...

Intraday bias in USD/CAD remains neutral for consolidation below 1.3521 temporary top. Downside of retreat should be contained by 1.3399 minor support to bring another rally. Prior break of 1.3467 resistance indicates resumption of rise from 1.3068. On the upside, break of 1.3521 will extend the rise to retest 1.3664 high.

In the bigger picture, USD/CAD is staying well inside medium term rising channel (support at 1.3235). Thus, the up trend from 1.2061 (2017 low) should be in progress. On the upside, decisive break of 61.8% retracement of 1.4689 (2016 high) to 1.2061 at 1.3685 will pave the way to 78.6% retracement at 1.4127 next. This will remain the favored case as long as 1.3068 support holds.

Daily Pivots: (S1) 1.1348; (P) 1.1367; (R1) 1.1383; More...

Intraday bias in EUR/CHF remains mildly on the downside for the moment. Fall from 1.1476 short term top would extend to 55 day EMA (now at 1.1324) first. Sustained break will pave the way back to 1.1162 low. On the upside, sustained break of 38.2% retracement of 1.2004 to 1.1162 at 1.1484 will confirm completion of corrective fall from 1.2004. Further rally should then be seen to 61.8% retracement at 1.1682 and above.

In the bigger picture, at this point, we're slight favoring the case that corrective fall from 1.2004 has completed after being supported by 61.8% retracement of 1.0629 to 1.2004 at 1.1154. Decisive break of 1.1501 resistance should confirm and target 1.1713 resistance next. And, firm break of 1.1154 is needed to confirm down trend resumption. Otherwise, medium term outlook will be neutral at worst.

Daily Pivots: (S1) 124.08; (P) 124.40; (R1) 124.72; More....

Intraday bias in EUR/JPY stays neutral for consolidation above 124.09 temporary low. Current development suggests corrective pattern from 127.50 is extending with fall from 126.79 as the third leg. Upside of recovery from 124.09 should be limited by 125.28 resistance to bring another fall. On the downside, below 124.09 will target 123.65 support. Nevertheless, break of 125.28 will turn bias back to the upside for 126.79 resistance.

In the bigger picture, there is no confirmation of completion of the down trend from 137.49 (2018 high) yet. In case of an extension, break of 118.62 will target 109.03/114.84 long term support zone. However, break of 127.50 will solidify the case of medium term bullish reversal. Further decisive break medium term channel resistance will affirm reversal and target 133.12 key resistance and above.

The third general election in four years brought another shake-up in Spain's political landscape, for the first time seeing the far-right Vox party joining the ranks of parliament. That said, it underperformed compared with the polls and its impact on policy-making will likely remain limited, with a centre-left alliance of the Socialist party (PSOE), Podemos and regional Catalan and Basque parties coming within reach of a majority. The snap election bet clearly paid off for the PSOE, which gained some 39 seats compared with its previous 84, making it by far the largest party in the new parliament.

Focus now reverts to coalition-building, but a difficult task still lies ahead. With the Catalan parties as king makers, the independence question could again take centre stage in the forthcoming negotiations. It remains to be seen whether promises on negotiations about more regional autonomy will satisfy the parties or whether demands for another independence vote render any coalition talks futile. This might induce the PSOE to reconsider talks with Cuidadanos instead, which would also yield a majority. Overall, we do not expect the fog on the political front to lift much before the EU Parliament elections at the end of May, with politicians' appetite for clear commitments likely to be muted before the voting.

Although a period of political uncertainty might lie ahead, we do not expect it to have major negative spill-over to the Spanish economy, which has been fairly resilient to previous such episodes. Should a centre-left coalition eventually emerge, we would expect to see a high degree of policy continuity from the previous PSOE minority government. Both Podemos and the PSOE have previously advocated a scale-back of the 2012 labour market reforms, further increases in the minimum wage, higher social benefits and lower taxes on low income earners, partly financed by raising taxes on companies and high income earners. While such policies are unlikely to inhibit the Spanish growth engine in the short term, it could still have negative repercussions on the business environment and public finances in the medium term, with Spain already having one of the highest structural budget deficits in the euro area.

We think Eurosceptic risks under a centre-left government including Podemos will remain small, as the party has moderated its rhetoric on that front in the past years. However, warnings from Brussels about a large fiscal expansion still have the potential to stoke renewed tensions.

As the election outcome was broadly in line with previous polls and the Vox party did not become a king maker in Spanish politics, we expect the market reaction to be muted. The economy remains on a strong footing, the rating outlook is stable and the risk of a Eurosceptic government is small. Furthermore, the periphery fixed income markets continue to see support from the hunt for carry after the ECB set the scene for a ‘low-forlonger' interest rate environment and Spain remains our top pick in the periphery

Daily Pivots: (S1) 143.78; (P) 144.11; (R1) 144.47; More...

Intraday bias in GBP/JPY remains neutral at this point, with focus on 143.72 key support. On the downside, decisive break of 143.72 will indicate near term reversal, after rejection by 149.48 key resistance. In that case, intraday bias will be turned to the downside for 141.00 support first. Meanwhile, rebound from current level will retain bullishness. Decisive break of 149.48 key resistance will carry larger bullish in implications and target 156.58 resistance next.

In the bigger picture, focus is staying on 149.98 key resistance. Decisive break there should confirm that medium term fall from 156.59 (2018 high) has completed at 131.51 already. Rise from 131.51 is then seen as the third leg of the corrective pattern from 122.36 (2016 low). GBP/JPY should then target 156.59 and above. However, rejection by 149.98 will retain medium term bearishness and could extend the fall from 156.59 through 131.51 to 122.36.