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STOCKS

Almost all major indices have bounced from immediate support levels and could move up for at least the next 2-3 sessions.

Dow (20578.71, +0.85%) has bounced back from support near 20400 as expected. A rise towards 20700 is a possibility in the near term.

Dax (12027.32, +0.09%) is also up from levels near 11930 and could move back towards 12100-12200in the coming sessions if this holds.

Shanghai (3175.86, +0.12%) has moved up from 3150 and is testing important resistance near 3175-3180 levels. In case 3180 produces a rejection, we could see a re-test of 3150 and may be even lower. A sustained break above 3180 is needed to ensure a rise towards 3225 for the near term.

Nikkei (18585.31, +0.84%) is also trading higher while the support near 18227 holds good. At the same time also note that we could see a slight dip from 18650-18745 region in the near term which could possibly bring back the price towards 18230.

9160-9075 is an important near term band for Nifty (9136.40, +0.36%). A break on either side would decide the next course of movement. We should be prepared to a see a fall towards 9000 in case of a break below 9100-9075 levels. But while 9100-9075 holds, we prefer a bounce back to higher levels in the medium term.

COMMODITIES

Muted price action had been seen in Gold (1281).Correction towards 1260-65 can be expected due to near-term overbought condition. We have been expecting 1260 to hold for some time as buyers are taking every dip as a further opportunity for buying. 1301 could be a level where the price action has to be checked to assess the chances of further bounce to 1328 to 1350 levels.

Silver (17.98) had also moved lower in line with our expectation. Immediate trading range could be 17.70-18.35. We think that the corrective phase could be restricted till 17.60-70 levels due to near term oversold condition.

Copper (2.54) has been stuck in the range of 2.50-2.66. A close below 2.50 could open up 2.48 and 2.45 levels respectively. Gradual buying at 2.45-48 levels can’t be ruled out due to near term oversold condition. Only above 2.66, higher resistances of 2.72 -80 can come into consideration.

Brent (53.06) and WTI (50.30) both had moved lower in line with our expectation. They are within their trading ranges of 52.20-53.60 and 50.30-51.70 respectively. Brent may consolidate within these levels for few more sessions though the possibility of a decline towards supports can’t be ruled out, but a close below 50.30 could drag WTI towards 48.36 levels. We will remain bearish while Brent and WTI are trading below 53.60 and 51.70 levels respectively.

FOREX

Dollar Index (99.74) is hovering around its pivot of 99.80 of its entire trading range of 98.80-100.75. If it breaches its pivot then we might see 100.45-80 within 3 to 5 trading sessions.

Euro (1.0716) was rejected from levels near 1.0770 yesterday. We could see a pause in Euro today trading within the 1.0770-1.0680 region. Looking at the German-US 10Yr yield spread (REFER TO INTEREST RATES SECTION BELOW) there could be some possibility that further upside for euro could be limited just now.

Pound (1.2799) is in a pause mode after the recent sharp rise from levels near 1.25. We may see trade within 1.2750-1.29 for the next 2-sessions. 1.29 may act as a decent resistance for the coming sessions.

Dollar-Yen (109.215) could test 109.50-110.08 levels before dipping back to 109-108.5 levels again. Overall some sideways consolidation might be on the cards for the coming sessions.

Aussie (0.7526) could move up towards 0.760-0.761 in the next 2-3 sessions before again coming off towards 0.7450 levels. As mentioned yesterday, the 0.76-0.7450 region could hold for a few more sessions.

Dollar-Rupee (64.56) could open near resistance at 64.70/80 today and may see a dip in the later hours of the session today. It would be important to watch if the pair moves above 64.70/80 or comes off from there to reinforce 64.40/30 on the downside.

INTEREST RATES

The US yields have moved up as expected. We could see some more rise in the near term.

The German-US 2Yr (-1.97%) and the 10Yr (-2.00%) have risen. The 2Yr yield spread has broken above immediate resistance level whereas the 10yr spread is testing important resistance at current levels. In case the 10Yr spread comes off from current levels in the early sessions of next week, we could expect a dip in Euro also in the neat week.

The UK-US 10yr (-1.19%) is trying to come off from a long term channel resistance and while that holds, we could see a fall towards -1.25%. in that case Pound may either consolidate sideways or come down in the near term.

The 10YR GOI may rise towards 6.95-7% if it breaks above 6.90%. Else a fall towards 6.85 or lower is possible.

Daily Pivots: (S1) 1.0688; (P) 1.0733 (R1) 1.0759; More....

A temporary top is in place at 1.0777 in EUR/USD and intraday bias is turned neutral first. With 1.0676 minor support intact another rise is in favor. Above 1.0777 will target 1.0905 and above. But still, choppy rise from 1.0339 is still seen as a correction. Hence, we'll pay attention to topping signal above 1.0905 again, as we'd expect larger down trend to resume later. On the downside, break of 1.0676 minor support will turn intraday bias back to the downside for 1.0569 instead.

In the bigger picture, as long as 1.1298 key resistance holds, whole down trend from 1.6039 (2008 high) is still expected to continue. Break of 1.0339 low will send EUR/USD through parity to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. However, considering bullish convergence condition in weekly MACD, break of 1.1298 will indicate term reversal. this would also be supported by sustained trading above 55 week EMA.

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."

For the moment, Macron and Le Pen are still tipped by polls to win the election on Sunday to go through to the run-off on May 7. But markets would be lightening up position on Euro, in case that both Euro sceptic Le Pen and Melenchon win. For the moment, EUR/USD is holding above 1.0676 minor support and further rise is still expected technically. But the common currency is staying bearish against Sterling and Yen. EUR/GBP is holding below 0.8511 resistance while EUR/JPY is kept below 118.23 resistance. Euro could turn softer before weekly close.

US Treasury Mnuchin: Close to bring forward major tax reform

On the other hand, US equities, treasury yields and Dollar were lifted by comments from US Treasury secretary Steven Mnuchin. Mnuchin said yesterday that Donald Trump's administration is close to bringing forward "major tax reform". And, he hoped that passing the tax overhaul bills won't "take till the end of the year". Mnuchin changed his tone on the issue and said that "whether health care gets done or health care doesn't get done, we're going to get tax reform done." Separately, Trump's economic adviser Gary Cohn said that the administration is going to come up with a "unified, united tax proposal from the White House that will include individual as well as corporate". Nonetheless, no detail is given to the public by any one so far.

Staying in US, President Donald Trump praised Chinese efforts regarding North Korea and said Chinese President Xi Jinping would "try very hard" on it. However, on the other hand, Trump launched a probe against exporters of cheap steel, including China, to US. And he emphasized that steel is "critical" to both the economy and military. Meanwhile, Trump's earlier comments that Korea used to be a part of China infuriated people in South Korea. South Korean foreign ministry spokesman Cho June Hyuck said yesterday that "it's a clear fact acknowledged by the international community that, for thousands of years of history, Korea has never been part of China." Meanwhile, the Liberal Korea Party presidential candidate Hong Joon Pyso said through a spokesman that Trump's comment " is clearly a distortion of history and an invasion of the Republic of Korea's sovereignty."

Dallas Fed president Robert Kaplan said yesterday that "three rate increases this year...is still a good baseline." And, "if the economy develops a little more slowly, then we can do less than that and if the economy is a little stronger, we can do more than that." Regarding unwinding the balance sheet, Kaplan said that "as soon as later this year or maybe early next year, we should begin the process of letting the balance sheet roll off."

On the data front

Japan PMI manufacturing rose to 52.8 in April, up from 52.4 and beat expectation of 52.5. New export jumped to 53.9, up fro 51.9. Output rose to 53.6, up from 53.0. Markit noted that "April's PMI data signaled continued healthy growth of Japans manufacturing sector, and the latest results were again consistent with production rising at a quarterly rate of around 2 percent."

Eurozone PMIs will be released in European session today while UK retail sales will be featured. Canada will release CPI. US will release PMIs and existing home sales.

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.0688; (P) 1.0733 (R1) 1.0759; More....

A temporary top is in place at 1.0777 in EUR/USD and intraday bias is turned neutral first. With 1.0676 minor support intact another rise is in favor. Above 1.0777 will target 1.0905 and above. But still, choppy rise from 1.0339 is still seen as a correction. Hence, we'll pay attention to topping signal above 1.0905 again, as we'd expect larger down trend to resume later. On the downside, break of 1.0676 minor support will turn intraday bias back to the downside for 1.0569 instead.

In the bigger picture, as long as 1.1298 key resistance holds, whole down trend from 1.6039 (2008 high) is still expected to continue. Break of 1.0339 low will send EUR/USD through parity to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. However, considering bullish convergence condition in weekly MACD, break of 1.1298 will indicate term reversal. this would also be supported by sustained trading above 55 week EMA.

Economic Indicators Update

Short term Elliott Wave view in INDU ( Dow) suggest that instrument is showing 5 swings sequence from 3/03 peak (21018) favoring more downside. From 3/03 peak INDU is following a Double three Elliott wave Structure , where Minor wave W ended at 20579 low and Minor wave X ended at 20887 peak. Index has since broken below the 20412 low, suggesting the next leg lower in Minor wave Y has started already. The Internal Subdivision of Minor wave Y is also unfolding as Double three Elliott wave structure where Minute wave ((w)) ended at 20453 and Minute wave ((x)) bounce turns out to be a flat correction . Where the Minutte wave (a) ended at 20644 peak and Minutte wave (b) at 20379 low, above from there index could have ended the 5 waves in Minutte wave (c) of a flat within blue box area at yesterday’s peak 20629, while near term bounces fails below there & more importantly as far as pivot from 20888 peak Minute wave X connector’s peak stays intact index has scope to resume lower 1 more leg at least. we don’t like selling the index.

INDU 1 Hour Elliott Wave Chart

EUR/USD

The EURUSD pair broke above daily Kijun-sen barrier at 1.0738 which capped upside attempts in past two day and met next target at 1.0776 (Fibonacci 61.8% retracement of 1.0906/1.0570 downleg. Initial attempt higher was short-lived, as the pair failed to hold gains and fell back bear key 1.0700 support after strong bearish signal was generated on formation of hourly double-top pattern.

Quick reversal was so far contained by the top of hourly Ichimoku cloud (spanned between 1.0715 & 1.0685) within 1.0700 support lies, marking strong support zone.

Dips are expected to hold above these supports in order to keep near-term studies in bullish alignment, as the pair remains biased higher overall, keeping positive tone ahead of Sunday’s French election.

However, close below Kijun-sen line and Thursday’s daily candle with long upper wick is expected to weigh on near-term action.

The pair may hold in extended consolidation between 1.0700 and 1.0738 ahead of releases of Eurozone PMI data, due on Friday which are expected to come out slightly below previous month’s figures and may further pressure the Euro on weaker-than-expected numbers.

Bearish scenario requires firm break below hourly Ichimoku cloud to signal further retracement of 1.0601/1.0776 upleg.

Otherwise, renewed attempts higher could be expected while 1.0715/00 supports hold. Close above daily Kijun-sen will be bullish signal, while lift above 1.0776 pivot would signal bullish continuation towards 1.0800/26 targets.

Support: 1.0715, 1.0700, 1.0684, 1.0658
Resistance: 1.0738, 1.0777, 1.0800, 1.0826

USD/JPY

USD JPY pair is on track for the second consecutive bullish daily close, signalling that consolidation above fresh low at 108.11 may extend higher. Thursday’s rally that firmly broke above 200SMA (108.87) and now acting as support, also cracked next pivot at 109.43 (Fibonacci 38.2% retracement of 111.57/108.11 downleg), signalled fresh strength of the dollar, despite weaker-than-expected releases of US economic indicators. US weekly jobless claims rose by 10K to 244K, above forecasted 242K, while Philadelphia Fed Manufacturing Index came at 22.0 in April, missing forecast at 25.0 and holding well below 32.8 release of March.

Extended recovery on close above 109.43 may challenge next strong barriers at 109.84 (daily Tenkan-sen) and psychological 110.00 barrier, as daily indicators that emerged from oversold territory show more room at the upside.

The pair is also on track for positive weekly close after two consecutive weeks in red which may signal further recovery.

Firmer bullish signal could be expected on sustained break above 109.84/110.00 pivots.

Support: 108.85, 108.68, 108.32, 108.11
Resistance: 109.48, 109.84, 110.00, 110.25

GBP/USD

GBPUSD currency pair remains in extended consolidation below fresh multi-month high at 1.2905, with downside being limited at 1.2770 (lows of Wed / Thu). Consolidation is forming bullish flag pattern on 4-hr chart which may signal fresh upside attempts towards 1.2905 and attack at psychological 1.3000 barrier in extension. Strong bullish sentiment continues to underpin the pound, along with bullish technical studies.

However, risk of deeper correction remains on the table, signalled by extended daily studies, as daily RSI and slow stochastic are hovering around overbought boundary line, but remain in sideways mode in the near-term and without firmer bearish signal so far.

On the other side, cable is on track for the second strong weekly close which is seen supportive for fresh advance.

Initial support lies at 1.2770, guarding 1.2750 (Fibonacci 38.2% retracement of 1.2500/1.2905 rally) and firm break here would generate stronger bearish signal for extended pullback.

The pair is looking for release of UK Retail Sales data for March on Friday, which may impact pair near-term action. Monthly Retail Sales are forecasted at -0.2% in March, well below Feb’s 1.4% release, with forecast for annualized Retail Sales at 3.4%, also being under previous month’s release at 3.7%.

Support: 1.2701, 1.2750, 1.2702, 1.2654
Resistance: 1.2846, 1.2859, 1.2905, 1.2950

AUDUSD

The AUDUSD pair recovered part of past two-day strong fall from 0.7610 that found footstep at 0.7490, just ahead of key near-term support at 0.7472 (lows of Apr 10,11,12 / base of thick daily Ichimoku cloud). Thursday’s bounce could be seen as a breather of downmove from 0.7610, before final attack at 0.7472 pivot, as daily technical studies remain in firm bearish setup and extended upticks on Thursday were capped under 200SMA (0.7550) and remain below strong resistance zone at 0.7541/50, formed by daily Tenkan-sen and 200SMA.

While the latter barriers hold, the downside is expected to remain at risk for renewed attempt through 0.7472, which would signal stronger bearish acceleration and expose targets at 0.7453 (50% retracement of 0.7158/0.7749 rally) and 0.7384 (Fibonacci 61.8% retracement) in extension.

Alternative scenario needs firm break and close above 200SMA to shift near-term focus higher.

Support: 0.7510, 0.7490, 0.7472, 0.7453
Resistance: 0.7541, 0.7550, 0.7576, 0.7596

GBPCAD

The GBPCAD cross maintains firm bullish tone and posted fresh high at 1.7340, the highest level since mid-September 2016. The pair continues to move higher despite strongly overbought daily studies, which are lacking to produce any firmer bearish signal. However, correction should be anticipated before the pair attacks next target at 1.7436 (50% retracement of Jun/Oct 2016 1.9127/1.5745 descend.

Daily candles with long upper wicks could be seen as initial signal of strong rally running out of steam.

Initial supports lay at 1.7215/1.7176, with 1.7024/00 zone expected to ideally contain correction.

Support: 1.7215, 1.7176, 1.7145, 1.7100
Resistance: 1.7340, 1.7436, 1.7524, 1.7542

GOLD

Spot Gold recovered part of losses of the previous day on Thursday, recovering from correction low at $1274, after pullback was contained by Fibonacci 38.2% retracement of $1243/$1295 upleg. The yellow metal bounced after the biggest one-day drop since Mar 30, after weaker than expected US jobs and manufacturing data released on Thursday, dented the tone of strengthening of US economy. Gold is also eyeing French election on Sunday, which may boost its existing safe haven appeal, built on recent uncertainty on rising geopolitical tensions that triggered strong risk-off mode among the traders.

From technical point of view, overall structure remains firmly bullish, with corrective easing on overbought studies seen preceding fresh upside actions.

Technical studies on lower timeframes are mixed and suggest prolonged consolidation phase. Thursday’s recovery was capped by thin hourly cloud (spanned between $1281 & $1283), break above which would gain fresh bullish momentum for further retracement of $1295/$1274 bear-leg and expose pivots at $1287 (Fibonacci 61.8%) and lower top at $1292.

Conversely, weakness below $1274 and violation of next pivot at $1271 (daily Tenkan-sen) would weaken near-term structure and risk stronger correction.

Support: 1276, 1274, 1275, 1271
Resistance: 1283, 1287, 1292, 1295

WTI CRUDE OIL

WTI oil remained in red on Thursday but managed to hold above Wednesday’s spike low at $50.06, as concerns over rising U.S. oil production offset bullish comments from oil producers on a possible extension to the OPEC-led deal to cut global supply. Oil price moved in and out of positive territory in volatile Thursday’s trading, but settled lower, despite bullish comments from OPEC members Saudi Arabia and Kuwait concerning a possible extension to the OPEC-led deal to cut global supply.

Technical studies remain negatively aligned and keep downside at risk, as price approached cracked Kijun-sen support at $50.40 and see risk of renewed attack at psychological $50.00 support, as the price closed below thickening daily Ichimoku cloud, which is seen as negative signal.

Support: 50.40, 50.00, 49.62, 48.92
Resistance: 51.36, 51.54, 51.84, 51.90

DJIA

Dow Jones bounced on Thursday and made strong bullish close after two days in red. The price found footstep at at 20310 and returned back into thick daily cloud after closing below cloud base on Wednesday, signalling false break lower.

Wall Street was higher on Thursday, led by a sharp rally in the shares of American Express , after the company posted better than expected earnings, as comments of US Treasury secretary Mnuchin on tax reform lifted sentiment.

Fresh rally on Thursday improved Dow’ s near-term sentiment, as Thursday’s rally marks the biggest one-day gains since Mar 1 and rally also cracked significant resistance at 20500 (daily Tenkan-sen). Recovery needs to regain next pivots at 20580 and 20669 (daily Kijun-sen) to expose daily Ichimoku cloud top at 20757 and signal stronger recovery on break.

On the downside, daily cloud base is expected to hold and maintain fresh bullish sentiment.

Support: 20500, 20385, 20310, 20211
Resistance: 20567, 20580, 20669, 20757

FTSE100

FTSE index is holding in narrowing consolidation for the second day, following strong fall on Tuesday, which so far found footstep at 7032. Firm bearish setup on daily technical studies keeps the downside in focus, as strong bearish sentiment remains in play on firm pound.

The price is looking for test of psychological 7000 support, break of which will open way towards next pivotal support at 6969 (Fibonacci 61.8% retracement of larger 6675/7444 rally.

Recovery attempts were limited for now and capped at 7092 (Fibonacci 23.6% of 7285/7032 fall) keeping intact more significant barriers at 7129 (Fibonacci 38.2%) and 7147 (broken 100SMA) which guard upper triggers at 7189/97 (daily Tenkan-sen / Ichimoku cloud base).

Support: 7032, 7024, 7000, 6969
Resistance: 7070, 7092, 7144, 7192

DAX

DAX ended Thursday’s trading positively, after spiking lower to 11962, but repeated probe below 12000 handle was short-lived and contained by rising 55SMA. Index was dragged higher by improved sentiment and Wall St rally and bounced back to broken Fibonacci 61.8% support at 12081, which capped the rally on Thursday.

Daily studies remain weak, but oversold conditions suggest extended correction, as daily indicators are turning up.

We look for recovery extension to 12133 (Fibonacci 38.2% of 12410/11962 pullback) which is expected to ideally cap, as barrier is reinforced by bearish-cross of daily Tenkan-sen / Kijun-sen lines.

Only sustained break above the latter would improve the structure and signal further recovery.

Support: 12026, 11962, 11943, 11878
Resistance: 12081, 12133, 12144, 12220

First there was Brexit, then Trump and now it's the French election; or at least that's the narrative playing out in the markets. We take a closer look. The Australian dollar was the top performer Thursday while the yen lagged. The Japan Nikkei PMI is due next. The Premium Insights closed the EURCAD long at 1.4495 for a 235-pip gain in order to make a way for a tactical dual EUR trade on Friday ahead of Sunday's French elections.

Polls showed fractional momentum for Macron, helping to boost the CAC-40 in countdown mode to the Sunday's 1st round vote. That uptick may be telling because a large number of voters said they were undecided earlier in the month.

A poll from Harris showed Macron at 24.5%, Le Pen at 21%, Fillon at 20% and Melenchon at 19%. Given the margin of error and other factors like turnout and undecideds, it's conceivable the second round could be the far right candidate Le Pen and the far left candidate Melenchon. Polls show Melenchon would win that contest but German Fin Min Schaeuble called it a 'nightmare scenario' because both are euroskeptics.

What's important to remember is that's a highly unlikely scenario and the only result that could immediately upend the euro. If Macron finishes in the top-two and moves to the runoff, he's heavily favoured against any of the candidates. Fillon would also be a big favorite against Le Pen or Melenchon.

So while the market sees this as a potential redux of Brexit or Trump, it would take a far bigger swing. Brexit polls were close in the days ahead of the vote and Trump lost the popular vote but won the electoral college. In France, it's a national popular vote so polling is simplified.

That said, there is always the risk that voters are playing coy with pollsters again or could swing late. The risks may be even higher after what looked like a terrorist attack on the Champs Elysee late Thursday. That alone could add to jitters Friday.

After talking with many traders and analysts, there is a distinct fear of history repeating itself but those fears (and market pricing) overstate the odds of a major surprise.

Sunday Afternoon Volatility

Watch for exit polls hitting at 8 pm Paris time on Sunday (7 pm London, 2 pm New York), coinciding with the market open in the Pacific.

Before that, we'll watch for continue comments from leaders at IMF meetings in Washington and the Japan Nikkei PMI at 0030 GMT. The prior was 52.4.

It's always nice to end the week with the obvious and you don't get much more obvious than this bullish setup on the S&P 500.

S&P 500 Daily:

The SP500 daily chart simply shows the textbook bull market that we've spoken about on the blog previously.

Look left to right and you can see that price is going up. You really don't need me to draw a trend line to show you that it's in a bull market no matter which higher time frame chart you click on.

S&P 500 4 Hourly:

Inside the higher time frame bullish trend, price has been drifting sideways and printed what looks to me like some sort of flag.

The Canadian dollar will end up near where it started the trading session. The USD/CAD is trading at 1.3476 as the pair was caught in a tight trading range were the US dollar weakness started dissipating as the session wore on. The price of oil continued on a downward trend, but there as a ray of hope for higher prices as Organization of the Petroleum Exporting Countries (OPEC) members Saudi Arabia and Kuwait signalled that an extension to the production cut agreement is likely ahead of a general meeting of the organization this weekend. There are rumours that even non-OPEC members who are part of the deal like Russia are on board with extending the original six month term.

Several think tanks and economic agencies have warned about Canadian real estate overheating and following the lead from Vancouver, Ontario announced a 15 percent tax on property purchases by foreign buyers who don't intend to reside in Canada. The tax is effectively immediately and aimed at curbing prices in Toronto and surrounding areas where properties have jumped 33 percent year over year. The move has been triggered by backlash from residents who have seen housing prices sky rocket ahead of the June provincial elections. The same tax applied in Vancouver is seen as resulting in a 9 percent drop when compared to last year.

US President Donald Trump took aim at the Canadian dairy industry as part of another attack on NAFTA. Canadian Prime Minister Justin Trudeau responded to those comments by pointing out that the US has a dairy surplus with Canada and that regarding agriculture every country protects, for good reason. The USD is still reeling from comments made by Trump who said the greenback was too strong prompting a sell off of the currency. Geopolitical risk is also on the rise as US rhetoric against North Korea has escalated and the French presidential elections have markets on edge.

The USD/CAD lost 0.032 percent in the last 24 hours. The pair is trading at 1.3476 in a tight range on Thursday. The price of oil has been volatile as OPEC comments and US production have kept the price of a barrel of crude around $50. The USD has regained some traction after the comments from US Secretary of Treasury Mnuchin in Washington, but not enough to fully offset earlier losses triggered by Trump's comments on the strength of the US dollar. The loonie is flat as there will be further quotes from Washington as the IMF/World Bank summit continues.

Oil fell 0.548 percent on Thursday. The price of West Texas is trading at $50.26 in a session where crude almost broke through the $51 price level but the battle between higher US production and the Organization of the Petroleum Exporting Countries (OPEC) production cuts continues. Saudi Arabia and Kuwait made comments on the possible extension of the deal with producers such as Russia theoretically on board. The rise in gasoline inventories on Wednesday, specially ahead of the US driving season, has put the black stuff on the back foot as there still seems to be more supply than demand despite the cuts from OPEC and non-OPEC producers.

Market events to watch this week:

Thursday, April 20

• 8:30am USD Philly Fed Manufacturing Index
• 8:30am USD Unemployment Claims
• 11:30am GBP BOE Gov Carney Speaks
• 12:30pm GBP BOE Gov Carney Speaks
• 1:15pm USD Treasury Sec Mnuchin Speaks

Friday, April 21

• 4:30am GBP Retail Sales m/m
• 8:30am CAD CPI m/m

Saturday, April 22

• All Day OPEC Meeting

Sunday, April 23

• All Day French Elections

*All times EDT

No majority win will result in a 2nd round in May 7

French voters will cast their ballots in the presidential elections on Sunday, April 23. The results will have a significant impact on the EUR as the tight 4 way race has could result in a variety of uncertain scenarios. Currently four candidates: Marine Le Pen, Emmanuel Macron, Francois Fillon and Jean-Luc Melenchon are close to evenly splitting the vote amongst themselves which means that regardless of who wins, it won't be a majority win. The second round will be held on May 7, but as more voters grow tired of the campaign and the fact that their vote will only decide who goes through to the run-off absenteeism expectations are high complicating matters even more. The EUR will be priced according to the eventual combination of the two politicians who go through with the best case scenario for the single currency the more market friendly Macron and Fillon and at the other end of the spectrum both extremists candidates Le Pen and Melenchon.

Marine Le Pen has been the highest profile candidate running on a protectionist platform and is the biggest eurosceptic. Le Pen poll numbers have always put her through in the second round but always losing by a wide margin as her view are too polarizing and voters will default to their second choice if their candidate did not make it to the run off. The French presidential campaign has been so volatile that Macron, the most inexperienced at this stage and with a new party and Melenchon have quickly built strong momentum, but also signalling the fickleness of voters at this stage.

Political uncertainty has increased its influence on global markets after the shocks of the Brexit referendum outcome and the election of Donald Trump. Pollsters were pointing to an altogether different result for both which the markets had already priced in, only to be caught on the wrong side as forecasters had missed the mark. The already packed election calendar in Europe just got another entry as the British Prime Minister Theresa May called for a snap election on June 8. The French presidential elections will be eclipsed by the parliamentary elections in June 11 where another lack of majority is expected leading to a comprised cohabitation between political parties.

The EUR/USD gained 0.048 in the last 24 hours. The single currency is trading at 1.0717 and has stayed on a tight trading range that has seen the euro up as Macron's poll numbers rise, but remains pressured by the ghost of high abstention numbers as there is almost a guarantee of a second round in the French elections this weekend. The tight race has put the worst case scenario for the markets of two extreme candidates making it through to the second round with little possibility of consolidating a coalition in the upcoming parliamentary elections.

The Brexit referendum as well as rhetoric from Le Pen has resonated with part of the French electorate which while not a high possibility Frexit is still in the cards putting downward pressure on the EUR as the stability of the Union is once again threatened. MarketPulse VP of Research Dean Popplewell wrote about the different French election scenarios

The economy of the European Union has shown signs of life and while not completely out of the woods it has given more breathing room to the European Central Bank (ECB) that after reaching negative rates and a massive stimulus program was running out of monetary policy tools to boost growth. The International Monetary Fund (IMF) has upgraded global growth, but now the biggest risks come from more protectionist governments and their quest for one-sided gains that appear to be directly lifted from the political campaigns around the globe.

Market events to watch this week:

Friday, April 21

• 4:30am GBP Retail Sales m/m
• 8:30am CAD CPI m/m

Saturday, April 22

• All Day OPEC Meeting

Sunday, April 23

• All Day French Elections

*All times EDT

Gold is unchanged in the Thursday session, after posting losses on Wednesday. In North American trade, gold is trading at $1279.91 per ounce. On the release front, manufacturing and employment numbers were soft, as the Philly Fed Manufacturing Index and unemployment claims missed their estimates. Later in the day, US Treasury Secretary Robert Mnuchin will deliver remarks in Washington.

Gold prices have climbed sharply in April, with gains of 2.6 percent. The base metal has benefited from geopolitical tensions in Syria and North Korea, as well as uncertainty over the French election on April 23. These concerns have dampened risk appetite, as investors have snapped up gold, traditionally a safe-haven asset.The French election race is one of the tightest in decades, with the four front-runners clustered within a few percentage points. Given the closeness and unpredictability of the election, the latest opinion polls are moving the markets. On Thursday, a Harris Interactive opinion poll showed centrist Emmanuel Macron gaining ground, with 25% of the vote. Far-right candidate Marine Le Pen follows with 22%. Next are Republican candidate Francois Fillon and left-wing candidate Jean-Luc Melenchon, both tied at 19%. Le Pen and Melenchon are both running on an anti-EU platform, so the markets are cheering for Macron and Fillion. We can expect more volatility from gold as the turbulent election winds up and French voters have their say.

With the US economy continuing to perform well, the markets are expecting the Fed to continue to gradually raise rates in 2017. The Fed has broadly hinted that it plans two more rate hikes this year, but there have been calls from some Fed policymakers for three more hikes. However, soft retail sales and CPI numbers in March are likely to make the Fed more dovish, and on Tuesday, the Atlanta and New York Federal Reserve lowered their outlook for US economic growth for the first quarter. The Fed can point to a labor market that is close to capacity as well as strong consumer confidence, but surprisingly, this has not translated into stronger consumer spending, a key driver of economic growth. The odds of a June hike have slipped to 46% according to the CME Group, down sharply from 65% in early April.