Benign start of the week

Monday’s trading was relatively light with the EURUSD hovering around 1,45 as absence of European markets discouraged investors from making major moves. A session on Wall Street brought a tiny profit taking but nothing casting shadow over a remaining part of the week. And days to follow might be much more interesting indeed. Companies, this week especially the energy sector, are still releasing quarterly results, US and UK will release the first estimate of Q1 GDP and most importantly – the Fed will indicate for how long the policy is about to stay accommodative during the first post-meeting conference in history.

Silver tumbles, options blamed

An exception to the light trading was the market of silver, seeing firstly a record of this bull market at 49,77 USD per ounce, only to tumble by some 10% in the span of 20 hours. Traders cite expiring options (today) as a major cause for a sell-off of a metal that saw an enormous rally from 14,60 USD in Feb’10 and 17,80 in Aug’10. Silver appreciated on Fed’s policy and increased role of new industrial applications but still it is hard not seeing it as a bubble. And while options might be a trigger, current levels may provide above-average opportunity for this bubble to burst: silver prices approached levels last seen in January of 1980 when the metal traded at record high. For many (holding long positions) that could have served as a natural target. 

Events to watch – Coneferce Board and earnings results

Conference Board sentiment index is the key figure today (10.00, consensus 64,5 pts.) with the market seeing a slight improvement in comparison to March despite elevated fuel prices. Companies including Ford, Lockheed Martin, 3M, Coca Cola (before session) and Amazon (after the bell) will announce quarterly results. However, the attention may be already on tomorrow’s Fed’s meeting and conference.    

Przemysław Kwiecień PhD, Chief Economist

Disclaimer, investment risk warning
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