Global indices pulled back at the start of this week which was only to be expected after a very strong few weeks of gains. There was no particular catalyst to the moves lower. Although there are concerns over global COVID-19 case numbers the optimism surrounding mass vaccination should ensure dip buyers keep stepping in. As long as monetary policy remains loose and fiscal stimulus from Governments remain in place any dips lower will offer value for medium-term buyers. The key here is to avoid leveraged buys at elevated prices and manage risk carefully.

Other key events from the past week

• CAD: Interest Rate Statement, April 21: The BoC made a hawkish shift this week. Bonds were tapered by $1B per week to a rate of $3B per week. GDP is now seen at +6.5% for 2021 vs +4.0% in January. This should mean USDCAD sellers on rallies as long as the Fed doesn’t start bond tapering next week.
• COVID-19: Johnson & Johnson, April 13: The EU will not use its option for an extra 300 million doses of the AstraZeneca and Johnson & Johnson vaccine according to an EU source. This is due to blood clotting risks with these vaccines.
• EUR: Interest Rate Statement, Apr 22: The ECB kept interest rates unchanged and asset purchases at the rate of €20 billion per month. The total envelope remains at €1.85 trillion. All in all, there was very little change by the ECB.

Key events for the coming week

• US oil: OPEC+ Meeting , April 28: At the time of writing it was still not decided if the OPEC+ meeting will go ahead next week on Wednesday. US oil is vulnerable to rising COVID-19 cases which reduces demand, but will OPEC step in?
• USD: Interest Rate Statement, Apr 29: The focus will be on the Fed’s dot plot. Are interest rates still not expected to rise until 2024? Will the Fed taper their bond purchases? The risk is for USD strength out of the meeting if bond tapering is announced next week. One event to watch!