Technicals

This week’s economic calendar will not test last week’s supportive footprint until Friday’s Flash PMIs, but we dive headfirst into earnings season and hear from both the Bank of Canada and the ECB ahead of next week’s FOMC meeting.
Fed Chair Powell has continued to emphasize his rhetoric that an acceleration in inflation through the summer is only expected to be transitory due to expected base data. Still, we didn't want to see the data run away and bring cause for policy to be reactionary.
Lack of demand continues to pull cocoa prices lower. The chart looks bearish, and short-term outlook for demand is bleak.
U.S. benchmarks were pointing higher this morning ahead of both the bell and a long weekend. Tomorrow brings Nonfarm Payroll, but the NYSE is closed and index futures only trade through 8:15 a.m. CT due to the Good Friday holiday.
Constructive hold of support early in Thursday's session set the stage for a friendly Friday. This undeniably brought bullish technical tailwinds due to seller’s exhaustion, shorts covering, and fresh buying hitting the tape. Remember, this is a bull market.
Fundamentally, cocoa has been one of the hardest hit commodities of late. Adding and removing shutdowns have created volatility in cocoa, and the recent pullback in May cocoa can create opportunities for traders: there’s clear support on the chart and a reversal may be forming.
Late last night, a U.S. health agency questioned the validity of AstraZeneca’s vaccine trials, saying the results included outdated data. To make matters worse, Germany followed through and announced a strict 5-day lockdown over Easter.
It’s Fed Day: the committee’s policy decision, economic outlook, and interest rate projections are due at 1:00 p.m. CT. Yields of longer duration Treasuries are climbing as many analysts say a dovish Fed is simply not enough anymore.
For cocoa, a global economic recovery and reopening of businesses and events can only help the market. A soft commodity like cocoa is heavily reliant on demand, and demand for cocoa has slowed.
The ECB said it’d purchase bonds at a faster pace through its PEPP program and that it expects yields to remain at their current levels or lower.