. Fundamental Analysis Report With Charting Trends- 06 April 2023

FUNDAMENTAL ANALYSIS REPORT WITH CHARTING TRENDS – 06 APRIL 2023

FUNDAMENTAL ANALYSIS REPORT WITH CHARTING TRENDS – 06 APRIL 2023

06 Apr 2023

MARKET UPDATE:

On April 5th, 2023, the US stock market showed a mixed performance, with the Nasdaq falling 1%, the Dow Jones up 0.24%, and the S&P losing 0.24%. The market volatility was driven by fears of a potential recession, as investors grew concerned about the impact of rising inflation and interest rates on the economy. As a result, Treasury yields also fell, with the benchmark 10-year yield dropping to 2.5%, its lowest level since January. 

Despite the market turbulence, gold maintained its higher level of $2,000 per ounce, as investors continued to flock to the precious metal as a hedge against inflation and economic uncertainty.

Based on recent economic data, it appears that the Federal Reserve’s monetary policy is working to support the US economy. One indicator of this is the non-farm payroll data, which measures the number of jobs added in the US outside of the farming industry. According to the most recent report, released on April 1st, 2023, non-farm payrolls increased by 513,000 in March, exceeding expectations and indicating continued job growth.

However, there are concerns about a potential recession, as some indicators are pointing to a slowing economy. The recent banking crisis, which hit the market, has also raised fears about the stability of the financial system. Despite these challenges, US economic data is coming in with stronger prints, indicating that the economy is still growing, albeit at a slower pace.

What happened in the Asian session?

The ANZ Commodity Prices m/m report was released, showing a 1.3% increase, slightly lower than the forecasted value of 1.4%. This could have a mild negative impact on the NZD. Additionally, Australia’s Trade Balance exceeded expectations, reporting a value of 13.87B compared to the forecasted 11.33B and the previous value of 11.27 B. Furthermore, China’s Caixin Services PMI was higher than the predicted and prior values, potentially positively influencing the AUD

What does it mean for the Europe & US Sessions?

The forecasted worse Canadian unemployment numbers compared to the US could result in the USD/CAD pair testing the psychological resistance of 1.3500 during the European and US sessions. Continued bullishness on the USD or weakness in the CAD could potentially push the pair to seek 1.3560 before the holidays. Traders may want to closely monitor any news or events that could impact the USD and CAD exchange rates during the upcoming sessions.

The Canadian Dollar (CAD)

Key news event today

Employment change

Unemployment rate

What can we expect from CAD today?

  • The upcoming release of employment change data, if it comes in below the previous release, could suggest a slowdown in the labour market and weaken the CAD. 
  • Similarly, a forecasted increase in the Unemployment Rate could also contribute to a weakening of the CAD.
  • The Bank of Canada has maintained its target for the overnight rate at 4.5%, but the central bank remains focused on returning inflation to the 2% target. 
  • While inflation has eased in January, the price increases for food and shelter remain high, indicating that the central bank may still be inclined to increase the policy rate further.
  •  The next meeting of the Bank of Canada is scheduled for April 12, 2023, which could also potentially impact the CAD.

The Pound (GBP)

Key news event today

No major news events

What can we expect from GBP today?

  • It appears that the impact of the upcoming data releases on the GBP could be mixed. 
  • The expected decline in the Halifax HPI m/m and the slight decrease in the Construction PMI could suggest a slowdown in the UK’s housing and construction sectors, which could potentially weigh on the GBP.
  • However, the expected increase in Housing Equity Withdrawal q/q could provide some support to the currency.
  • While CPI inflation increased unexpectedly, the MPC expects it to fall sharply over the rest of the year due to lower energy prices. The MPC has also indicated that it will continue to monitor inflationary pressures and adjust the Bank Rate as necessary.

OIL

Key news event today

No major news events

What can we expect from OIL today?

  • The next 24 hours bias for crude oil prices appears to be bullish. 
  • The Crude Oil Inventories data for the week ending on April 1, 2023, was better than the forecasted figure and the previous week’s figure, indicating a decrease in inventories and a potential increase in demand. 
  • Typically, a decrease in inventories can lead to an increase in crude oil prices as it suggests that there is more demand than supply.
  • As such, based on the Crude Oil Inventories data, it appears that the crude oil market may experience a bullish bias in the next 24 hours.

Global Markets:

Asian Stock Markets: Nikkei is down 1.22%, Shanghai Composite up 0.01%, Hang Seng up 0.28%, ASX down 0.31%

European equities, the DAX futures up 0.27%, CAC 40 up 0.21%, and FTSE up 0.46%.

US Stock Market: Dow Jones up 0.24%, S&P 500 is down at 0.25%, Nasdaq 100 is down at 1.07%.                    

Commodities: Gold at $2018.16 (-0.12%), Silver at $24.95 (+0.28%), Brent Oil at $84.63 (-0.45%), WTI Oil at $80.21 (-0.48%)

News & Data

  • (USD) Initial Jobless Claims Forecast 200K, Previous 198K at 18:00
  • (CAD) Employment Change (Mar) Forecast 12.0K, Previous 21.8K at 18:00
  • (CAD) Ivey PMI (Mar) Forecast 56.1, Previous 51.6 at 19:30
  • (GBP) Construction PMI (Mar) Actual 50.7, Forecast 53.5, Previous 54.6 at 14:00
  • (CAD) Unemployment Rate (Mar) Forecast 5.1%, previous at 18:00

Technical Outlook

GBPUSD

The GBP/USD chart is presently displaying bearish momentum.

The first support level is located at 1.2432, which also happens to be a powerful overlap support level and a 38.20% Fibonacci retracement. 

The second level of support is located at 1.2337, which is a decline in support level and 78.60% Fibonacci retracement at the same time.

The first resistance level, which coincides with a 138.20% Fibonacci extension, is at 1.2522 and is a multi-swing high resistance level. A reversal could occur to drive prices back down toward the first support level if the price is unable to break above this level.

The second resistance level, which is a swing-high resistance level, is located at 1.2588. Further bullish momentum might develop if the market were to break through this level.

EURUSD

There is presently bearish momentum on the EUR/USD chart, and further declines could lead to the first support level at 1.0790. This support level is important because it is an overlap support, which means that it has already been tested several times and will probably generate a lot of purchasing interest. In addition, if price were to drop below the first support, there is a secondary support level at 1.0739 that is also overlap support.

The first resistance mark of 1.0969, on the other hand, is where the chart indicates there is resistance. As a multi-swing high resistance level that has previously undergone testing, it is likely to generate significant selling activity. This resistance level also coincides with the 138.20% Fibonacci Extension level, further emphasizing its ability to act as a powerful resistance level. In case the price were to break above the first resistance, there is also a secondary resistance level at 1.1022, which is a swing high resistance and could serve as a possible upside target.

AUDUSD

There is a general bearish momentum on the AUD/USD chart, and the price may decline further toward the first support level. 

Price could possibly find support at the first support level of 0.6675 if it were to keep falling. Strong swing low support that has previously held is at this level. The second support level at 0.6640 would be the next support level to watch for if the price were to drop below this one. This level also functions as an overlap support level and might offer further market stability.

A pullback resistance and the 50% Fibonacci retracement level are congruent with the first resistance level on the upswing at 0.6741. Price might hit this level if it were to rise further after bouncing off the first support level. The second resistance level is a multi-swing high resistance level and is located at 0.6791. A shift in momentum in favour of a more bullish trajectory could be indicated if the price were to break through this level.

USDJPY

The general bullish momentum on the USD/JPY chart suggests that prices will probably keep rising. Currently, there are no elements influencing the pace.

Price might keep climbing towards the first barrier level at 133.00. The 78.60% Fibonacci retracement serves as a support for this level, which acts as a pullback barrier. Price may climb towards the second resistance at 133.82, a multi-swing high resistance if it is able to overcome this resistance.

On the other hand, if the price were to fall, it might find assistance at the 130.52 first support level. Price could move upward towards the first resistance level if it rebounds off this support level.

The price may decline towards the second support level at 129.75 if the first support level fails to hold. The price has previously rebounded off this level several times because it is multi-swing low support.

S&P 500

The US500 chart exhibits a bearish momentum, suggesting that the price may continue to fall until it reaches the first support mark. The first support level, which is declining support with a 23.60% Fibonacci retracement, is located at 4058.41. The second support level at 4006.46, which is also declining support with a 38.20% Fibonacci retracement, could be reached if price breaks through this level.

The first resistance level at 4140.92, which is a swing high resistance, could be reached if the price were to move upward after bouncing off the first support level. The second resistance level is located at 4186.76, which also marks a swing-high resistance and a Fibonacci extension of 127.20%.

It is important to note that the chart presently has a bearish momentum, and the descending trend line indicates that there may be more bearish momentum to come.

WTI CRUDE OIL

Recently, WTI crude oil has been moving downward, and the price may continue to move down towards the first support level. The chart’s general momentum is currently bearish.

The decline support level and 23.60% Fibonacci retracement level at 77.07 serve as the first level of support to keep an eye on. This is a crucial mark because a break below it might indicate that the bearish momentum will continue. The second support level to keep an eye on is a crossover support level located at 73.76.

The first level to monitor on the resistance side is at 81.78, which is a swing-high resistance level. The bearish momentum could possibly reverse if the price is able to breach above this level. 83.43, another swing-high resistance level, is the next level to keep an eye on.

SILVER

Recent silver price movements have been bullish, and the silver chart’s general momentum is pointing upward.

The price might move in the direction of the first support level at $24.58 if the bearish pattern persists. Due to its alignment with the 38.20% Fibonacci retracement level, this level is a strong support zone.

The second support level at $23.90, which could be reached if the market breaks below the first support level. 

The price might move towards the first resistance mark at $25.11, however, if there is a bullish reversal. Given that it coincides with a previous swing high, this level makes for a strong resistance area.

The second resistance level at $83.43, which is also a strong resistance area because it coincides with a prior swing high, may be reached if the bullish momentum persists.

ETHEREUM

The ETH/USD chart’s general momentum is bearish, indicating that the price may continue to fall.

The second support level, which also serves as a retreat support level, is located at 1735.11. This level is crucial because it has historically served as a degree of support.

The first resistance level, which is a swing-high resistance level, is located at 1936.64. This resistance level is important because it served as a barrier in the past to stop the price from rising.

The swing high resistance level at 1968.02, which is also the 161.80% Fibonacci extension level, serves as the second opposition level. This resistance level is important because it might function as a solid roadblock to stop the price from rising.