FUNDAMENTAL REPORT FORECAST
MARKET UPDATE:
US STOCKS-S&P 500 and Nasdaq fall on weak earnings projections and inflation data attention.
U.S. market indexes ended lower on Tuesday as traders became more circumspect before a report on the consumer price index and a meeting of top political figures to discuss the debt ceiling.
Following the release of the consumer price index (CPI) report from the Labour Department on Wednesday, investors will be looking for signs that inflation is still declining.
As traders awaited information on the debt ceiling plans from a meeting between U.S. President Joe Biden, Republican House Speaker Kevin McCarthy, and other congressional leaders at the White House, discussions over the U.S. debt ceiling are adding to market nervousness.
The debt ceiling and inflation are both causing some fear, but overall, it’s a very calm day, according to Randy Frederick, managing director of trading and derivatives at the Schwab Centre for Financial Research.
Although earnings season is typically lumpy and we have some negative numbers today, companies have largely been outperforming earnings projections. That is somewhat dragging on the market.
What happened in the Asia Session?
A value of 97.5% was recorded in the statistics for Japan’s Leading Indicators, which was lower than the predicted value of 97.9% and the previous value of 98.0%. This could be interpreted as bad news for the Japanese economy, which could cause demand for JPY to fall and its value to decline.
What does it mean for the Europe & US Session?
The primary event of the US session will be the release of the US CPI data set. German CPI m/m is anticipated to stay at 0.4% ahead of US consumer data, which might cause the EUR/USD to oscillate around a 23.6% Fibonacci retracement line at 1.0970. In the event of a data deviation, the upside and downside objectives are 1.1000 and 1.0940, respectively.
The Dollar Index (DXY)
Key news events today
CPI m/m
CPI y/y
Core CPI m/m
What can we expect from DXY today?
The annual variation is anticipated to stay constant at 5.0%, while the next report of the US CPI m/m is predicted to rise 0.4% from the previous month’s 0.1%. The volatile items are excluded from the core CPI rate, which is anticipated to decrease from 0.4% to 0.3%. Since the Fed must keep interest rates higher for longer to contain inflation, a higher CPI rate signifies an increase in the cost of goods and services and could result in a rise in the USD.
Central Bank Notes:
- The committee raised the target range for the federal funds rate to 5 to 5-1/4 per cent. The U.S. banking system is sound and resilient.
- Tighter credit conditions for households and businesses may weigh on economic activity, hiring, and inflation.
- The committee is committed to returning inflation to its 2% objective
- The committee will adjust monetary policy as appropriate if risks emerge that could impede the attainment of goals
- Next meeting is on 14 June 2023
Next 24 Hours Bias
Mixed
The Canadian Dollar (CAD)
Key news events today
No major news events.
What can we expect from CAD today?
A decline in permits for new building is predicted to occur, with a negative projection of -2.3% (prior 8.6%) for the Canadian Building Permits m/m. This could slow down economic activity and have a negative effect on the CAD.
Central Bank Notes:
- Bank of Canada holds its target for the overnight rate at 4.5%
- Labour markets remain tight with persistent price pressures, especially for services
- Economic growth in Q1 looks to be stronger than projected; to be weak through the remainder of this year before strengthening gradually next year
- Prepared to increase the policy rate further to return inflation to the 2% target.
- Next meeting on 7 June 2023
Next 24 Hours Bias
Weak Bearish
The Kiwi Dollar (NZD)
Key news events today
No major news events.
What can we expect from NZD today?
Since there is no major news event affecting the New Zealand dollar (NZD) today, the direction of its price will probably be determined by impending data releases. Previous FPI m/m data showed a 0.8% increase in food costs, pointing to a possible rise in inflation that could result in an increase in interest rates in the future. The NZD might be strengthened if it has a good trend. On the other hand, a decrease or no change in the FPI m/m statistics could make the NZD weaker.
Central Bank Notes:
- OCR increased by 50bps from 4.75% to 5.25%
- Recent severe weather events in the North Island have led to higher prices, increasing the risk of inflation expectations exceeding the target range.
- New Zealand’s economic growth is expected to slow through 2023 due to the slowing global economy, reduced residential building activity, and the ongoing effects of monetary policy tightening.
- Next meeting is on 25 May 2023
Next 24 Hours Bias
Mixed
Global Markets:
Asian Stock Markets: Nikkei is down 0.41%, Shanghai Composite is down 1.15%, Hang Seng is down 0.53%, ASX is down 0.12%
European equities, the DAX futures down 0.25%, CAC 40 down 0.20%, and FTSE down 0.16%.
US Stock Market: Dow Jones is down 0.17%, S&P 500 is down at 0.46%, Nasdaq 100 is down 0.63%.  Â
Commodities: Gold at $2028.12 (-0.29%), Silver at $25.54 (-0.18%), Brent Oil at $76.50 (-1.29%), WTI Oil at $72.72 (-1.38%)
News & Data
- (USD) CPI (YoY) (Apr) Forecast 5.0%, Previous 5.0% at 18:00
- (USD) Core CPI (MoM) (Apr) Forecast 0.4%, Previous 0.4% at 18:00
- (USD) CPI (MoM) (Apr) Forecast 0.4%, Previous 0.1% at 18:00
- (EUR) German CPI (MoM) (Apr) Actual 0.4%, Forecast 0.4%, Previous 0.8% at 11:30
- (EUR) German CPI (YoY) (Apr) Actual 7.2%, Forecast 7.2%, Previous 7.4% at 11:30
Technical Outlook
GBPUSD
The price is currently above a significant ascending trend line on the GBP/USD chart, which indicates that additional upward momentum may be in the works.
First support level at 1.2541 is a strong level of support since it is an overlap support level with a 50% Fibonacci retracement. The strength of the support levels is further increased by the presence of a multi-swing low support level at 1.2439.
A strong level of resistance that the price may find difficult to break through is the swing-high resistance level at 1.2662 on the resistance side. Further adding to the potential support that the price may encounter is an overlap support level at 1.2583, which is an intermediate support level and coincides with a 38.20% Fibonacci retracement.
Given the high momentum of the chart, the potential for a bullish continuation into the first resistance level is apparent.
EURUSD
The price has broken below an ascending support line on the EUR/USD chart, signalling the possibility of a bearish move. The chart is currently displaying overall bearish momentum.
A multi-swing low support level, the first support level at 1.0941 is a potent level of support. The strength of the support levels is further increased by the presence of a swing low support level at 1.0945.
The price might fall towards the second support level, though, if there is a chance for a bearish break off the first support level.
A multi-swing high resistance level at 1.1078, which is a significant level of resistance that the price would find difficult to overcome, is present on the resistance side. The price may encounter additional resistance at the intermediate resistance level at 1.1047, which is another multi-swing high resistance level.
AUDUSD
The price is currently above a significant ascending trend line on the AUD/USD chart, which indicates that additional upward momentum may be in the works.
The first support level, which is at 0.6749 and has a 23.60% Fibonacci retracement, is an overlap support level and a reliable level of support. Further adding to the potential support that the price may encounter is another overlap support level at 0.6703, which also happens to be a 38.20% Fibonacci retracement.
A multi-swing high resistance level of 0.6793, which is a significant amount of resistance, is present on the resistance side. A further potential barrier to the price’s progress is an overlap resistance level at 0.6822, which also happens to be a 127.20% Fibonacci extension.
Given the high momentum of the chart, the potential for a bullish continuation into the first resistance level is apparent.
The fact that the price is currently above the main ascending trend line suggests that additional bullish momentum may be anticipated.
USDJPY
The price is currently above a significant ascending trend line on the USD/JPY chart, which indicates that additional upward momentum may be in the works.
As a multi-swing low support level at 133.53, the first support level is a powerful level of support.
The price may find it difficult to break through the overlap resistance level at 135.27, which is a significant level of resistance on the resistance side. A high level of resistance that also falls within a 78.60% Fibonacci retracement is an overlap resistance level at 136.99.
Given the high momentum of the chart, it is possible for a bullish breakthrough of the first resistance level and a rise towards the second resistance level.
DAX 40
Currently, the DAX 40 chart displays a generally neutral momentum, with the possibility of swings between the first resistance and first support level.
A 38.20% Fibonacci retracement and an overlap support level are present at the first support level, which is located at 15861.8. It has a high level of support as a result. Further bolstering the level of support is a multi-swing low support level at 15690.3, which has a Fibonacci confluence created by a 78.60% and a 23.60% retracement, respectively.
A multi-swing high resistance level at 16003.2, which is a significant amount of resistance, is present on the resistance side. In addition, a swing-high resistance level at 16159.00 raises the possibility of further resistance for the price.
The price may oscillate between the support and resistance levels given the chart’s present neutral trend.
WTI CRUDE OIL
On the chart, the price of WTI crude oil has been trending upward. This is because a prospective bullish rise has been sparked by the price’s breakout above a falling resistance line. As a result, there is a chance that the price will move higher in the direction of the first resistance level.
WTI crude oil’s first support level is at 71.56. This level is excellent support because it overlaps with another level, indicating that it has previously served as both support and resistance. Another overlap support, the second support level is located at 71.56 as well.
At 74.22, there is the first resistance level. Because it is a pullback resistance and the 50% Fibonacci retracement level, this level is a good resistance. This suggests that selling pressure may exist at this price. The second resistance level, which is likewise an overlap resistance, is located at 76.89. This level has even more confluence because it falls on the 61.80% Fibonacci retracement line.
GOLD
The price of gold, represented by the currency pair XAU/USD, has been moving lower, indicating that sellers have overseen the market. Price could keep falling in the direction of the initial support level.
The overlap support level at 2008.93, which also happens to be the level of the 78.60% Fibonacci retracement, serves as the initial level of support. This level has previously withstood numerous tests and has served as a solid support level.
The second support level, which is a multi-swing low support level, is located at 1975.61. Additionally, this level has previously withstood numerous tests and has served as a powerful support level.
The first resistance level, on the other hand, is located at 2046.25 and is a pullback resistance level that also happens to be the 61.80% Fibonacci retracement level. This level has previously withstood numerous tests and has remained a strong resistance level.
The second resistance level, which is a swing-high resistance level, is located at 2074.25. In the past, this level was also put to the test several times, and it remained a solid resistance level.
Price could move upward towards the second resistance level if it can get over the first resistance level. The overall bias is still bearish, though, and it is more likely that the downward trend will continue towards the support levels.
LITECOIN
The LTC/USD chart’s overall momentum is now neutral. Between the first resistance and first support levels, however, there is a chance that the price will change. This implies that the Bitcoin market might offer trading opportunities.
The first support level, multi-swing low support, is located at 75.96. The second support level, which is another multi-swing low support, is located at 71.85. If the price declines, these levels can serve as strong support.
The first resistance level, which is an overlap resistance and the 38.20% Fibonacci retracement level, is located at 79.65. The 61.80% Fibonacci retracement level and the second resistance level are both located around 84.58, which is a multi-swing high resistance level. If the price rises, these levels might serve as effective resistance levels.
