FUNDAMENTAL REPORT FORECAST
MARKET UPDATE:
Investors are cheering inflation statistics as Nasdaq rises. Alphabet
The Nasdaq ended Wednesday at its best intraday level in more than eight months, helped by Alphabet Inc.’s (GOOGL.O) most recent artificial intelligence rollout and a somewhat lower-than-expected increase in April inflation.
Contrary to estimates of a 5% increase, the Consumer Price Index (CPI) released by the Labour Department increased 4.9% in April from a year earlier, giving rise to optimism that the Federal Reserve’s cycle of interest rate increases is nearing its conclusion. After increasing by 0.1% in March, the CPI increased by 0.4% in April.
According to Michael Harris, president of hedge fund Quest Partners LLC, the inflation report was viewed as a slight positive by the markets, which caused them to react favourably. “The Fed is currently pausing. After their most recent rate increase, they will wait and observe for the ensuing few months.
“The CPI shows that inflationary pressure has subsided in some way. Growth companies are most severely impacted by rising interest rates, so it would indicate that the Fed is either nearing or has already reached the end of its interest rate cycle, according to Kevin W. Philip, a partner at investment firm Bel Air.
Growth businesses profit from lower rates because they depend more on borrowing money.
“A Fed cut starting this summer is already factored into the market. Inflation is slowing down, but not quickly enough to allow the Fed to lower interest rates before the fourth quarter of 2023, according to Matthew , senior investment strategist at Bernstein Private Wealth Management.
What happened in the Asia Session?
The year-over-year (y/y) figures for Japanese bank lending was published at 3.2%, exceeding the 3.0% estimates and previous levels. The current account data revealed a value of 1.01 trillion yen, which was less than the 1.31 trillion yen expected value and the 1.23 trillion yen recorded previously. The bid-to-cover ratio for the 30-year Bond Auction was 1.25, which was higher than the previous value of 1.35 and suggests that investors were pleased with the auction. A value of 54.6 was reported in the Economy Watchers Sentiment data, which was higher than the predicted and prior values of 53.3 and 54.1, respectively. The JPY may experience a range of effects from these data releases.
What does it mean for the Europe & US Session?
The GBP/USD pair may increase to recent highs near 1.2700 if the BoE raises interest rates by more than 25 basis points. The pair might likely continue a surge above the specified round level should the US PPI data set indicate lessening inflation on the supply side.
The Japanese Yen (JPY)
Key news events today
No major news events.
What can we expect from JPY today?
The BoJ Summary of Opinions may have an impact on the value of the Japanese yen, according to the central bank’s report. Since the BoJ has remained accommodative on the monetary policies, traders would be searching for signals of less dovishness.
Central Bank Notes:
- The bank will continue with QQE with Yield Curve Control to achieve the price stability target of 2%
- Japan’s economy is expected to recover gradually
- The bank will not hesitate to take additional easing measures if necessary
- Next meeting is on 15 June 2023
Next 24 Hours Bias
Mixed
The Euro (EUR)
Key news events today
No major news events.
What can we expect from EUR today?
The EUR is not currently being affected by any significant news stories; thus the direction of its price will likely depend on impending economic data releases. It is anticipated that the French Final CPI m/m would stay at 0.6%. The French Final CPI m/m report will be eagerly watched by traders and investors since it offers information on inflation, a key aspect in deciding the ECB’s monetary policy decisions.
Central Bank Notes:
- The ECB has decided to raise the three key interest rates by 25 basis points as the inflation outlook continues to be too high for too long.
- The ECB will continue to follow a data-dependent approach to determining the appropriate level and duration of restriction.
- Renewed financial market tensions and Russia’s war against Ukraine remain significant economic downside risks.
- The continued resilience of the labour market could lead to higher growth than anticipated.
- Next meeting on 15 June 2023
Next 24 Hours Bias
Weak Bullish
The Pound (GBP)
Key news events today
No major news events.
What can we expect from GBP today?
The predicted increase in the official bank rate from 4.25% to 4.50%. It was predicted that the previous MPC Official Bank Rate Votes’ 7-0-2 split would not change. If the MPC maintains its current voting split and the Official Bank Rate increases as expected, the GBP could strengthen against other currencies due to the higher interest rate environment.
Central Bank Notes:
- The BoE’s MPC increased the Bank Rate by 25bps to 4.25%, with a majority of 7-2 in favour of the hike
- The UK banking system is judged to be robust and resilient.
- CPI inflation increased unexpectedly but is expected to fall sharply over the rest of the year due to lower energy prices.
- The MPC will continue to monitor inflationary pressures and adjust Bank Rate as necessary.
- Next meeting on 11 May 2023
Next 24 Hours Bias
Mixed
Global Markets:
Asian Stock Markets: Nikkei up 0.02%, Shanghai Composite up 0.29%, Hang Seng down 0.09%, ASX down 0.05%
European equities, the DAX futures up 0.21%, CAC 40 up 0.68%, FTSE up 0.15%.
US Stock Market: Dow jones down 0.09%, S&P 500 up at 0.45%, Nasdaq 100 up at 1.04%.
Commodities: Gold at $2026.36 (-0.14%), Silver at $24.92 (-1.71%), Brent Oil at $77.05 (+0.85%), WTI Oil at $73.12 (+0.83%)
News & Data
- (USD) Initial Jobless Claims Forecast 245K, previous 242K at 18:00
- (USD) PPI (MoM) (Apr) Forecast 0.3%, Previous –0.5% at 18:00
- (GBP) BoE Interest Rate Decision (May) Forecast 4.50%, Previous 4.25% at 16:30
- (GBP) BoE Gov Bailey Speaks at 18:45
- (CNY) CPI (YoY) (Apr) Actual 0.1%, Forecast 0.4%, Previous 0.7% at 07:00
Technical Outlook
GBPUSD
The GBP/USD chart is currently showing neutral momentum and the price may fluctuate between the 1st resistance level and the 1st support level. The first support level is 1.2585, which is an overlapping support level and the same as the 38.20% Fibonacci retracement.
If the price were to decline from the current level, it could possibly find support at this level. Another support level is 1.2541, which is also an overlapping support level and the same as the 61.80% Fibonacci retracement.
If the price continues to decline, it may find support at this level. On the resistance side, the 1st resistance level is 1.2677, which is the high resistance of the momentum.
If the price has moved up from the current level, there may be resistance at this level.
EURUSD
The EUR/USD chart is currently showing bearish momentum, with several factors contributing to this trend. Firstly, price broke below an ascending support line, triggering a potential bearish move.
If this bearish momentum were to continue, price could potentially drop towards the 1st support level at 1.0941, which is a multi-swing low support level. If price were to break through this support level, it could potentially drop further towards the 2nd support level at 1.0912, which is a swing low support level.
On the resistance side, the 1st resistance level is at 1.1007, which is an overlap resistance level and coincides with a 61.80% Fibonacci retracement. If price were to rise from the current level, it could potentially encounter resistance at this level before moving further up.
The 2nd resistance level is at 1.1052 and is a swing high resistance level. If price were to rise past the 1st resistance level, it could potentially encounter resistance at this level.
AUDUSD
The AUD/USD chart is currently showing bullish momentum, with price above a major ascending trend line suggesting further bullish momentum is on the cards.
If this bullish momentum were to continue, price could potentially rise towards the 1st resistance level at 0.6822, which is an overlap resistance level and coincides with a 127.20% Fibonacci extension. If price were to break through this resistance level, it could potentially rise further.
The first support level, which is an overlap support level and corresponds with a 23.60% Fibonacci retracement, is at 0.6749 on the support side. If price were to drop from the current level, it could potentially find support at this level.
The 2nd support level is at 0.6703, which is also an overlap support level and coincides with a 50% Fibonacci retracement. If price were to drop further, it could potentially find support at this level.
It’s worth noting that the AUD/USD chart is currently showing bullish momentum, with price potentially rising towards the 1st resistance level.
USDJPY
The USD/JPY chart is currently showing bearish momentum, with price having broken below an ascending support line, triggering a potential bearish move.
If this bearish momentum were to continue, price could potentially drop towards the 1st support level at 133.53, which is a multi-swing low support level. If price were to break through this support level, it could potentially drop further towards the 2nd support level at 132.35, which is also a multi-swing low support level.
On the resistance side, the 1st resistance level is at 135.27, which is an overlap resistance level and coincides with a 38.20% Fibonacci retracement.
The 2nd resistance level is at 136.99 and is also an overlap resistance level, coinciding with a 78.60% Fibonacci retracement. If price were to rise past the 1st resistance level, it could potentially encounter resistance at this level.
It’s worth noting that the USD/JPY chart is currently showing bearish momentum, with price potentially continuing its bearish trend towards the 1st support level.
DOW JONES
There is currently a chance for a bullish continuation towards the first resistance level on the DJ30 chart.
On the support side, the 1st support level is at 33266.51, which is an overlap support level and coincides with a 61.80% Fibonacci retracement. This level may potentially provide support if the price were to decrease.
Another support level is found at 32912.93, which is an overlap support level coinciding with a 50% Fibonacci retracement and a 78.60% Fibonacci projection. This level displays Fibonacci convergence and might offer more robust support.
The first resistance level, which is a multi-swing high resistance level and coincides with a 61.80% Fibonacci retracement, is at 33826.34. This level might serve as resistance if the price were to rise.
At 34268.31, which is a swing high resistance level and coincides with a 61.80% Fibonacci retracement, there is still further resistance.
WTI CRUDE OIL
The WTI chart is currently showing bullish momentum. Factors contributing to this momentum are that the price broke above the bearish resistance line that triggered a possible uptrend and is currently on the uptrend line that acts as support.
If this upward momentum were to continue, the price could potentially rise to the first resistance level at 74.36, which is the bearish resistance level and coincides with the 50% Fibonacci retracement.
On the support side, the 1st support level is at 71.42, which is an overlapping support level and the same as the 23.60% Fibonacci retracement. If the price were to decline from the current level, it could possibly find support at this level.
There is also another support level at 67.49 which is an overlapping support level. If the price were to fall further, it could find support at this level. It is worth noting that the WTI chart is currently showing bullish momentum and could possibly continue to move higher towards the first resistance level at 74.36
SILVER
The price of silver, has been moving lower, indicating that sellers have overseen the market.
The overlap support level at 24.76, which also happens to be the level of the 78.60% Fibonacci retracement, serves as the initial level of support.
The second support level, which is a multi-swing low support level, is located at 24.08. 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 25.40 and is a pullback resistance level that also happens to be the 61.80% Fibonacci retracement level.
The second resistance level, which is a swing high resistance level, is located at 26.12. 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.
ETHEREUM
The ETH/USD pair is showing bearish momentum, with possible downside continuing to the first support level. The first support level is 1805.57, which is a low multi-pivot support level. If the price were to decline from the current level, it could possibly find support at this level.
There is also a 2nd support level at 1751.41 which is also a multi-pivot low support level. If the price were to fall further, it could find support at this level.
On the resistance side, the 1st resistance level is at 1874.19, which is an overlapping resistance level and the same as the 38.20% Fibonacci retracement level.
There is also another resistance level at 1939.19, which is the high resistance level of the pivot and the same as the 61.80% Fibonacci level. If the price continues to rise, there may be resistance at this level.
