Fundamental Analysis Report With Charting Trends- 12 April 2023
12 Apr 2023
FUNDAMENTAL REPORT FORECAST
As investors awaited critical inflation data and the unofficial start of the first-quarter reporting season, Wall Street equities lost momentum late in the session and ended the day with a mixed performance.
It’s the quiet before the storm, said Detrick. “Traders are adopting a wait-and-see strategy to see how the inflation data comes in, given the importance of tomorrow’s inflation data, the impending release of the Fed minutes, and the impending earnings season.”
Analysts predict that the headline and core CPI will decline to 0.2% and 0.4%, respectively, monthly. The core measure, which excludes volatile food and energy costs, is anticipated to gather steam, climbing to 5.6% from 5.5%, even though consensus projections call for a considerable decline in the headline number – to 5.2% from 6.0%.
West Texas Intermediate (WTI) crude increased by 1.5% to $90.18 per barrel, while Brent crude increased by 1.3% to $94.12 per barrel. Concerns about supply disruptions in important producing nations and growing demand as the world economy keeps improving were the main factors driving the increase in oil prices.
Spot gold rose barely 0.1% to $1,776.25 an ounce, remaining virtually unchanged as investors adopted a wait-and-see attitude in the face of conflicting market sentiment.
The US Dollar Index, which gauges the dollar’s strength against a basket of other currencies, fell 0.1% to 96.62, showing the dollar’s marginally declining value relative to other important currencies.
What happened in the Asian session?
The Japanese Bank Lending y/y announcement came in at 3.0%, slightly higher than the previous 3.3% but less than the expected 3.5%. The actual Core Machinery Orders m/m release was -4.5%, which was better than the expected -6.4% but still significantly below the previous 9.5%.
The JPY may see a boost in demand because of inflationary pressures, as seen by the PPI y/y actual release of 7.2%, which was higher than the expected 7.1% and the prior 8.3%. The drop in credit growth and machinery orders, however, can result in a decline in currency demand.
What does it mean for the Europe & US Sessions?
The major movements from the Asian session may be consolidated during the data-light European session. Any progress will probably be made during the US session, when the closely anticipated CPI statistics are announced. Since the BoC’s monetary policy announcement is due after, USD/CAD should experience the largest movement. If things go well on the Canadian front, the pair may decline towards 1.3400. An alternative would be for the Loonie to test recent highs near 1.3550.
The Dollar Index (DXY)
Key news events today
Core CPI m/m
What can we expect from DXY today?
The CPI is anticipated to rise by 0.2% monthly and 5.2% annually based on the data that is projected. According to the prior data, there was a growth of 6.0% annually and 0.4% monthly.
The inflation rate may not be falling as quickly as previously believed if the prediction and actual data agree. As a result, there might be less demand for US dollars as the Fed’s bullish stance on the rate hike cycle softens.
The high inflation rate may linger, though, if the actual figures come in higher than expected. The demand for US dollars might rise as a result.
Central Bank Notes:
- The US banking system is sound and resilient, but recent developments may result in tighter credit conditions for households and businesses.
- The Federal Reserve has raised the target range for the federal funds rate to 4-3/4 to 5 per cent, committed to returning inflation to its 2 per cent objective.
- In determining the extent of future increases in the target range, the Committee will consider various factors, including the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and economic and financial developments.
- Next meeting is on 3 May 2023
Next 24 Hours Bias
The Swiss Franc (CHF)
Key news events today
No major news events.
What can we expect from CHF today?
The ongoing IMF meetings are likely to have an impact on the volatility of the Swiss Franc because there won’t be any CHF-specific news until Friday’s release of the PPI m/m.
Central Bank Notes:
- Raised policy rate to 1.5% to counter inflationary pressure and ensure price stability. The SNB may need to raise the policy rate further in the future
- The SNB is providing liquidity assistance to Credit Suisse, and the crisis has been halted
- The new inflation forecast assumes a policy rate of 1.5% and puts average annual inflation at 2.6% for 2023 and 2.0% for 2024 and 2025.
- Mortgage and real estate market vulnerabilities persist
- Next meeting on 11 April 2023
Next 24 Hours Bias
The Pound (GBP)
Key news events today
BOE Gov Bailey Speaks
What can we expect from GBP today?
At a web conference organised by the Institute of International Finance, BOE Governor Bailey is scheduled to speak about the robustness of the world financial system. Questions from the audience are expected; being more pessimistic benefits the GBP and vice versa.
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
Asian Stock Markets: Nikkei up 0.57%, Shanghai Composite up 0.41%, Hang Seng down 1.06%, ASX up 0.47%
European equities, the DAX futures up 0.20%, CAC 40 up 0.34%, FTSE up 0.58%.
US Stock Market: Dow jones up 0.29%, S&P 500 at 0.00%, Nasdaq 100 down at 0.43%.
Commodities: Gold at $2028.85 (+0.49%), Silver at $25.43 (+0.96%), Brent Oil at $85.89 (+0.33%), WTI Oil at $81.77 (+0.29%)
News & Data
- (USD) CPI (YoY) (Mar) Forecast 5.2%, Previous 6.0% at 18:00
- (USD) CPI (MoM) (Mar) Forecast 0.2%, Forecast 0.4% at 18:00
- (USD) FOMC Meeting Minutes at 23:30
- (CAD) BoC Interest Decision Forecast 4.50%, Previous 4.50% at 19:30
- (CAD) BoC Monetary Policy Report at 19:30
The price of the GBP/USD currency pair has broken below an ascending support line, which may be a sign that a negative move is possible. The chart of the pair is currently displaying bearish momentum.
The first support level, which is located at 1.2349, is an overlap support level, meaning that it has previously served as support and may do so again in the future.
At 1.2274, the second support level—also an overlap support level—is located. At this level, the price might also find support if it were to keep dropping.
The 50% Fibonacci retracement level and the first resistance level, which is an overlap resistance level, are both located at 1.2439. Price might perhaps encounter resistance at this level and start to decline in the direction of the support levels if it were to increase.
The second resistance level is located at 1.2526 and is a multi-swing high resistance level, meaning it has previously served as resistance and might do so again in the future.
Right now, the EUR/USD chart is in a bearish trend. Price might potentially respond negatively and fall away from the first resistance level and towards the first support level.
The first support level, which also happens to be the 38.20% Fibonacci retracement level, is located at 1.0797 and is a strong overlap support level. The second support level, which also overlaps with the 50% Fibonacci retracement level, is located at 1.0740. Both are solid levels from which the price might perhaps retrace if it were to fall.
On the other hand, the overlap resistance level at the first level is at 1.0932. The second resistance level, which is a swing high resistance level, is located at 1.1022. Price may rise towards the second obstacle if it were to break through the first resistance. But if the price fell below the first support, it might move in the direction of the second support.
In addition to these levels, a swing low support level at 1.0833 serves as an intermediate support level.
Price is trading below a significant falling trend line on the AUD/USD chart, which suggests that bearish momentum may be imminent.
Price may potentially react off the first resistance at 0.6726 and drop towards the first support at 0.6623, which is a multi-swing low support level, if it were to maintain its bearish trend. If this level is breached, the second support at 0.6579, which also serves as a multi-swing low support level, may act as the following level of support.
On the other hand, if price were to surpass the first barrier, it might move upward in the direction of the second obstacle, which is a multi-swing high resistance level at 0.6784.
Between the present price and the first barrier, at 0.6666, there is an intermediate resistance that should be noted. A larger bullish acceleration towards the second resistance can result from price breaking this intermediate hurdle.
While the general tendency is still unfavourable, USD/JPY is still experiencing bearish momentum. Potentially, the price will reverse downward off the first resistance at 133.7600 and fall to the first support at 131.8100.
The first support level, which is located at 131.8100 and is a strong overlap support as well as the 61.80% Fibonacci retracement level, is crucial as a support for the pair. Price may move towards the first barrier at 133.7600 if it rebounds off this support level.
The second support level, at 130.5300, which is also an overlap support level, is where the price could fall if the first support level is broken.
The first resistance level for the pair is at 133.7600, which is an overlap resistance level and the 50% Fibonacci retracement level. As such, it is a significant resistance level. The second barrier, which is an overlap resistance level at 135.0800 and corresponds with the 61.80% Fibonacci retracement level, might be reached if the price moves past this resistance level.
The US500 chart is currently sitting above a significant ascending trend line and the bullish Ichi Moku cloud, exhibiting a strong bullish momentum. These variables point to the possibility of additional bullish momentum.
The 4059.02 level, which is a strong overlap support and is situated on the ascending trend line, should be prioritised as the initial support level because of its significance. In addition, it lines up with a 23.6% Fibonacci retracement, giving it an even more powerful level to watch. The 4005.99 level, a pullback support with a 38.2% Fibonacci retracement matching up with it, is the second support level to consider.
However, there are also significant resistance levels to keep an eye on. The first one is a swing high resistance level at 4145.18. Price may find it difficult to surpass this level, but if it does, it might signal a bullish continuation towards the following resistance level at 4188.27, another swing high resistance level.
WTI CRUDE OIL
The horizontal movement of WTI prices suggests a neutral momentum. Price may continue to sway between the first resistance at 82.70 and the first support at 77.87. A 23.60% Fibonacci retracement provides support for the first support level, which is an overlap support. The second support, which is also an overlap support at 74.01, could be reached if the first support is broken. On the other side, a breach of the first resistance might trigger a bullish acceleration towards the swing high resistance at the intermediate resistance at 81.18. The second resistance level, which is a multi-swing high resistance, is located above that at 82.70.
It’s crucial to keep in mind that because of the neutral momentum and lack of a clear trend driving price in one direction, breakouts from these levels could not be highly convincing.
Given that they are above the Ichi Moku cloud and an upward trend line, gold prices have been displaying bullish momentum. This means that costs could increase even more. Prices may go in a bullish direction in the near term approaching the first resistance level. Currently, the ascending trend line and the strong overlap support at 1985.04, which is also the first support level, indicate its validity. The price had previously bounced off the second support level, which is located at 1947.88, a multi-swing low support.
The first resistance level, which is a swing high resistance and could serve as a potential price barrier on the upside, is located at 2031.31. In addition, a pullback support at 2010.46 serves as an intermediate support. Prices could move down towards the second support at 1947.88 if they were to breach this interim level of support.
Overall, there is a bullish bias for gold prices, and prices may continue to rise in the direction of the first resistance level. A breach below the intermediate support level, however, would portend a change in the negative trend.
The LTC/USD price, which is currently moving lower, could keep going till it reaches its initial support level.
$89.604 is the initial support level, which is a pullback support level. The second support level, which is an overlap support level, is at $83.9450.
$95.521 marks the initial resistance level, which is also a swing high resistance level. If LTC/USD can break through the first resistance level at $101.952, it might start to matter.
It’s crucial to remember that LTC/USD has recently had strong negative momentum, which makes reaching the first support level less likely. It’s essential to monitor the support levels as well in case of a potential decline.