MARKET UPDATE:
Yesterday’s trading day was marked by extreme volatility because of the prolonged ripple effects of the closures of SVB and Signature banks on international markets. Investors were still worried about a possible banking sector spread after another 70 billion in value was wiped off bank shares over the last three days, bringing the total to 170 billion. The US indices ended the day split, with the Dow down 0.28%, the S&P down 0.15%, and the Nasdaq up 0.45%, as compared to where it was only last week. Or to be more precise, because of this concern.
The benchmark 2-year yield dropped below 4%, continuing the sharp decline in Treasury yields that began at the end of last week. At one point, this decline put Treasury yields on track to see their largest declines since Black Monday and October 1987. It’s wild times when the market expects the Fed to raise interest rates by 25 basis points next week, down from 80% only a few days ago. Currencies experienced a whippy day within recent ranges with the dollar remaining on the back foot in keeping with the changes that we have seen in yields.
The Asian trading session is relatively calm in terms of data releases when compared to the rest of the day’s trading sessions. The London session sees the latest employment reports reported in the UK which should add to volatility in the sterling products, but the main event of the day is the CPI data release in the US. Given the movements we’ve witnessed over the last few days, the market expects a 0.4% m/m and 6.0% yearly number. If this number puts another wrench in the works, expect a huge impact across products.
How did the US session go?
Despite the paucity of significant data releases, the US banking crisis continues to be the primary cause of volatility. With the advent of the internet, the world has become a much more globalized place.
What does it mean for the Asian Session?
Although US regulators have intervened to calm the banking crisis, the approaching lower-than-expected US CPI data releases may contribute to the contagion fears surrounding the US banking sector and weaken the USD even more.
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?
US CPI m/m is forecasted to rise 0.4% (previous 0.5%) and y/y to fall to 6.0% (previous 6.4%). Core CPI m/m is expected to stay at 0.3%. Higher-than-expected figures could increase USD strength due to potentially rising interest rates, while lower figures could decrease USD value.
Central Bank Notes:
- The Committee has raised the federal funds rate target range to 4.5-4.75% and plans to continue increasing it to return inflation to 2%
- The Committee will monitor incoming information and adjust the stance of monetary policy as appropriate to achieve its goals
- A majority vote from the Committee supported the decision to raise the target range
- The next meeting is on 23 March 2023
Next 24 Hours Bias
Bearish
The Euro (EUR)
Key news events today
No major news events.
What can we expect from EUR today?
The upcoming ECOFIN Meetings could impact the euro. Any significant announcements or decisions made during these meetings could affect the market’s perception of the eurozone economy, potentially leading to changes in the euro’s value.
Central Bank Notes:
- Main Refinancing Rate is currently at 3.00%
- ECB Governing Council to continue raising interest rates and reducing holdings of securities
- Future policy decisions to be data-dependent
- Next meeting on 16 March 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?
The forecasted data for Manufacturing Sales m/m shows a decrease of 0.4% compared to the previous data, which was a decline of 1.5%. This suggests that the manufacturing industry in Canada is recovering from the last slump, which could positively impact the CAD currency.
Central Bank Notes:
- Bank of Canada maintains its target for the overnight rate at 4.5%
- Inflation eased in January, but price increases for food and shelter remain high
- BOC is prepared to increase the policy rate further to return inflation to the 2% target.
- Next meeting is on 12 April 2023
Next 24 Hours Bias
Weak Bullish
The Kiwi Dollar (NZD)
Key news events today
No major news events.
What can we expect from NZD today?
The latest data of Visitor Arrivals m/m at -26.3% (previous 55.6%) represents a decrease in the number of visitors arriving in New Zealand from the last month, which could have a negative impact on the NZD.
Central Bank Notes:
- Monetary Policy Committee increased the OCR from 4.25% to 4.75%
- Higher interest rates are needed to reduce inflation and support employment sustainably
- Severe storms in North Island will increase inflation and disrupt production.
- The next meeting is on 5 April 2023
Next 24 Hours Bias
Weak Bearish
Global Markets:
Asian Stock Markets: Nikkei is down 2.24%, Shanghai Composite is down 0.72%, Hang Seng is down 2.33%, ASX is down 1.41%
European equities, the DAX futures up 0.25%, CAC 40 down 0.03%, and FTSE down at 0.39%.
US Stock Market: Dow jones down 0.28%, S&P 500 down at 0.15%, Nasdaq 100 up at 0.45%.
Commodities: Gold at $1902.92 (-0.54%), Silver at $21.58 (-0.87%), Brent Oil at $78.99 (-2.09%), WTI Oil at $73.08 (-2.30%)
News & Data:
- (USD) Core CPI (MoM) (Feb) Forecast 0.4%, Previous 0.4% at 18:00
- (USD) CPI (MoM) (Feb) Forecast 0.4%, Previous 0.5% at 18:00
- (USD) CPI (YoY) (Feb) Forecast 6.0%, Previous 6.4% at 18:00
- (GBP) Average Earnings Index +Bonus (Jan) Actual 5.7%, Forecast 5.7%, Previous 5.9% at 12:30
- (CAD) Manufacturing Sales (MoM) (Jan) Forecast 3.9%, Previous –1.5% at 18:00.
TECHNICAL OUTLOOK
GBPUSD
Price holds firmly above the 1.1847 intermediate support level, which must be breached to bring about a double top reversal. Also, it has dipped below the Ichi Moku cloud, indicating that this move may have more bearish implications.
The price needs to break through the first barrier at 1.2440, a multi-swing strong resistance level, to move on to the second long-tern hurdle at 1.2671.
EURUSD
Price is showing bullish divergence vs. Stochastic, indicating that there may be a further move higher, and it has begun to bounce nicely off first support. An ascending trend line that we can see suggests that the EURUSD has a little more bullish momentum.
The price must break through an intermediate resistance at the 1.0787 level to go on to the 1.1000 level, which is a swing high resistance and a significant figure.
AUDUSD
If the price were to break through our first support level at 0.6554, which coincides with the 61.8% Fibonacci retracement, the second important support level would be at 0.6383, another overlap support that corresponds with the 78.6% Fibonacci retracement.
The first resistance level, which is a strong overlap resistance, is at 0.6886, and the second resistance level, which is a multi-swing high resistance level, is at 0.7127.
It’s important to note that Stochastic is directly above a key support level, which may indicate a rebound is about to occur.
USDJPY
Price has significantly declined and is close to key overlap support at 132.69. To cause a decline to the second support, which is the most recent big swing low support at 128.08, this level must be violated.
The first resistance is an overlap resistance, a 50% Fibonacci retracement, and a 61.8% Fibonacci projection located at 138.01 in terms of resistance.
DOW JONES
Prices may drop sharply towards the 30438 level because of price breaking the first support-turned-resistance at 32487, which has caused a sort of double-top reversal. Yet, a modest swing low plus a 50% Fibonacci retracement at 31776 serves as an intermediate support level. For there to be a chance for a greater move down, this level needs to be broken.
BRENT CRUDE OIL
If the price were to reverse from this level, it might push up to our first resistance at 82.97, which is overlap resistance, and our second barrier is 86.10, which is yet another overlap resistance. Price is respecting our ascending trendline, which coincides with our first support level at 77.90.
SILVER
From our first support in 21.29, the price has neatly reversed. The price is currently testing the 50% Fibonacci retracement at 21.96, which is our first resistance level. The price might fall to our first support in 21.29 if it reversed from this resistance. In 20.50, which is overlap support, we have our second support.
22.76 is our second resistance, which is a swing-high resistance.
BITCOIN
Price is getting close to our first resistance, a multi-swing high resistance at 25208. The next significant obstacle, a major overlap resistance, and a Fibonacci retracement is at 28342, which would be reached if the price broke through that level.
The first support is located at 21505 and is an overlap support that the price recently breached. If that level were to be broken, a descent to 19567 would be suggested.
