MARKET UPDATE:
Global markets made a strong comeback overnight as concerns about financial contagion following the failure of SVB and Signature bank subsided as US CPI data came in as expected. The Nasdaq closed the day nicely above 2%, the S&P was up 1.68%, and the Dow was up 1.06%, all positive indicators for the American stock markets. The benchmark 10-year US note is presently hovering around 3.7%, albeit it is still significantly below last week’s highs. Foreign treasury yields have also rebounded strongly. The trading ranges for currencies remained rather narrow.
Investor attention is quickly shifting back to the FOMC meeting next week since US inflation is still a long way from being anywhere close to the Fed’s 2% target rate. Markets are already pricing in a near 80% possibility of a 25bps raise and this now appears a safe midway house for the Fed given the situation they now find themselves in, stuck between the ‘rock’ of high inflation and the ‘hard place’ of a potential financial collapse.
Investor apprehension will remain high as we look ahead to today’s trading sessions, with any sign of additional market unrest resulting in swift corrections in all markets. The real action will, once again, begin after the New York open. A tonne of Chinese data is scheduled to be released in the Asian session, as well as some tier 3 statistics in Europe. Today it is PPI and Retail Sales data in the US alongside the Empire State Manufacturing Index statistic but anticipates any new news on the banking sector to exceed this in terms of market impact.
How did the US session go?
US CPI m/m at 0.4% exceeded expectations; y/y at 6.0% was as expected but less than the prior year’s 6.4%. Core CPI increased by 0.5% (compared to a 0.4% expectation). Although most of the data are expected, there should be little influence on the Dollar, but inflation is still a major worry for the economy.
What does it mean for the Asian Session?
The rebound of risky assets is likely to be constrained by lingering worries about the risks of contagion from the American financial industry. More banks, even those outside the US, might report problems if history is any indication. In this case, it is very likely that investors will seek “safe haven” in the Swiss Franc, Japanese Yen, and gold.
Gold (XAU)
Key news events today
No major news events.
What can we expect from gold today?
The announcement of the US CPI statistics will probably have a mixed effect on gold prices. Demand for gold as a safe-haven investment might surge in response to rising inflation. Yet, given that a weaker dollar might increase demand for the precious metal from foreign investors, the minimal influence of the most recent CPI announcement on the USD may lower gold prices soon.
Next 24 Hours Bias
Mixed
Oil
Key news events today
No major news events.
What can we expect from Oil today?
The expected drop in crude oil inventories of 0.2 million barrels (down from -1.7 million) could result in an increase in oil prices if actual data release reveals a bigger drop. On the other hand, a slight reduction can have a negligible influence.
Next 24 Hours Bias
Weak Bullish
The Pound (GBP)
Key news events today
Annual Budget Release
What can we expect from GBP today?
A good economic growth and budgetary restraint indicator in the UK’s annual budget release might support GBP. A bad announcement, on the other hand, may result in more taxes or weaker growth forecasts, which would lead to a decline in the pound.
Central Bank Notes:
- MPC voted to increase Bank Rate by 0.5 percentage points to 4%
- Near-term data developments are crucial in assessing how quickly external and domestic inflationary pressures will abate
- MPC’s updated projections show CPI inflation falling back sharply from its current level
- Next meeting on 23 March 2023
Next 24 Hours Bias
Mixed
The Swiss Franc (CHF)
Key news events today
No major news events.
What can we expect from CHF today?
The CHF currency is not expected to be significantly impacted by any major news today. The previously provided PPI m/m data, with the actual data showing a negative reading of -0.2% (anticipated 0.5%, previous 0.7%), may be used to assess the price direction bias.
Central Bank Notes:
- Current policy rate is at 1.00%
- Next meeting on 23 March 2023
Next 24 Hours Bias
Weak Bearish
Global Markets:
Asian Stock Markets: Nikkei down 0.03%, Shanghai Composite up 0.69%, Hang Seng up 1.28%, ASX up 0.86%
European equities, the DAX futures down 0.36%, CAC 40 down 0.75%, FTSE down 0.60%.
US Stock Market: Dow jones up 1.06%, S&P 500 up at 1.68%, Nasdaq 100 up at 2.14%.
Commodities: Gold at $1903.15 (-0.41%), Silver at $21.81 (-1.03%), Brent Oil at $78.30 (+1.10%), WTI Oil at $72.16 (+1.16%)
News & Data:
- (USD) Core CPI m/m 0.50% vs 0.40% expected
- (USD) CPI y/y 6.00% vs 6.00% expected
- (USD) CPI m/m 0.40% vs 0.40% expected
- (CNY) Unemployment Rate 5.60% vs 5.30% expected
- (CNY) Retail Sales y/y 3.50% vs 3.50% expected
- (CAD) Manufacturing Sales m/m 4.10% vs -0.40% expected
Technical Outlook
GBPUSD
Our first support level, an overlap support level at 1.2136, has been respected by the price. Price might possibly move up to our second resistance level at 1.2360 if it were to reverse from this level.
The price may potentially drop to our second support level at 1.2045, which is another overlap support level, if it were to break through our first support level.
EURUSD
Price is currently moving towards 1.0776, our first resistance level, which corresponds with the 50% Fibonacci retracement. The second resistance level at 1.0926 may be reached by the price if it were to break through this level.
However, it’s important to note that there is a bearish divergence compared to the RSI, which points to a possible reversal. If the price were to move in the opposite direction from our first resistance level, it might fall to our first support level at 1.0693. The price may fall as low as our second support level at 1.0525 if it were to breach our first support level.
AUDUSD
Price is currently at 0.6659, which corresponds to the 61.8% Fibonacci retracement and is in our first support region. It’s important to note that the price might push up to our first barrier at 0.6779 if it were to break through the falling trendline.
The second support level, at 0.6564, would be reached if the price were to reverse from our first support, which is overlap support.
USDJPY
Price is currently targeting our intermediate resistance level at 134.56, which corresponds with the 38.2% Fibonacci retracement, after sharply reversing from our first support level at 132.26. Our second resistance level is at 137.33, and if the price were to move past this level, it might move up to our first resistance level, which corresponds to the 50% Fibonacci retracement.
There are two support levels: the first one is an overlap support level at 132.26, and the second one is a 78.6% Fibonacci retracement and overlap support level at 130.69.
DAX 40
Price has reached our first resistance level at 15245, which overlaps with the 50% Fibonacci retracement and acts as resistance. Price may potentially move up to our second resistance at 15491 and the 78.6% Fibonacci retracement if it were to break through.
Our first support level, which corresponds to the 38.2% Fibonacci retracement, is at 14923 in terms of support levels. The price might fall to our second support at 14668, which overlaps with the 50% Fibonacci retracement if it were to break below this level.
WTI CRUDE OIL
Price is currently overlapping at our first resistance level, which is 72.56. Price might move up to our second resistance level at 73.74 if it were to break through this level.
Our first support level is at 70.27, and our second support level is at 69.00.
GOLD
For now, the price is stuck between our first support and resistance levels. Price might drop to our first support at 1891, which is an overlap support level as well as the 23.6% Fibonacci retracement if it reversed from our first resistance at 1924, which is an overlapping resistance level. If the selling trend is strong, the price may decline even further to our second support at 1861, which also serves as the 50% Fibonacci retracement and another overlap support level.
Nevertheless, if the price were to surpass our first resistance level, which is a swing-high resistance level at 1959, it might be able to advance there.
ETHEREUM
Price has lately turned back from our first support level at 1676, which overlaps with the 23.6% Fibonacci retracement and serves as a support level. Price may potentially fall to our second support at 1580, which overlaps with the 50% Fibonacci retracement and serves as a support level if it were to break below this level.
