FUNDAMENTAL REPORT FORECAST 

MARKET UPDATE:

After weak retail sales, US stocks end lower

Following the release of Retail Sales data that was far below expectations, US markets ended the trading day down on Friday. The data was not weak enough to persuade the market that the Fed won’t still hike rates at the next meeting, even though the Dow dropped 0.41%, the S&P 0.21%, and the Nasdaq shed 0.35% on the day. The dollar recovered once more, rising more than 0.5% on the day as the Euro and other major currencies fell precipitously. Due to dollar buying, gold also suffered, dropping just under 2% on the day, but it is still holding steady just above the $2,000/oz mark.

Mixed Data Keeps the FOMC’s 25 bps Option Open

The US markets received a lot of data last week, and the fact that the Retail Sales, PPI, and CPI readings were all lower than anticipated indicates that the US economy is slowing down. The employment market is still tight, industrial production is resilient, and consumer mood is strong, so the Fed believes it still has work to do to contain inflation. The market is currently pricing in an 80% possibility that another 25bps will be added at the May meeting but keep an eye on this space as earnings season really begins this week and we still have a long way to go before the May 3rd announcement.

Markets Open with a Low Note Before Another Big Week

Today’s Asian markets have had a relatively tranquil start, but investors do not anticipate that situation to endure for very long. There aren’t many macroeconomic data releases today; the only tier 1 release is the Empire State Manufacturing Index. However, the US earnings season began on Friday with some big banks exceeding expectations, and more are expected this week. State Street and Charles Schwab are the speakers today, but as the week goes on, the speakers’ names become increasingly well-known and significant.

What happened in the Asian session?

The Business NZ Services Index dropped from a reading of 55.8 the previous month to 54.4 this month. This suggests a decline in the service sector, which could harm the NZD. According to the FPI month-over-month, the inflation rate dropped from 1.5% to 0.8% from the previous month. This suggests that price growth is accelerating more slowly, which could harm the NZD.

What does it mean for the Europe & US Sessions?

In a low-data environment, the European session is anticipated to carry on the previous day’s consolidating mood. Following that, with the publication of the Empire State Manufacturing Index, the USD is anticipated to take the lead. When ECB President Lagarde speaks afterward, the EUR/USD pair is anticipated to make a notable move. The pair may move higher, towards a price of 1.1075, or lower, towards a price of 1.0900, depending on the result.

The Dollar Index (DXY)

Key news events today

Empire State Manufacturing Index

What can we expect from DXY today?

The Empire State Manufacturing Index is expected to reach a new predicted value of -17.7, up from the previous reading of -24.6. A favourable outcome might boost demand for US dollars and signal a resurgence in the manufacturing industry.  

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

Weak Bullish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

The prior release’s Business Services Index result of 55.8 showed that the service sector was expanding. The NZD may benefit if the upcoming release displays more progress. On the other hand, if the FPI m/m figure of 1.5% in the prior release is greater than anticipated, inflationary pressures may rise. The Reserve Bank of New Zealand may increase interest rates as a result, luring more investors to the NZD.  

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

Weak Bullish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

Since there are currently no significant news events affecting the JPY currency, the market movement will likely be influenced by the next data releases. On Wednesday, the revised Industrial Production m/m data is scheduled to be announced. Based on forecasts and prior data, a rate of 4.5% is anticipated. The demand for JPY may be affected if the actual data drastically differs from the projection.

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 27 April 2023 

Next 24 Hours Bias

Mixed

Global Markets:

Asian Stock Markets: Nikkei up 0.70%, Shanghai Composite up 1.42%, Hang Seng up 1.68%, ASX up 0.27%

European equities, the DAX futures up 0.14%, CAC 40 up 0.04%, FTSE up 0.51%.

US Stock Market: Dow jones down 0.42%, S&P 500 down at 0.21%, Nasdaq 100 down at 0.35%.            

Commodities: Gold at $2011.28 (+0.36%), Silver at $25.498 (+0.54%), Brent Oil at $85.90 (-0.48%), WTI Oil at $82.03 (-0.47%)

News & Data

• (CAD) Wholesale Sales (MoM) (Feb) Forecast –1.6%, Previous 2.4% at 18:00
• (EUR) ECB President Lagarde Speaks at 20:30

Technical Outlook

GBPUSD

The overall trend of the GBP/USD is now negative. This is due to the price’s present position below a significant falling trend line, which indicates that more bearish momentum is likely. Furthermore, the price may fall towards the first support level if it breaches below the ascending trend line.

The overlap support for the GBP/USD pair is at 1.2183, which is also on an ascending trend line that serves as support. If the price were to breach this level, it might fall towards the intermediate support at 1.2345, which is also an overlap support. This level has historically shown to be a solid support.

The first resistance level, which is a multi-swing high resistance, is located at 1.2530 on the resistance side. Watching for any bearish swings at this level is crucial. Additionally, there is an overlap resistance level at the intermediate resistance level of 1.2445. A larger bullish acceleration towards the first resistance could result from a price break through of this intermediate resistance level.

EURUSD

The EUR/USD chart is currently displaying general bearish momentum, which implies that the price may make a bearish continuation towards the first support level.

The overlap support at 1.0806 serves as the first support level for the EUR/USD. The price may potentially drop towards the second support at 1.0516, which is a multi-swing low support, if it were to break through this level, which has historically shown to be a solid support.

On the resistance side, the overlap resistance at 1.1184 serves as the first resistance level. Watching for any bearish swings at this level is crucial. A multi-swing high resistance level at 1.1035 serves as an additional intermediate resistance level. A sharper bearish acceleration towards the first support may start if the market were to breach this intermediate resistance level.

It’s important to remember that there is a retreat support and an intermediate support level around 1.0974. The intermediate resistance at 1.1035 may be reached if the price were to rebound from this level.

AUDUSD

The AUD/USD chart currently exhibits a generalised bearish momentum. This implies that the price may decline much further in the future, with a possible negative continuation towards the first support level.

The 0.66 overlap support serves as the first support level for the AUD/USD currency pair. This level is currently at a 61.80% Fibonacci retracement and has historically shown to be a reliable support. The second support at 0.66, a multi-swing low support, might be reached if the price were to breach this level of support.

The first resistance level, which is a pullback resistance and falls within a 38.20% Fibonacci retracement on the resistance side, is at 0.68. Price might move upward towards the following resistance level if it were to surpass this resistance level. However, a decline towards the support levels is more likely given the AUD/USD chart’s present negative trend.

USDJPY

The USD/JPY chart now displays general positive momentum. This means that the price may continue to increase and may even continue to rise in a positive manner towards the first resistance level.

The overlap support at 130.84 serves as the first level of support for the USD/JPY. The price might increase towards the first barrier at 139.45 if it were to bounce from this level, which has historically shown to be a strong support. The first resistance level, which also happens to be an overlap resistance and a 50% Fibonacci retracement, is crucial to observe for prospective bullish developments.

Price might move upward towards the second resistance, a pullback level at 145.16, if it were to overcome the first obstacle. The second support level, which is a swing low support, is located at 127.08, however if the price were to fall instead.

S&P 500

There is currently a bearish momentum seen on the US500 chart. The first resistance level, which is a powerful multi-swing high barrier level at 4145.18, has the potential to trigger a negative reaction. In addition, there is a swing high resistance at the second resistance level of 4320.83.

However, there are assistance levels to be aware of. The first support level, which is a strong overlap support level, is at 3943.02, while the second support level, which is a swing low support, is at 3757.43.

Price might move upward towards the second resistance level if it were to break through the first resistance. However, it is more likely that the price would decline towards the first support level given the general bearish momentum of the chart.

WTI CRUDE OIL

On the chart, the price of WTI has been moving upward. However, a possible short-term retracement of the price towards the first support level at 81.87, a level of strong overlap support, is possible. Price might restart its bullish momentum towards the first resistance at 92.63, which is also an overlap resistance level, if it bounces off this support.

Price might potentially go towards the second support at 72.90, another overlap support level, if it were to fall below the first support. Although a decline towards the second support is not our default case, it is important to keep it in mind.

GOLD

The XAU/USD chart is currently exhibiting positive momentum, and the price may decline in the near term towards the first support at 1997.57, which coincides with the 23.6% Fibonacci retracement level and is a strong overlap support level. The second support at 1954.78, which is also an overlap support and coincides with the 38.2% Fibonacci retracement level, might be reached if the stock breaks below this level.

The first resistance, which is a swing high resistance level, is on the resistance side and is located at 2070.59. Price might perhaps move upward towards the intermediate resistance at 2048.91, which is also a swing high resistance, if it is able to break through this level. Overall, the chart indicates that the momentum is bullish and that after a little decline towards the support levels, the price may continue to rise towards the resistance levels.

ETHEREUM

The price of ETH/USD has been trending downward on the chart, and there is a chance that this trend may continue towards the first support level, which is a pullback support level at 2038.89. The second support at 1923.52, which is likewise a pullback support and lines up with the 23.6% Fibonacci retracement level, is another level of support to consider.

The first resistance, which is a strong overlap resistance level on the resistance side, is at 2154.26. Price may move up towards the second barrier, a pullback resistance level at 2299.41, if it manages to break through this level. But given the chart’s negative trend, it is more likely that the price will keep falling in the direction of the support levels than that it will rise above the resistance ones.