FUNDAMENTAL REPORT FORECAST 

MARKET UPDATE:

Growing optimism about a debt ceiling agreement lift stocks

U.S. stocks increased for a second day in a row on Thursday as hopes that a compromise on raising the country’s debt ceiling were growing. Discount retailer Walmart Inc., which had just released a positive annual sales outlook, added to the confidence.

President Joe Biden and McCarthy agreed to speak as soon as this Sunday and emphasised their desire to reach a quick agreement to raise the $31.4 trillion federal debt ceiling on Wednesday.

According to Anthony , chief market strategist at Ameriprise Financial in Troy, Michigan, “today and yesterday it’s really been about some easing pressure from the debt ceiling. McCarthy again came out expressing some optimism a deal could be formed by the end of the week, House could vote on a bill the following week.”

According to economic data, fewer Americans than anticipated filed new claims for unemployment benefits last week, indicating that the labour market is still tight and allowing the Fed more room to keep hiking rates.

Recent figures show that the U.S. economy has slowed down somewhat because of the Fed raising interest rates repeatedly to combat excessive inflation. Nevertheless, even though the market has priced in a rate decrease for the end of the year, Fed officials’ statements signalled they are not yet prepared to cut or even suspend raising rates soon.

What happened in the Asian Session?

Japan’s National Core CPI y/y remained at 3.4%, maintaining inflation at a moderate level and matching expectations. In contrast to the expected growth of 0.3% and the prior growth of 1.7%, the Tertiary Industry Activity m/m saw a fall of -1.7%. The Japanese Yen was not significantly impacted by the CPI statistics, but could depreciate because of the unexpected decline in industrial output.

What does it mean for Europe & US Session?

The DXY is starting to trend upward for a fourth day, but consolidation at 103.50, an intermediate barrier, is there. If this technical retracement occurs, the US Dollar Index might fall as low as 103.00, while a less aggressive tone from Fed chair Powell’s speech might cause a deeper loss to 102.50.

The Kiwi Dollar (NZD)

Key news events today

Annual Budget Release

What can we expect from NZD today?

The trade balance statistics from the past showed a deficit of $1,273 million, which was a little bit higher than the predicted deficit of $1,310 million. The New Zealand dollar may appreciate if the next data indicate an improvement and the deficit decreases. However, the NZD may suffer if the figures show a wider shortfall or no improvement.  

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 bearish

The Euro (EUR)

Key news events today

No major news events.

What can we expect from EUR today?

The PPI m/m figures for Germany will soon be released, and a 0.5% decline is predicted. A deflationary tendency in producer prices is highlighted by the prior release’s negative PPI figure of -2.6%. If the predicted decline materialises as predicted and the data match, the EUR may weaken, suggesting decreased pricing power for German companies and posing questions about the prognosis for the nation’s economy.

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 Bearish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

According to the projected data, retail sales will decrease by 1.3% and core retail sales by 0.8%. According to earlier figures, Core Retail Sales and Retail Sales both decreased by 0.7% and 0.2%, respectively. These numbers point to a decline in retail sales, which might make the Canadian dollar less strong relative to other currencies.

Central Bank Notes:

• Bank of Canada holds its target for the overnight rate at 4.5%
• Labour markets remain tight with persistent price pressures, especially for services
• Economic growth in Q1 looks to be stronger than projected; to be weak through the remainder of this year before strengthening gradually next year
• Prepared to increase the policy rate further to return inflation to the 2% target.
• Next meeting on 7 June 2023

Next 24 Hours Bias

Weak Bearish

Global Markets:

Asian Stock Markets: Nikkei up 0.77%, Shanghai Composite down 0.42%, Hang Seng down 1.40%, ASX up 0.59%

European equities, the DAX futures up 0.58%, CAC 40 up 0.58%, FTSE up 0.39%.

US Stock Market: Dow jones up 0.34%, S&P 500 up at 0.94%, Nasdaq 100 up at 1.51%.   

Commodities: Gold at $1965.24 (+0.39%), Silver at $23.69 (+0.83%), Brent Oil at $76.19 (+0.46%), WTI Oil at $72.11 (+0.35%)

News & Data

• (JPY) National Core CPI (YoY) (Apr) Actual 3.4%, Forecast 3.4%, Previous 3.1% at 05:00
• (CAD) Core Retail Sales (MoM) (Mar) Forecast –0.8%, Previous –0.7% at 18:00
• (CAD) Retail Sales (MoM) (Mar) Forecast –1.4%, Previous –0.2% at 18:00
• (USD) Fed Chair Powell Speaks at 20:30
• (NZD) Trade Balance (MoM) (Apr) Actual 427M, Forecast –235M, Previous –1,273M at 04:15

Technical Outlook

GBPUSD

The price is below a significant declining trend line on the GBP/USD chart, indicating a likely continuation of the bearish trend.

The first support level may be approached by the price in the future. 1.2350 is where the first support is situated.

At 1.2395, which is also a multi-swing low support, is the intermediate support, which indicates its potential power in preventing the price from dropping any more.

1.2448 is where the first resistance is situated. This retreat resistance may serve as a ceiling on price growth and encourage selling.

The second resistance is located at 1.2503 above. If the price tries to rise, these swings high resistance level could act as a substantial roadblock.

EURUSD

The EUR/USD chart’s current momentum is marginally bearish but not strongly so. A negative falling channel in which the price is moving suggests the possibility of additional downward movement.

The overlap support level and 61.8% Fibonacci retracement level are both present at the first support level, which is marked at 1.0746.

The second support is located at 1.0689 farther below. This pullback support may provide an additional layer of defence against further decline. This level might serve as a backup support if the price breaks through the first support.

1.0792 is where the first resistance is situated. This overlap resistance may restrict upward price movement and draw selling attention.

The second resistance is located above that at 1.0845. Another overlap resistance exists here that could pose a serious obstacle to any bullish trend.

AUDUSD

Recently, there has been a clear bearish momentum in the AUD/USD pair. Based on the examination of the chart, we believe that a bearish reaction off the first resistance could result in a down to the first support level.

If the decline becomes steeper, intermediate support at 0.6606 can be our target.

If the price were to move back up, however, we have noted the initial barrier at 0.6640. This level has previously served as overlap support, indicating that it might now provide resistance to a rising price.

The next obstacle would be at the second resistance level of 0.6668, should the price succeed in breaking through the first barrier. It is expected that this level, which is a multi-swing high resistance, will provide a significant barrier to additional price increases.

USDJPY

The USD/JPY pair demonstrates a strong overall positive momentum. The price’s current position above a major ascending trend line is one of the important elements fostering this momentum. This means that bullish momentum may continue to increase.

The first support level to pay attention to when looking downward is at 137.75. This level has been designated as a support for pullbacks, indicating that it might stay steady against a future price decline.

The first support level to watch is at 137.75 when looking downward. As a pullback support, this level has been identified as having the potential to hold steadfastly against a prospective price decline.

The next key support level, if the price were to fall any more, would be at 136.25.

On the other hand, if the price maintains its upward trend, 139.40 represents the first big resistance to be aware of.

Trading participants may be predicting a rise in price from the support level to the resistance level given the current positive momentum.

S&P 500

A positive momentum may be seen on the US500 chart. The price’s position above a significant ascending trend line, which suggests a likely continuation of this bullish trend, is the main driver of this momentum.

The first level of support is now at 4167. This level functions as a support for pullbacks and provides a solid base to withstand possible bearish retracements.

The second support level, sometimes known as overlap support, is located below that at 4112. This can act as an extra safeguard against unexpected price drops.

The first resistance level on the upswing is located at 4218. It’s possible that this swing high resistance may serve as a ceiling for subsequent positive gains.

Furthermore, the second resistance level, which is also a swing high, is located at 4257 and may provide extra barrier to bullish advances.

WTI CRUDE OIL

We can see a strong momentum on the WTI chart. The price’s break over a declining resistance line, which could lead to a bullish advance, is a significant feature in this upward trend.

The first support level, which is regarded as an overlap support, is set at 71.28.

At 69.08, the second support level—another overlap support—is located further down. This level signals a further area where buyers might swarm in large numbers to stop a further slide in price.

The first resistance level is located at 73.60 on the side of resistance.

At 76.65, the second resistance level is located further higher. Further bullish momentum may encounter resistance at this level, which also acts as overlap resistance.

The intermediate resistance is located at 73.22, which is halfway between the two main resistance levels. The price may encounter some brief resistance when moving upward due to this multi-swing high resistance.

GOLD

A bearish momentum may be seen on the XAU/USD chart. Price positioning below a significant falling trend line signals the presence of bearish momentum, which may eventually cause additional collapse.

1930.37 is the first support level, which is categorised as an overlap support.

The intermediate support level at 1949.84, known as a multi-swing low support, is located above this.

The 1974.49 level, which is regarded as a pullback resistance, is the first resistance level in terms of resistance. The price may find it difficult to get beyond this level given its current direction.

The second resistance level, often known as a pullback resistance, is found higher up at 2005.64. Any potential short-term bullish attempts may be further hampered by this level.

ETHEREUM

We are now seeing a neutral trend on the ETH/USD chart. The price has been fluctuating without a distinct direction and may move between the first resistance and first support level at some point, signalling a period of market uncertainty.

The first support level, which acts as a multi-swing low support, is indicated at 1787.52.

Below this, an overlap support is provided by the second support level at 1736.96. It is yet another crucial mark that might stop additional price drops.

The first resistance level, on the other hand, is at 1834.46. Any immediate bullish rise may have a ceiling because to this overlap resistance.

At 1877.80, the second resistance level is a little higher. As a 50% Fibonacci retracement level and an overlap resistance, it stands out as a potential location where the price may have trouble breaking through.