FUNDAMENTAL REPORT FORECASTÂ
MARKET UPDATE:
After First Republic news, Wall Street is almost flat while waiting for the Fed.
U.S. stocks finished Monday with little change as traders digested First Republic Bank’s (FRC.N) weekend auction and readied themselves for the Federal Reserve’s anticipated interest rate hike this week.
JPMorgan will pay the U.S. Federal Deposit Insurance Corp $10.6 billion to seize most of the assets of the local bank. After two additional regional banks failed in March, investors have been concerned about the stability of the banking system.
Market observers also absorbed the most recent economic information, which led some to speculate that the Fed could need to continue its tightening cycle for the foreseeable future. On Monday, the Institute for Supply Management (ISM) reported that its manufacturing PMI increased from March to April. On Wednesday, the Fed is anticipated to raise rates by an extra 25 basis points, continuing its policy of hiking rates to control inflation.
However, recent earnings gave investors some cause for hope, according to Ghriskey. Most S&P 500 firms’ first-quarter results exceeded expectations, allaying fears about the state of the economy.
“Our earnings have exceeded expectations. For the time being, analysts have refrained from decreasing estimates,” he remarked. “It’s very encouraging if we could have rates at this level… and corporate America continue to deliver.”
What happened in the Asia Session?
In May, the RBA shocked the markets by raising interest rates by 25 basis points to 3.85%, citing worries about high inflation and a tight job market. Although the RBA has indicated that additional policy tightening may be necessary depending on how the economy and CPI develop, the rate increase is anticipated to help stabilise inflation expectations.
What does it mean for the Europe & US Session?
The RBA’s surprise might push the Australian dollar as high as 0.6775. In contrast, as investors moved their attention to higher-yielding assets in reaction to rising interest rates, gold prices may decline towards $1,950 due to the higher opportunity cost of holding non-yielding assets. This week, rates are predicted to rise by 25 basis points at the Fed and the ECB, respectively.
The Australian Dollar (AUD)
Key news events today
Cash Rate
RBA Rate Statement
RBA Gov Lowe Speaks
What can we expect from AUD today?
The AUD will be impacted if the Cash Rate deviates from the predicted 3.60%, since higher interest rates may draw in foreign investment and boost demand for the currency. In contrast, reduced prices can result in less demand. The RBA Rate Statement offers information on the central bank’s decision-making process and economic outlook, both of which can affect. Any remarks made by RBA Governor Lowe will be keenly scrutinised for clues about the future of the institution’s policy and any prospective adjustments to interest rates.
Central Bank Notes:
- Kept the cash rate unchanged at 3.60%
- Full impact of previous interest rate hikes is yet to be felt.
- Inflation in Australia has peaked, and the central forecast is to decline this year, at around 3% in mid-2025.
- Further tightening of monetary policy may be necessary to achieve the 2 – 3% inflation targets
- Next meeting on 2 May 2023
Next 24 Hours Bias
Mixed
The Euro (EUR)
Key news events today
No major news events.
What can we expect from EUR today?
A higher CPI Flash Estimate (expected 7.0%, previous 6.9%) indicates that inflation has risen in the Eurozone, which could lead to an increase in the value of the EUR since the ECB may be perceived as continuing to raise rates. In contrast, a lower-than-expected Core CPI Flash Estimate (5.6% vs. 5.7% yesterday), could have a negative effect on the common currency.
Central Bank Notes:
- ECB raised interest rates by 50 basis points to ensure the 2% inflation target is met
- Inflation is projected to average 5.3% in 2023, with growth at 1%, and underlying price pressures remain strong
- The bank will continue to monitor market tensions closely and will be data-dependent in its policy rate decisions
- Next meeting on 4 May 2023
Next 24 Hours Bias
Mixed
The Kiwi Dollar (NZD)
Key news events today
No major news events.
What can we expect from NZD today?
No noteworthy NZD-related news is anticipated today. The next data releases, particularly the Employment Change q/q and the Unemployment Rate, are anticipated to have an impact on the direction of its price movement. It is anticipated that the Employment Change q/q would expand by 0.5%, up from the 0.2% growth rate seen in the previous quarter. The unemployment rate is anticipated to stay constant at 3.5%, which is the same as the number from the previous quarter of 3.4%.
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
Mixed
Global Markets:
Asian Stock Markets: Nikkei up 0.12%, Shanghai Composite up 1.14%, Hang Seng up 0.20%, ASX down 0.92%
European equities, the DAX futures down 0.29%, CAC 40 down 0.46%, FTSE down 0.05%.
US Stock Market: Dow jones up 0.14%, S&P 500 up at 0.04%, Nasdaq 100 down at 0.11%.
Commodities: Gold at $1985.28 (+0.16%), Silver at $24.69 (-1.03%), Brent Oil at $78.92 (-0.49%), WTI Oil at $75.25 (-0.54%)
News & Data
- (USD) JOLTs Job Opening (Mar) Forecast 9.775M, Previous 9.931M at 19:30
- (AUD) RBA Interest Rate Decision (May) Actual 3.85%, Forecast 3.60%, Previous at 3.60% at 10:00
- (AUD) RBA Rate Statement at 18:00
- (EUR) CPI (YoY) (Apr) Actual 7.0%, Forecast 7.0%, Previous 6.9% at 14:30
- (GBP) Manufacturing PMI (Apr) Actual 47.8, Forecast 46.6, Previous 47.9 at 14:00
Technical Outlook
GBPUSD
The overall bullish momentum on the GBP/USD chart is now very strong, and a positive breakout towards the second resistance level is possible.
A 50% Fibonacci retracement plus an overlap support level make up the first support level, which is located at 1.2455. A sturdy support level for the GBP/USD chart, this level has withstood numerous tests in the past.
Price might potentially fall to the second support level at 1.2346 if it were to breach the first support level. This level has historically served as a reliable support level and is also an overlap support level.
The first resistance level, which is a pullback resistance level, is located at 1.2509 on the other hand. The GBP/USD chart’s strong resistance level has withstood numerous tests at this level in the past.
Price might move up towards the second resistance level at 1.2598 if it were to break through the first resistance level. This level has historically served as a strong opposition level and is a swing high level.
EURUSD
Strong bullish momentum is currently visible on the EUR/USD chart, and there is a chance that it will continue bullishly in the direction of the first resistance level.
The first support level, which is an overlap support level, is located at 1.0959. The EUR/USD chart’s sturdy support level has withstood numerous tests at this level in the past.
Price might perhaps fall to the second support level at 1.0911 if it were to breach the first support level. This level is a strong support level for the EUR/USD chart because it is an overlap support level and corresponds with a prior swing low.
The first resistance level, on the other hand, is at 1.1070 and is a multi-swing high resistance level. The EUR/USD chart’s strong resistance level has withstood numerous tests at this level in the past. An additional factor that makes this level an even stronger resistance level is that it lines up with a 78.60% Fibonacci projection.
The price might move up towards the second resistance level at 1.1129 if it were to break through the first resistance level. A powerful resistance level for the EUR/USD chart, this level represents a swing-high resistance level and coincides with a -27% Fibonacci expansion.
AUDUSD
The AUD/USD chart is now displaying general bullish momentum, which is being fuelled by several different reasons. The price may carry on in a bullish direction towards the first resistance level.
The first support level, which is a pullback support level, is located at 0.6593.
Price might perhaps fall to the second support level at 0.6567 if it were to breach the first support level. This level, which also happens to be a 127.20% Fibonacci extension, is a multi-swing low support level.
The first resistance level, on the other hand, is around 0.6676 and is a pullback resistance level that also happens to be a 50% Fibonacci retracement. The AUD/USD chart’s strong resistance level has withstood numerous tests at this level in the past.
If the price were to break above the 1st resistance level, it could potentially rise towards the 2nd resistance level at 0.6753. This level has historically served as a strong opposition level and is a swing-high level.
USDJPY
The USD/JPY chart is currently displaying general bearish momentum, which is being fuelled by several different reasons. The price may respond negatively and drop from the first resistance level to the first support level.
The first support level, which is a pullback support level, is located at 136.76. A sturdy support level for the USD/JPY chart, this level has withstood numerous tests in the past.
Price might perhaps fall to the second support level at 135.34 if it were to breach the first support level. This level has historically served as a reliable support level and serves as a pullback support level as well.
The first resistance level, which is a swing-high resistance level and corresponds with a 78.60% Fibonacci projection, is located at 137.89. The USD/JPY chart’s strong resistance level has withstood numerous tests at this level in the past.
Price might move up toward the second resistance level at 139.55 if it were to break through the first resistance level. This level has historically served as a strong resistance level and is also a swing high level.
S&P 500
The general bias on the chart suggests that the US500 has been exhibiting a strong bullish momentum. Given that it has already surpassed earlier resistance levels, the price may advance further towards the first level of resistance.
The price is currently at the overlap support level of 4145.18, which also serves as the level of the 23.60% Fibonacci retracement. This support level indicates that buyers might enter the market, potentially causing a price increase. Price could move upward towards the first resistance at 4194.89, a swing high resistance level, if it rebounds off this level.
The second resistance level of 4228.03 may be reached if the price moves past the first resistance level. The 138.20% Fibonacci extension level that this resistance level also signals strengthens the likelihood that the price will advance towards this level.
On the downside, the second support level at 4112.96, which overlaps the first level and serves as the 50% Fibonacci retracement level, is a crucial support level to keep an eye on. If this level is broken, it may signal a bearish reversal and possible additional decline towards the first support level, which is 4145.18.
WTI CRUDE OIL
The general momentum is currently bearish on the WTI chart. This is mostly because the price is in a bearish falling channel and below the bearish Ichi Moku cloud.
When considering potential price changes, we might observe a continuation of the bearish trend in the direction of the first support level at 73.73. This level is a strong level of support because it is an overlap support and matches up with a 50% Fibonacci retracement. Price may move upward towards the first resistance level at 76.90, which is also an overlap resistance, if it bounces off this level.
The second support level at $72.07, on the other hand, is the level to which the price could fall if it were to breach the first support level.
On the other side, if the price rose past the first resistance level and reached 78.97, it might then continue to rise. Another potent level of resistance, this level is an overlap resistance that coincides with a 50% Fibonacci retracement.
SILVER
Bearish momentum is there on the silver chart, and there is a chance that it will continue in that direction approaching the first support level at 24.593.
On the chart, two significant support levels have been noted. 24.593, a multiple-swing low support, serves as the first level of support. It is wise to keep an eye out for future price bounces around this support level. The second level of support is located at 23.830 and is a multi-swing low support as well.
There are two strong resistance levels to be on the lookout for. 25.393, a multi-swing high resistance level, serves as the first level of resistance. This resistance level can serve as a useful starting point for searching for potential price reversals. Price might move up towards the second resistance level at 26.003 if it were to break through the first resistance level.
ETHEREUM
ETH/USD’s overall momentum seems to be bearish. The price is currently circling below significant resistance levels, indicating that there may still be room for more decline.
Price can make a bearish break off the first support level at 1815.10 in the near term and fall towards the second support level at 1720.37. The first support level is a multi-swing low support level, meaning it has already through several tests and may be able to offer a strong amount of support. The second support level is an overlap level that also happens to be the 50% Fibonacci retracement level, which strengthens its potential as a support zone.
To the upside, the 50% Fibonacci retracement level and the first resistance level at 1964.68 are both overlap resistance levels. The 78.6% Fibonacci retracement level and the second resistance level, which is at 2059.68, are both pullback resistance levels. Possible reversal of the current bearish trend could be indicated by a break above these resistance levels.
