Fundamental Analysis Report With Charting Trends- 20 April 2023
20 Apr 2023
FUNDAMENTAL REPORT FORECAST
As investors analysed a mixed bag of corporate profits, including positive news from medical technology companies offset by fall in Netflix shares, the S&P 500 ended Wednesday practically flat as the Dow fell. Major equity indexes have been largely stable during the early stages of a first-quarter earnings season that investors expect to show tepid results.
“Corporate results are being seen as being in large part company-specific news versus market news,” said Art Hogan, chief market strategist at B Riley Wealth. “If that keeps us relatively calm and unchanged for now, while the sample set of reporters is still quite small, I think that’s a positive.”
Amid concerns that the economy may be headed for a downturn, investors are looking for signals in business earnings that inflation may be raising costs or harming consumer spending.
As investors drew hope from better-than-expected earnings results from several key players in the industry, Asian markets were supported by robust gains from technology stocks on Thursday. The Hang Seng in Hong Kong and the Shanghai Composite both increased by about 1%. The Nikkei 225 in Tokyo led the charge, jumping 1.5%.
The US dollar, which dropped to a two-week low versus a basket of foreign currencies, helped to drive the rise. This boosted commodities like gold and crude oil, which both increased by more than 1% on the day.
Overall, economists are optimistic about the prospects for Asian markets and believe that in the coming months, Asia will continue to outperform other global markets. Investors should, however, exercise caution as always and closely monitor domestic and international developments.
What happened in the Asian session?
Demand for NZD fell because of the CPI q/q for NZD being lower than anticipated at 1.2%. The nearby NAB Quarterly Business Confidence, which could put pressure on the AUD, was worse than anticipated at -4.
The Trade Balance was better at -1.21T and the Tertiary Industry Activity m/m for JPY was stronger than anticipated at 0.7%, which could increase demand for JPY.
What does it mean for the Europe & US Sessions?
Prior to the publication of the US Unemployment Claims, the EUR/USD pair is expected to move in a 100-pip band between 1.0900 and 1.1000.
The intraday upswing for the Loonie will probably extend towards 1.3500. Today’s BoC Governor Mackle’s hawkish stance would support the positive situation.
The Dollar Index (DXY)
Key news events today
What can we expect from DXY today?
Forecasted data suggest that the USD may not be much impacted by the imminent announcement of Unemployment Claims. The 240K anticipated value is little higher than the 239K actual value, indicating that any increase in jobless claims may only be minor.
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
The Australian Dollar (AUD)
Key news events today
RBA Gov Lowe Speaks
What can we expect from AUD today?
Investors will keenly follow any remarks made by Governor Lowe during the scheduled media briefing in Sydney discussing the economy and the RBA’s monetary policy.
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
The Kiwi Dollar (NZD)
Key news events today
What can we expect from NZD today?
According to the projected information, New Zealand’s CPI is expected to have increased by 0.1% from 1.4% to 1.5% from the previous quarter. If the prognosis holds true for the data release, the NZD may only be slightly impacted. The NZD, however, might be favourably impacted by an actual CPI q/q result that is higher than the projection, but a figure that is lower than the estimates could have the opposite effect.
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
Asian Stock Markets: Nikkei up 0.11%, Shanghai Composite down 0.09%, Hang Seng up 0.07%, ASX down 0.04%
European equities, the DAX futures down 0.71%, CAC 40 down 0.36%, FTSE down 0.17%.
US Stock Market: Dow jones down 0.23%, S&P 500 down at 0.1%, Nasdaq 100 up at 0.23%.
Commodities: Gold at $2009.65 (+0.12%), Silver at $25.31 (-0.26%), Brent Oil at $81.81 (-1.58%), WTI Oil at $77.89 (-1.70%)
News & Data
- (USD) Initial Jobless Claims Forecast 240K, Previous 239K at 18:00
- (USD) Existing Home Sales (Mar) Forecast 4.50M, Previous 4.58M at 19:30
- (EUR) ECB Publishes Account of Monetary Policy Meeting at 17:00
- (NZD) CPI (QoQ) (Q1) Actual 1.2%, Forecast 1.7%, Previous 1.4% at 04:15
- (CNY) PBoC Loan Prime Rate Actual 3.65%, Forecast 3.65%, Previous 3.65% at 06:45
The positive bias on the GBP/USD chart suggests a likely continuation in the direction of the first resistance level. Ascending support lines are being crossed by price, which is consistent with the chart’s bullish trend.
The first support level, which coincides with the 38.20% Fibonacci retracement, is at 1.2346 and is a strong overlap support level. Another overlap support level, the second support level is located at 1.2273.
The initial resistance level, on the other hand, is at 1.2541 and is a multi-swing high resistance level. It is an important level to keep an eye on because if it is broken, a strong bullish acceleration towards the intermediate resistance level at 1.2440, which is also an overlap resistance and falls on the 38.20% Fibonacci retracement, might begin.
Strong positive momentum can be seen on the EUR/USD chart, which is in an ascending bullish channel, suggesting that the uptrend may continue. This means that the price may eventually break over the first resistance level in a positive fashion and climb towards the second resistance level.
It is important to keep an eye out for the first support level, which is around 1.09 and is an overlap support that also happens to be a 50% Fibonacci retracement level. The second support level, which is a multi-swing low support and is located at 1.08, is another level of support.
However, the first resistance level, which is an overlap resistance and a 100% Fibonacci projection level, is at 1.1020. The overlap resistance level at 1.1079, which also happens to be a 38.20% Fibonacci retracement level, serves as the second resistance level.
The general momentum of the AUD/USD chart is bearish. A bearish continuation towards the first support level, which is at 0.6680, is possible. This support level, which also corresponds with the 78.60% Fibonacci projection, is a strong overlap support. The second level of support, a multi-swing low support, is located at 0.6624.
On the other hand, the initial resistance level, which overlaps with the 38.20% Fibonacci retracement level, is at 0.6785. The 50% Fibonacci retracement level and the second resistance level are both at 0.6873, which is a pullback resistance.
It’s important to note that the chart’s overall momentum is negative, which indicates that the price may continue to decline. A breach of the first support level can lead to a significant bearish acceleration in the direction of the second support level. Price may possibly move upward towards the second resistance level if it were to break through the first resistance level instead.
The general momentum of the USD/JPY chart is currently bearish. This is because a strong downward trend line, which portends probable more downside movement, is present.
The first support level in this scenario is at 133.72, which is a strong support level because it is an overlap support. The 61.80% Fibonacci projection and the second support level, which also acts as an overlap support, are both located at 132.36.
The first resistance level, on the other hand, is located at 134.73 and is a multi-swing high resistance that also happens to be the 61.80% Fibonacci retracement. The second resistance level, which acts as a pullback resistance, is located at 135.37.
Price may move in a bearish direction towards the first support level if it is unable to overcome the first resistance level. The second support level at 132.36 is where the price could fall if the first support level is broken.
The DJ30 chart’s overall momentum is optimistic, indicating that prices may increase further. The price may drop to the first support before rising back towards resistance, but the short-term momentum appears bearish.
The first support level, which is a good overlap support level, is at 33835.40. The second support level, which is a multi-swing low support and coincides with the 61.80% Fibonacci retracement, is another level of support and is located at 33551.43.
On the other side, the first resistance level, which is a multi-swing high resistance level, is located at 34378.72. The second resistance level, which is a swing high resistance, is located at 34638.72. 34135.00, a multi-swing high resistance level, serves as an intermediary resistance level.
Noting that the overall momentum is bullish, it is possible that the price will increase towards the resistance levels if the short-term decline occurs, and the price bounces off the support level. But if the price were to breach the first support, it might fall to the second support level below at 33587.40.
WTI CRUDE OIL
WTI crude oil’s overall momentum is bearish, and price movement may continue to be bearish approaching the first support level. First is the overlap support at 73.15, then comes the swing low support at 77.02.
The initial resistance level on the upward is an overlap barrier at 81.58. The second resistance level and swing high resistance is located at 84.51. Furthermore, there is a pullback barrier at 78.96, which is an intermediate resistance.
A good support level is the 38.20% Fibonacci retracement level at 77.02. Price could fall to the next support level, which is also an overlap support at 73.15, if it breaks below this level.
On the upside, traders should keep an eye on the first resistance level at 81.58. Price might move up to the second resistance level at 84.51, which is a swing high resistance, if it is able to break through this level.
Recently, the price of silver has been trending downward, and it may continue to do so until it reaches the 24.620 first support level. This support level is significant since it is an overlap support and because it is located at the 23.60% Fibonacci retracement level. The next possible support level is at 23.951, which is a multi-swing low support and is at the 38.20% Fibonacci retracement level, if prices drop below this level.
The overlap resistance at 25.349, which is at the 38.20% Fibonacci retracement level, is the first resistance level on the upswing. The next possible resistance level is at 26.079, which is a pullback resistance and is at the 78.60% Fibonacci retracement level, if prices can break above this resistance level.
The momentum of the chart is generally neutral for silver. Trading participants should monitor the support levels if prices do really continue to decline. However, if prices can go past the resistance levels, this may signal a change in momentum from bearish to positive.
Overall, the LTC/USD pair is displaying a bearish movement. Between the first resistance and first support levels, the price could change. The first support level, which is a pullback support, is situated at 88.679, and the second support level, which is likewise a pullback support, is situated at 81.177. While the first resistance level is situated at 94.932 and is multi-swing high support, the initial resistance level is situated at 101.809 and is a multi-swing high resistance.