FUNDAMENTAL REPORT FORECAST
MARKET UPDATE:
Major U.S. stock indices declined at the close of trading on Thursday as investors sought clarification on the direction of interest rates in the wake of poor quarterly results from businesses like Tesla and AT&T.
The first-quarter earnings season, which investors anticipate showing mediocre results, is expected to put a strain on the S&P 500’s surge to start the year. According to Refinitiv statistics, analysts have so far mainly maintained their predictions from last week, which called for a close to 5% decline in quarterly profits at S&P 500 businesses.
Investors are evaluating the future of interest rates, and many anticipate that the Federal Reserve will start lowering rates later this year as it balances its fight against inflation. This prediction is based on a slowing U.S. economy. According to data, the number of Americans requesting new unemployment benefits grew slightly last week, indicating a weakening of the labour market.
Prior to the Fed’s meeting early next month, when investors widely anticipate a 25-basis point raise, the markets were focused on a slew of Fed officials speaking at the end of the week.
What happened in the Asian session?
Australia’s Flash Manufacturing PMI registered at 48.1, down from the previous reading of 49.1. The Flash Services PMI of 52.6 beats the expected reading of 48.6. As a result, the AUD/USD pair fell approaching the pivotal support of 0.6690.
The most recent GfK Consumer Confidence score for the UK is -30, which is lower than the predicted -35 and the prior data of -36. Any possible impact was, however, mitigated by the USD’s strength and the Fed’s generally hawkish tone this week.
Japan’s National Core CPI y/y has remained constant at 3.1%, matching the expected value of 3.0%. A contraction in the manufacturing sector is indicated by the fact that the Flash Manufacturing PMI has dropped to 49.2 from the expected value of 49.9 and the value of 49.5 from the previous period. Despite this trend, the USD/JPY exchange rate remains in the hunt for gains.
What does it mean for the Europe & US Sessions?
The Euro and Cable will only leave their respective consolidative ranges of 1.0920-80 and 1.2400-70 if there is a surprise in the Flash Manufacturing PMI and Flash Services PMI of the Eurozone, the UK, and the US.
The Euro (EUR)
Key news events today
German Flash Manufacturing PMI
German Flash Services PMI
What can we expect from EUR today?
Given the small changes in the projected PMI values, the impact of the upcoming Eurozone data releases may be rather muted. The Euro is anticipated to benefit from the German Flash Manufacturing PMI data, which is predicted to improve from 44.7 to 45.6. The Euro may suffer because of the German Flash Services PMI data, which is expected to fall from 53.7 to 53.2.
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 Pound (GBP)
Key news events today
Flash Manufacturing PMI
Flash Services PMI
What can we expect from GBP today?
The UK’s future data releases could have a mixed-to-bullish effect. Flash Manufacturing PMI for GBP is expected to come out at 48.8, which is a little bit higher than the previous figure of 47.9. A higher reading might result in a rise in the value of the GBP, whereas a lower reading might result in a fall. It’s anticipated that the Flash Services PMI will stay at 52.9.
Central Bank Notes:
- The BoE’s MPC increased the Bank Rate by 25bps to 4.25%, with a majority of 7-2 in favor of the hike.
- The UK banking system is judged to be robust and resilient.
- CPI inflation increased unexpectedly but is expected to fall sharply over the rest of the year due to lower energy prices.
- The MPC will continue to monitor inflationary pressures and adjust Bank Rate as necessary.
- Next meeting is on 11 May 2023
Next 24 Hours Bias
Mixed-to-bullish
The Swiss Franc (CHF)
Key news events today
No major news events.
What can we expect from CHF today?
Today, there is no major news event from Switzerland, so the price direction will likely draw from the previously released statement by the SNB’s Schlegel. He commented on the possibility of further interest rate hikes to control Swiss inflation, which he considers high compared to international standards.
Central Bank Notes:
- Raised policy rate to 1.5% to counter inflationary pressure and ensure price stability. The SNB may need to raise the policy rate further in the future
- The SNB is providing liquidity assistance to Credit Suisse, and the crisis has been halted
- The new inflation forecast assumes a policy rate of 1.5% and puts average annual inflation at 2.6% for 2023 and 2.0% for 2024 and 2025.
- Mortgage and real estate market vulnerabilities persist
- Next meeting is on 22 June 2023
Next 24 Hours Bias
Weak Bullish
Global Markets:
Asian Stock Markets: Nikkei is down 0.33%, Shanghai Composite is down 1.95%, Hang Seng is up 0.07%, ASX is down 0.04%
European equities, the DAX futures down 0.26%, CAC 40 up 0.02%, and FTSE up 0.10%.
US Stock Market: Dow Jones is down 0.33%, S&P 500 is down at 0.60%, and Nasdaq 100 is down 0.33%.
Commodities: Gold at $1987.16 (-0.82%), Silver at $25.13 (-0.05%), Brent Oil at $81.81 (-1.58%), WTI Oil at $77.89 (-1.70%)
News & Data
- (GBP) Retail Sales (MoM) (Mar) Actual –0.9%, Forecast –0.5%, Previous 1.2% at 11:30
- (GBP) Manufacturing PMI Actual 46.6, Forecast 48.5, Previous 47.9 at 14:00
- (CAD) Core Retail Sales (MoM) (Feb) Forecast –0.1%, previous 0.9% at 18:00
- (EUR) Manufacturing PMI (Apr) Actual 45.5, Forecast 48.0, Previous 47.3 at 13:30
- (EUR) ECB`s Elderson Speaks at 20:00
Technical Outlook
GBPUSD
Given that price is above a significant ascending trend line and on an ascending trend line that serves as support, the GBP/USD chart is generally exhibiting strong bullish momentum. This means that the positive trend will probably continue.
Price may break past the first level in a positive manner, moving up towards the second obstacle.
The first support, which is an overlap support and lines up with a 23.6% Fibonacci retracement, is at 1.2346 on the support side. If the price were to rise from this point, it might serve as a solid support. The second support, which is likewise an overlap support and lines up with a 38.2% Fibonacci retracement, is at 1.2273.
The first resistance on the resistance side is at 1.2471, which is a high resistance level with several swings. Price may move higher towards the second barrier at 1.2542 if it is able to cross over this level. This level, which coincides with the 78.6% Fibonacci projection, is a swing-high resistance.
EURUSD
The EUR/USD chart is currently within an ascending bullish channel, indicating that price may continue to rise because of its bullish momentum.
When examining the levels of support and resistance, the first support, which is an overlap support that coincides with a 61.80% Fibonacci retracement, is at 1.0910. This level has previously shown to be sturdy and may serve as price support. Price might go towards the swing low support at 1.0831, which serves as the second support, if it were to fall below this level.
The overlap resistance and first resistance level on the resistance side are at 1.0976 and 38.20% Fibonacci retracement, respectively. The second resistance level at 1.1071, which is also an overlap barrier and corresponds with a 61.80% Fibonacci projection, might be reached by the price if it were to breach this resistance level.
AUDUSD
Strong bearish momentum is currently seen on the AUD/USD chart. Price is below the main declining trend line, indicating that the bearish trend can continue.
The price may fall farther to the downside towards the first support level around 0.6680. This level is an excellent contender for a potential bounce because it is a strong overlap support and matches up with the 78.60% Fibonacci projection. The second support at 0.6624, which is a multi-swing low support, would be the next level of support if the price were to drop below this one.
On the other hand, if price were to move in the other direction from the first support, it might climb to the first resistance at 0.6785. This level acts as a resistance during pullbacks and lines up with the 38.20% Fibonacci retracement. The second resistance level, which is a pullback resistance and coincides with the 50% Fibonacci retracement, is at 0.6873, and it is the level to watch out for if price were to break above the first obstacle.
USDJPY
Strong bullish momentum is currently seen on the USD/JPY chart. Prices can advance in the direction of the first resistance level at 134.73 after bouncing off the first support level at 133.72.
The first support level, which overlaps with the present price and denotes a high amount of purchasing interest, is a support level. The relevance of the second support level as a support level is further increased by the fact that it is a multi-swing low support that is aligned with the 61.80% Fibonacci projection.
On the resistance side, the first resistance level, which coincides with the 61.80% Fibonacci retracement, is a multi-swing high resistance. This resistance level is anticipated to present a considerable obstacle to price growth. The second resistance level is a pullback resistance that can also prevent the positive momentum from continuing.
S&P 500
As it tries to hold onto its position above significant support levels, the US500 index has been exhibiting bearish momentum. Traders may expect a decline towards the second support level at 4060.83 if the price breaks below the first support level at 4118.57.
The US500 chart’s overall momentum is negative, and prices are having difficulty holding onto support levels. The first level of support has an overlap and a 50% Fibonacci retracement. However, the second support level is also an overlap support, adding to the proof that a strong support zone exists.
The first resistance level, which denotes a multi-swing high resistance level, is currently at 4174.31 in terms of resistance. The chart’s bearish momentum is further confirmed by the second resistance level at 4206.16, which also serves as a swing high resistance.
Traders may expect a breakdown of important support levels, which might result in a decline towards the next level of support, if the negative trend persists. A bullish trend, on the other hand, could develop if the index is able to hold its position above the support and resistance lines.
WTI CRUDE OIL
WTI’s general momentum is upward. It is anticipated that the price will move upward off the first support level and towards the first resistance level.
The initial level of support is a swing low support and is located at 77.05. It is also a key level to watch because it is located at the 38.20% Fibonacci retracement level. The second support level is at 73.22, and it is a pullback support level.
The initial resistance level on the resistance side is an overlap resistance level, located at 81.55. It is anticipated to be a significant level of resistance that may serve to halt the price’s upward trend. The second resistance level, which is a swing high resistance level, is located at 84.47.
In addition to the levels mentioned above, a pullback resistance level at 78.96 is an intermediate resistance level. Before the price reaches the first resistance level, this level could serve as a slight obstacle.
GOLD
On the chart, gold prices are currently moving in a bearish direction. The overlap support level at 1982.69, which serves as the first support level, may be approached by the price as it continues its downward path. The second support at 1951.41, which is a multi-swing low support level and coincides with the 161.80% Fibonacci Extension level, will act as support if the price breaks below this level of support.
On the other hand, the initial resistance level, which is also an overlap resistance level, is situated at 2013.97. Price could move upward towards the second resistance level at 2033.52 if it can break through this resistance level. This resistance level lines up with the 61.80% Fibonacci projection and a pullback barrier level.
BITCOIN
With a likely continuation towards the first support level around 27504, the Bitcoin/USD pair is currently displaying bearish momentum.
The first level of support is a retreat level, while the second level of support, at 26534, is an overlap level of support that also corresponds to the 38.20% Fibonacci retracement level. As prices continue to fall, these levels are anticipated to provide as support.
While the second resistance level at 30414 is an overlap resistance level, the first resistance level at 28777 is a pullback resistance level. It is anticipated that prices moving upward will encounter severe resistance at these resistance levels.
