MARKET UPDATE:
Markets Rise After Good Bank News
On the first trading day of the week, yesterday, international markets recovered as news of the UBS-Credit Suisse shotgun merger and the US’s NY Community Bank’s agreement to acquire Signature Bank’s deposit and loan book boosted investor confidence. The major American indices all ended the day in the green, with the Nasdaq behind at 0.4% in the black, the S&P up 0.9%, and the Dow up 1.2%. With the dollar weakening versus the major currencies and gold falling quickly from highs after topping, traders exited some of the recent haven trades that had been entered.
The dollar declines by 0.5% as optimism increases
Yesterday, traders noticed more of the silver lining around recent storm clouds of market turbulence, which caused the US dollar to fall across the board. Cable took the lead, ending the New York session up 0.87%, followed closely by the Euro, which gained 0.54%. Now that the FOMC meeting is in the spotlight, some investors believe that the Fed won’t raise interest rates this month due to the recent extreme market volatility. The FOMC meeting concludes on Wednesday. The Fed can best hedge its bets between the good American data we have seen and the potential for a rapid downturn, according to the market, which currently places a 70% chance of a 25-bps rate hike.
The Day Ahead Markets have stabilised in recent hours as investors try to process the vast amount of information that has come their way from the previous few days of trade. Today marks the beginning of Ernest’s economic data calendar as we get ready for three significant central bank statements later this week. While Australian traders will be eagerly observing the RBA’s Monetary Policy Meeting Minutes, Asian markets might see a little more respite due to Japan’s national holiday. The North American session opens as the most recent CPI data is released; 0.5% is anticipated for the m/m number. Although the European session is likewise relatively devoid of data releases, attention will momentarily shift to Canada. Nonetheless, in the current climate, anticipate any significant news regarding the banking industry to have a significantly greater impact on market movements than data.
What happened in the Asian session?
The RBA’s most recent Monetary Policy Meeting Minutes release strikes a dovish tone. Due to recent strict rules and an unclear outlook, it was stated that rates might remain steady at some point. Inflation, the labour market, and business surveys are all viewed favourably by the central bank, so any decrease in the AUD might be cushioned.
What does it mean for the Europe & US Sessions?
If the rebound rallies in risk assets persist, the AUD is the best currency to hold because it has been stable during the volatility brought on by the financial crisis in the US and Europe. The recent rally in gold towards its peak of about $2,070 in 2020–2022 may be advantageous for the commodity-linked Australian dollar.
The Australian Dollar (AUD)
Key news events today
Monetary Policy Meeting Minutes
What can we expect from AUD today?
As the release date for the RBA’s Monetary Policy Meeting Minutes approaches, volatility is expected. To combat inflation, the central bank increased the cash rate by 25 basis points to 3.60% during the most recent meeting. A hawkish stance in the minutes might strengthen the Australian dollar, while a dovish stance could push it lower.
Central Bank Notes:
- The cash rate was raised by 25 basis points to 3.60%.
- Board prioritises returning inflation to target, with a likely need for further monetary policy tightening.
- Board to closely monitor the global economy, household spending trends, inflation and labour market outlook when assessing interest rate increases.
- Next meeting on 4 April 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?
New Zealand’s trade balance was recently reported at -714 million, which is better than the anticipated result of -1450 million. The NZD may briefly appreciate because of the better-than-expected result, which may indicate that New Zealand is importing less than predicted.
Central Bank Notes:
- Monetary Policy Committee increased the OCR from 4.25% to 4.75%
- Higher interest rates are needed to reduce inflation and support employment sustainably
- Severe storms in North Island will increase inflation and disrupt production.
- Next meeting is on 5 April 2023
Next 24 Hours Bias
Weak Bullish
The Canadian Dollar (CAD)
Key news events today
No major news events.
CPI m/m
Median CPI y/y
Trimmed CPI y/y
What can we expect from CAD today?
The CPI for Canada is expected to stay at 0.5% monthly. Both the median and the adjusted CPI are predicted to decline from 5.0% to 4.8% and 5.1% to 4.9% respectively. If the prognosis comes true, it might be bad for the value of the Canadian dollar.
Central Bank Notes:
- Bank of Canada maintains its target for the overnight rate at 4.5%
- Inflation eased in January, but price increases for food and shelter remain high
- BOC is prepared to increase the policy rate further to return inflation to the 2% target.
- Next meeting on 12 April 2023
Next 24 Hours Bias
Bearish
Oil
Key news events today
No major news events.
What can we expect from Oil today?
It is anticipated that the WTI’s rebound rally, which is based on the central banks’ coordinated efforts to stop the banking crisis, will stall at a technical level of about $68.
Next 24 Hours Bias
Weak Bearish
Global Markets:
Asian Stock Markets: Nikkei down 1.42%, Shanghai Composite up 0.64%, Hang Seng up 1.36%, ASX up 0.82%
European equities, the DAX futures up 1.48%, CAC 40 up 1.58%, FTSE up 1.37%.
US Stock Market: Dow jones up 1.20%, S&P 500 up at 0.89%, Nasdaq 100 up at 0.39%.
Commodities: Gold at $1966.68 (-0.57%), Silver at $22.44 (-0.36%), Brent Oil at $74.37 (0.85%), WTI Oil at $68.47 (0.97%)
News & Data:
- (USD) Existing Home Sales Forecast 4.19M, Previous 4.00M at 19:30
- (CAD) Core CPI (MoM) (Feb) Previous 0.3% at 18:00
- (EUR) German ZEW Economic Sentiment (Mar) Actual –46.5, Forecast 17.1, Previous 28.1 at 15:30
- (AUD) RBA Meeting Minutes at 06:00
- (EUR) ECB President Lagarde Speaks at 18:00
Technical Outlook
GBPUSD
A likely bearish reaction off the first resistance level towards the first support level is indicated by the GBP/USD chart’s bearish momentum.
The first support level, which is a pullback support level at 1.2194, lines up with a 23.60% Fibonacci retracement. The second support at 1.2045, which is likewise a pullback support level and has a 50% Fibonacci retracement matching up with it, is the next support level price might approach if it were to break below this level.
However, the overlap barrier level at the first resistance level of 1.2287 may be able to stifle any bullish advances. The second resistance level, which is located at 1.2440, is a substantial swing high resistance level after that.
EURUSD
Bullish momentum can potentially continue towards the first resistance level, as seen on the EUR/USD chart.
Whereas the second support level at 1.0523 is a multi-swing low support, the first support level at 1.0694 is a strong overlap support.
However, the first resistance level at 1.0768, which also happens to be the 50% Fibonacci retracement level, is an overlap barrier. Price might move towards the second resistance level at 1.0925, which is a pullback resistance and has a 61.80% Fibonacci retracement level aligning up with it, if it is able to break through this level.
AUDUSD
The AUD/USD chart is currently showing positive momentum as price has crossed over the Ichi Moku cloud and broken above a falling resistance line. This positive trend may continue towards the first resistance level in terms of possible price movement.
0.6640 is a strong overlap support level that serves as the first level of support. The price had already bounced off the second support level, which is at 0.6569, a multi-swing low support level.
The first resistance level, which is located at 0.6782 and coincides with the 38.20% Fibonacci retracement level, is a multi-swing high resistance level, on the other hand. Price might move towards the second resistance level at 0.6876, another important overlap resistance level, if it were to break through this one.
USDJPY
The USD/JPY chart currently has positive momentum and has the potential to retrace back towards the first resistance level after rebounding from the first support level. The first support level, which is around 130.8200 and coincides with a 78.60% Fibonacci retracement, is a strong overlap support level. The following support level, which is a multi-swing low support level, is at 128.1000.
The first resistance level, which is at 132.8100, on the other hand, is a considerable overlap resistance level. Price may go towards the second resistance level at 134.5500, another significant overlap resistance level, if it is able to break through this level of resistance.
S&P 500
The price may likely extend its bullish trend towards the first resistance level, as the US500 chart now exhibits strong momentum. The first support level, which is an overlap support level, is located at 3898.08. The second support level, which is located at 3847.76 and corresponds with the 78.60% Fibonacci retracement level, is a multi-swing low support level.
To the upside, the 61.80% Fibonacci retracement level and the first resistance level at 3971.87 are both pullback barrier levels. The second resistance level, which is an overlap resistance level at 4021.21, falls at the same level as the 78.60% Fibonacci retracement.
WTI CRUDE OIL
The price of WTI is most likely to undergo a bearish response off the first resistance level and drop towards the first support based on the chart’s bearish momentum. Located at 64.90, the first support level is a swing low support, indicating that it is a powerful degree of support. At 61.82, the second support level is a multi-swing low support as well.
To the upside, the 23.60% Fibonacci retracement level and the first resistance level, both at 68.21, are overlap resistance levels. The 38.20% Fibonacci retracement level serves as the second resistance level at 70.42, which is a pullback resistance.
All things considered, it is likely that the price of WTI will face some bearish pressure, although it is still unclear if it will breach the first support level or continue a bullish trend.
SILVER
Silver prices have bullish for a while, and the silver chart’s general momentum is bullish. During this time, the price may change between the first support and first resistance level. A crucial multi-swing low support level at 21.34 serves as the first support level. Price might continue its downward trend until the intermediate support at 21.90, a pullback support level, if it were to break through this level.
Yet, the initial resistance level at 22.47 is a significant swing high barrier level that may serve to restrain any bullish advances. Price might move towards the second resistance level at 22.96, another important swing high resistance level, if it were to break through this one.
ETHEREUM
The ETH/USD chart is currently showing a bearish overall momentum, and price may react negatively off the first resistance level and fall in the direction of the first support level. The 23.60% Fibonacci retracement level and the first support level, which is an overlap support, are both at 1719.82. The 50% Fibonacci retracement level and the second support level, both of which are located at 1585.37, are overlap supports.
The first resistance level, which is at 1843.36 on the upswing, is a multi-swing high resistance. 1950.00 is a swing high resistance, which is the second resistance level.
The ETH/USD chart has been displaying a bearish momentum, which may cause the price to decline further.
