FUNDAMENTAL REPORT FORECAST
MARKET UPDATE:
Prior to inflation statistics, Wall Street closes about flat.
As investors turn their attention to a crucial inflation data later this week, U.S. stocks took a break on Monday following a robust gain in the previous session.
While Tyson Foods and Catalent reported poor profits and regional banks experienced a brief uptick, equities struggled to find direction for most of the day.
The need for a more defined course of action follows a rise on Friday when U.S. jobs data showed a strong labour market.
“Whenever you have a big up day, people need more good news to keep the market up every day in a row,” explained Anson Funds portfolio manager Moez Kassam.
The consumer price index (CPI), which is estimated to have increased 0.4% in April after increasing 0.1% in March, will be the focus of this week’s attention when the Labour Department releases its inflation report on Wednesday. This week’s data on producer prices, weekly claims for unemployment benefits, and consumer sentiment are all scheduled.
According to Michael James, managing director of stock trading at Wedbush Securities, “the bigger picture is that inflation will remain higher for longer and that we are entering a recession.”
Whether that’s hard or soft is still up for debate, but the market will remain mostly range-bound until something comes along to refute that larger argument.
What happened in the Asia Session?
Following the publication of Retail Sales m/m data, the Australian dollar maintained its stability with an actual result of 0.4% that was consistent with estimates and prior data. While China’s trade sector is functioning better than anticipated, the CNY Trade Balance data indicated a huge increase in the precise amount of 618B compared to the estimated 500B and the preceding 601B. Due to China and Australia’s tight trading ties, this data release can have a favourable effect on the AUD.
What does it mean for the Europe & US Session?
Earlier in the Asia session, the USD’s technical recovery was unable to be sustained. The GBP and EUR each versus the USD, the in-play currencies for the European session, may revisit the most recent intra-day highs made around 1.2670 and 1.1050, respectively.
The Australian Dollar (AUD)
Key news events today
No major news events.
What can we expect from AUD today?
The New Loans and M2 Money Supply y/y figures for CNY which will be released soon, could influence the AUD. China is expected to issue 1400 billion in new loans during the current term, compared to 3890 billion during the previous one. The AUD could suffer if the actual data doesn’t match the forecast. However, the predicted M2 Money Supply y/y for the present period is 12.5%, which is a little lower than the predicted 12.7% for the prior period. The AUD may benefit if the actual data release results are as anticipated or higher.
Central Bank Notes:
- The Official Cash Rate was increased by 25 basis points to 3.85%.
- Inflation in Australia has passed its peak but remains high at 7%, and it may take some time to return to the target range.
- GDP is forecast to increase by 1.25% this year and around 2% over the year to mid-2025.
- Next meeting on 6 June 2023
Next 24 Hours Bias
Mixed
The Japanese Yen (JPY)
Key news events today
No major news events.
What can we expect from JPY today?
Japan’s predicted leading indicators are now expected to be 97.9%, which is a little lower than the previous estimate of 98.0%. Although the leading indicators are crucial for forecasting economic trends, it is doubtful that the JPY would be considerably impacted by the modest change in anticipated value.
Central Bank Notes:
- The bank will continue with QQE with Yield Curve Control to achieve the price stability target of 2%
- Japan’s economy is expected to recover gradually
- The bank will not hesitate to take additional easing measures if necessary
- Next meeting is on 15 June 2023
Next 24 Hours Bias
Mixed
The Pound (GBP)
Key news events today
No major news events.
What can we expect from GBP today?
Future UK data releases include the Halifax House Price Index month-over-month projection of 0.2%, which is lower than the previous reading of 0.8%, and the BRC Retail Sales Monitor year-over-year forecast of 4.7%, which is somewhat lower than the previous reading of 4.9%. A lower-than-expected home price index may also signify a potential downturn in the property market, encouraging investors to steer clear of the currency, while worse retail sales can suggest a weaker economy, thus producing a decline in the value of the GBP.
Central Bank Notes:
- The BoE’s MPC increased the Bank Rate by 25bps to 4.25%, with a majority of 7-2 in favour 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 on 11 May 2023
Next 24 Hours Bias
Mixed
Global Markets:
Asian Stock Markets: Nikkei up 1.01%, Shanghai Composite down 1.10%, Hang Seng down 2.12%, ASX down 0.17%
European equities, the DAX futures down 0.29%, CAC 40 down 0.89%, FTSE down 0.46%.
US Stock Market: Dow jones down 0.17%, S&P 500 up at 0.05%, Nasdaq 100 up at 0.18%.
Commodities: Gold at $2030.01 (+0.47%), Silver at $25.55 (+0.13%), Brent Oil at $76.41 (-0.78%), WTI Oil at $72.56 (-0.85%)
News & Data
- (USD) EIA Short-Term Energy Outlook at 21:30
- (JPY) Household Spending (MoM) (Mar) Actual –0.8%, Forecast 1.5%, Previous –2.4% at 05:00
- (AUD) Retail Sales (MoM) Actual 0.4%, Forecast 0.4%, Previous 0.2% at 07:00
Technical Outlook
GBPUSD
The GBP/USD currency pair. The chart’s overall momentum is still bearish, and a bearish continuation in that direction towards the first support level is possible.
The first support level, which is an overlap support level, is located at 1.2541. This indicates a convergence of variables that could result in this level becoming a strong support level, such as a former resistance level that is now operating as a support level. This level also falls at the 50% Fibonacci retracement level, perhaps making it an even more potent support level.
The second support level, which is a multi-swing low support level, is located at 1.2439. If price were to decline further, it might find support at this level as well because it has historically served as a solid support level.
On the resistance side, the first resistance level, which is a multi-swing high resistance level, is located at 1.2652. If price were to advance towards this level, it might encounter resistance because in the past it has served as a powerful level of resistance.
EURUSD
The EUR/USD currency pair. Due to the potential for a price break below the ascending trend line, which could send the price falling below the first support level, the overall momentum of the chart is currently bearish.
The first support level, which is a multi-swing low support level, is located at 1.0941. This shows that price has already rebounded off this level, and if price were to fall towards it, it might do so again as a support level.
The multi-swing low support level and intermediate support level are both located at 1.0968. If price were to decline further, it might find support at this level as well because it has historically served as a solid support level.
On the side of resistance, the first resistance level, an overlap level, is at 1.1054. This indicates a convergence of variables that could result in this level being a strong resistance level, such as a former support level that is now operating as a resistance level.
The second resistance level, which is a multi-swing high resistance level, is located at 1.1093. If price were to advance towards this level, it might encounter resistance because in the past it has served as a powerful level of resistance.
AUDUSD
The price is currently above a significant ascending trend line, indicating further upward potential, and the AUD/USD chart’s overall momentum is currently bullish. But soon, there can be a decline into the first support level followed by a possible rebound towards the first resistance.
The initial level of support is at 0.6749, which also happens to be an overlap support level and a 23.60% Fibonacci retracement. Another overlap support level at 0.6703, which also corresponds to a 38.20% Fibonacci retracement, serves as the second support level.
The initial resistance level on the upside is at 0.6793, a multi-swing strong resistance level. The second barrier is an overlap barrier at 0.6822, which also happens to be a 127.20% Fibonacci extension.
USDJPY
The USD/JPY exchange rate. Due to the price being above a significant ascending trend line, the chart’s overall momentum is bullish, and this signals that further bullish momentum may be forthcoming.
A bullish breakthrough of the first resistance level and a surge towards the second resistance level are possible.
The first support level, which is a multi-swing low support level, is located at 133.53. This indicates that price has already bounced off this level several times, and it may do so again in the future, acting as a strong support level.
The first resistance level, which is an overlap resistance level, is located at 135.27. This indicates that several things are coming together, such as the fact that a former support level is now working as a resistance level, and this might turn this level into a powerful resistance level.
At 136.75, there is a second resistance level that overlaps the first one. This indicates a convergence of variables that could result in this level being a strong resistance level, such as a former support level that is now operating as a resistance level.
S&P 500
The US500 chart’s overall momentum is optimistic. Price movement is anticipated to remain bullish as it approaches the first resistance level.
The first support level, which is an overlap support, is located at 4061.62. The second level of support is a pullback support, located at 4007.26. These levels may serve as pillars of support from which the price may retrace.
The first resistance level, which is a multi-swing high resistance, is located at 4191.60. This level can serve as a point of resistance where the price might turn around. At 4151.43, which is an overlap resistance level and the level of the 78.60% Fibonacci retracement, there is an intermediate resistance level.
WTI CRUDE OIL
The recent upward trend in crude oil prices is anticipated to continue for several reasons. The chart’s general momentum is optimistic; therefore, we may anticipate further price increases.
The first support level, which is an overlap support level, comes at $71.11 when looking at the support and resistance levels. This indicates that this level has previously undergone testing and maintained support. At $66.56, the second support level—also an overlap support level—is available.
The first resistance level, which is a pullback resistance level and correlates to the 50% Fibonacci retracement level, is located at $74.01, on the other hand. It is anticipated that at first, this level will act as resistance. The 61.80% Fibonacci retracement level and the second resistance level are both at $76.76, which is an overlap resistance level. If the price can go past the initial resistance level, this level is anticipated to be the next destination.
SILVER
The Silver chart indicates that the recent bearish trend and is likely to remain for the foreseeable future. Prices are more likely to decline than rise because the chart’s overall trend is bearish. In fact, pricing may decide to continue falling in the direction of the first support.
A 38.20% Fibonacci retracement and a strong overlap support are present at the first support level, which is located at 25.199. Price might fall to the second support, which is also an overlap support, at 24.494 if it were to dip below this support level.
On the other side, the first resistance is located at 26.089 and is a high resistance level with several swings. The next resistance level at 26.682 might be reached by the price if it were to break through this one.
Bearish divergence vs price is also being seen by the RSI indicator, indicating that a reversal may be on the horizon. The possibility of a bearish continuation towards the first support is increased by this.
BITCOIN
The price of bitcoin is currently above a significant ascending trend line on the BTC/USD chart, displaying a strong bullish momentum. This means that there may be further upside potential in the immediate future.
Price may move in a positive direction soon towards the first resistance level at 27704 and the second resistance level at 28718.
On the negative side, there are two significant support levels to be wary of. The initial support level, a multi-swing low support, is at 26957. The second support level, which is also multi-swing low support, is located at 26317.
The 38.20% retracement level, which is the first resistance level according to the Fibonacci retracement levels, increases its significance as a crucial level to be on the lookout for. The second resistance level, which is a swing-high resistance level, is located at the 50% retracement level.
