Next 24 hours: ECB decision takes on added significance
Today’s report: Market tries to stabilize into Thursday risk
There’s been a lot of fear and panic in markets this week, with many investors worrying about vulnerabilities in the banking system. We’ve since seen interest rate expectations come off as a result, and yet, stocks continue to struggle.
- policy decision
- UK budget
- Fed repricing
- Aussie employment
- oil weakness
- soft GDP
- Inflation headache
- Dealers report
Peformance chart: 30 Day Performance vs. US dollar (%)
- Move Along, There’s No Crisis to See Here, J. Authers, Bloomberg (March 15, 2023)
- The US Banking System Is Still Fragile, R. Wigglesworth, FT Alphaville (March 15, 2023)
Chart talk: Technical & fundamental highlights
EURUSD – technical overviewThe Euro is in the throes of a correction following a run to the topside through 1.1000 earlier this year. Any additional setbacks should be well supported ahead of 1.0300 in favor of the formation of the next major higher low and a bullish continuation. Ultimately, only a monthly close back below parity would give reason for concern.
EURUSD – fundamental overviewThe Euro came off hard on Wednesday on banking concerns in Europe and trimmed back rate hike expectations ahead of today's policy decision. Key standouts on today’s calendar come from US building permits, housing starts, import prices, initial jobless claims, the Philly Fed, and ECB policy decision.
EURUSD - Technical charts in detail
GBPUSD – technical overviewSigns have emerged of the market wanting to put in a longer-term base after collapsing to a record low in September 2022. The recent weekly close back above the September high at 1.1739 strengthens this prospect. Any setbacks should now be well supported ahead of 1.1500. Next key resistance comes in at 1.2668.
GBPUSD – fundamental overviewThe Pound sold off on Wednesday on the back of broad based US Dollar demand. However, it did hold up better than peers getting help from a more upbeat picture around the UK budget. Hunt said the UK would avoid recession. Key standouts on today’s calendar come from US building permits, housing starts, import prices, initial jobless claims, the Philly Fed, and ECB policy decision.
USDJPY – technical overviewThe major pair has seen a nice recovery following the massive correction out from multi-year highs. Setbacks have finally been well supported ahead of 125.00 in the 127s thus far. At this stage, it looks like the market could be wanting to resume the bigger picture uptrend and head back towards a retest of that multi-year high from October 2022 up at 151.95. Look for any weakness to continue to be well supported in favor of higher lows along the way.
USDJPY – fundamental overviewA good chunk of this recent flow back into the Yen comes from a repricing of Fed expectations in light of the US bank woes. Key standouts on today’s calendar come from US building permits, housing starts, import prices, initial jobless claims, the Philly Fed, and ECB policy decision.
AUDUSD – technical overviewThere are signs of the potential formation of a longer-term base following the late 2022 surge back above 0.6500. The recent weekly close back above previous support now turned resistance at 0.6682 strengthens the outlook for a bullish structural shift. Next key resistance comes in at 0.7284. Setbacks should be well supported ahead of 0.6500.
AUDUSD – fundamental overviewThe Australian Dollar has recovered on Thursday getting help from Australian employment growth that easily surpassed expectations in February, sending the jobless rate lower and underscoring the economy's resilience. Key standouts on today’s calendar come from US building permits, housing starts, import prices, initial jobless claims, the Philly Fed, and ECB policy decision.
USDCAD – technical overviewA recent surge back above 1.3000 signals an end to a period of bearish consolidation and suggests the market is in the process of carving out a more significant longer-term base. Next key resistance now comes in up into the 1.4000 area. Setbacks should be very well supported down into the 1.3000 area.
USDCAD – fundamental overviewThe Canadian Dollar suffered against the Buck on broad based US Dollar demand and oil weakness, but tried to find some support on a decent Canada housing number Key standouts on today’s calendar come from US building permits, housing starts, import prices, initial jobless claims, the Philly Fed, and ECB policy decision.
NZDUSD – technical overviewOverall pressure remains on the downside with the market once again stalling out on a run up into the 0.6500 area. Ultimately, a break back above 0.6577 would be required to take the immediate pressure off the downside.
NZDUSD – fundamental overviewThe New Zealand Dollar is underperforming on Thursday after the New Zealand economy contracted by more than expected in the final three months of 2022, putting it on the brink of recession and prompting investors to lower bets on the pace of further interest-rate hikes. Key standouts on today’s calendar come from US building permits, housing starts, import prices, initial jobless claims, the Philly Fed, and ECB policy decision.
US SPX 500 – technical overviewLonger-term technical studies are in the process of unwinding from extended readings off record highs. Look for rallies to be well capped in favor of lower tops and lower lows. A monthly close back above 4300 will be required at a minimum to take the immediate pressure off the downside. Next major support comes in at 3763.
US SPX 500 – fundamental overviewWe've finally reached a point in the cycle where the Fed recognizes unanchored inflation expectations pose a greater downside risk than over-tightening. This is significant, as it means less investor friendly monetary policy that risks potential recession in the months ahead. Overall, we expect inflation to continue to be a problem in H1 2023 that results in downside pressure into rallies.
GOLD (SPOT) – technical overviewThe 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs. Setbacks should now be well supported above 1600 on a monthly close basis ahead of the next major upside extension. The recent break back above 1808 strengthens the bullish outlook. Next major resistance comes in at 2000.
GOLD (SPOT) – fundamental overviewThe yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about inflation risk and a less upbeat global growth outlook. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.