Next 24 hours: Some good cheer as the week gets going
Today’s report: Reassurances helping....for now
As we come into the weekly close, the big takeaway has been a clear repricing of Fed expectations. While the central bank has continued to highlight risks to inflation, the consensus in the market is that the Fed will be forced to scale it back with respect to its hawkishness.
Wake-up call
- Deutsche Bank
- BOE comments
- traditional flow
- Aussie PMIs
- retail sales
- NZDUSD
- Inflation headache
- Dealers report
Peformance chart: 30 Day Performance vs. US dollar (%)
Suggested reading
- How Much Bad News Is Priced Into Stocks?, N. Kaissar, Bloomberg (March 24, 2023)
- Boeing's pioneering flight plan for green fuel jets, M. McCormick, FT (March 22, 2023)
Chart talk: Technical & fundamental highlights
Choose pair:
EURUSD – technical overview
The Euro remains well supported on dips following a run to the topside through 1.1000 earlier this year. Any additional setbacks should be well supported ahead of 1.0500 in favor of the formation of the next major higher low and a bullish continuation. Ultimately, only a monthly close back below 1.0500 would give reason for concern.EURUSD – fundamental overview
Concerns in the banking sector have opened renewed downside pressure on the Euro. The latest news has revolved around troubles at Deutsche Bank. Key standouts on Monday’s calendar come from German Ifo reads, UK CBI distributive trades, and some ECB and BOE speak.EURUSD - Technical charts in detail
GBPUSD – technical overview
Signs 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 overview
UK consumer confidence data improved and retail sales were better than expected. Ultimately however, the Pound fell victim to more dovish leaning BOE chatter from the likes of BOE Bailey and BOE Mann. Key standouts on Monday’s calendar come from German Ifo reads, UK CBI distributive trades, and some ECB and BOE speak.USDJPY – technical overview
The 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 overview
The Yen has continue to hold up well overall on positive Japan data and safe haven bid appeal. Key standouts on Monday’s calendar come from German Ifo reads, UK CBI distributive trades, and some ECB and BOE speak.AUDUSD – technical overview
There 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 overview
The Australian Dollar is back under pressure in recent sessions, with discouraging Aussie PMI reads contributing to the deterioration. Key standouts on Monday’s calendar come from German Ifo reads, UK CBI distributive trades, and some ECB and BOE speak.USDCAD – technical overview
A 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 overview
Canada retail sales came in better than expected at the end of last week, which helped to mitigate fallout in the Canadian Dollar. Key standouts on Monday’s calendar come from German Ifo reads, UK CBI distributive trades, and some ECB and BOE speak.NZDUSD – technical overview
Overall 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 overview
The Economics Division of the Ministry of Foreign Affairs and Trade reported New Zealand's economy may have contracted in Q1 2023 due to adverse weather conditions. Primary production and exports would be affected, weighing on the already expected slow growth for Q1 2023. Inflation is expected to remain above 7% for longer than expected. Recall New Zealand's 4Q GDP contracted by 0.6% q/q and another successive contraction in Q1 2023 would drive New Zealand into a technical recession. Key standouts on Monday’s calendar come from German Ifo reads, UK CBI distributive trades, and some ECB and BOE speak.US SPX 500 – technical overview
Longer-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 overview
We'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 overview
The 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 the record high from 2020 at 2076.GOLD (SPOT) – fundamental overview
The 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.