Today’s report: Good vibes into Friday
There’s still some stress around the banks out there, though the market has been able to shrug it off, instead playing into the bet the Fed will be needing to ease up on its policy trajectory on this new risk.
Wake-up call
- German inflation
- hike odds
- Friday data
- Metals prices
- Oil surge
- macro drivers
- Inflation headache
- Dealers report
Peformance chart: 30 Day Performance vs. US dollar (%)
Suggested reading
- Breaking Up, for Alibaba and a Playlist. Plus, CRE, J. Authers, Bloomberg (March 30, 2023)
- Roger Federer and Trevor Noah on why you should visit Switzerland, Financial Times (March 30, 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
The Euro made a move back towards retesting yearly highs against the Buck after German CPI reads came in above forecast. The Euro also got some help from further recovery in the banks, which were up nearly 2%. ECB Schnabel added to confidence after saying banks had not seen a loss of deposits. Key standouts on Friday’s calendar come from German retail sales, UK GDP, German unemployment, Eurozone unemployment, Eurozone inflation, Canada GDP, US personal spending and core PCE, Michigan sentiment, and some Fed 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
The Pound traded up on more hawkish comments out from the BOE on Thursday. BOE Mann was on the wires saying core inflation was still very sticky and trending up. Odds for a BOE rate hike in May have now jumped to about 75%, just behind the ECB. Key standouts on Friday’s calendar come from German retail sales, UK GDP, German unemployment, Eurozone unemployment, Eurozone inflation, Canada GDP, US personal spending and core PCE, Michigan sentiment, and some Fed 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
Most of the price action we've seen in recent sessions has been tied to traditional correlations. The Yen has been mostly weaker as US equities extend higher. Still, there has been some caution ahead of a major batch of Japan data due Friday in the form of unemployment, Tokyo CPI, retail sales, and industrial production. Other key standouts on Friday’s calendar come from German retail sales, UK GDP, German unemployment, Eurozone unemployment, Eurozone inflation, Canada GDP, US personal spending and core PCE, Michigan sentiment, and some Fed 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 has traded higher this week on solid Aussie retail sales, rallying metals prices and supported US equities. Key standouts on Friday’s calendar come from German retail sales, UK GDP, German unemployment, Eurozone unemployment, Eurozone inflation, Canada GDP, US personal spending and core PCE, Michigan sentiment, and some Fed 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
The Canadian Dollar has been enjoying a bit of a resurgence in recent sessions on the back of a very healthy recovery in the price of oil. Key standouts on Friday’s calendar come from German retail sales, UK GDP, German unemployment, Eurozone unemployment, Eurozone inflation, Canada GDP, US personal spending and core PCE, Michigan sentiment, and some Fed 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 New Zealand Dollar has bid up on macro drivers this week, with the currency getting a boost from higher US equities and rallying commodities prices. Key standouts on Friday’s calendar come from German retail sales, UK GDP, German unemployment, Eurozone unemployment, Eurozone inflation, Canada GDP, US personal spending and core PCE, Michigan sentiment, and some Fed 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.