Next 24 hours: Solid earnings, above forecast data
Today’s report: Bad vibes on more bank woes
There were some heavy recession vibes in markets on Tuesday, this after worries re-emerged around the banking sector. First Republic bank revealed a larger than expected deposit drain, while UBS and Santander shared their own negative headlines.
Wake-up call
- UBS, Santander
- BOE Pill
- YCC anticipation
- Aussie inflation
- manufacturing sales
- RBNZ repricing
- Inflation headache
- Dealers report
Peformance chart: 30 Day Performance vs. US dollar (%)
Suggested reading
- For Tech, Doing Better Might Not Look Good Enough, J. Authers, Bloomberg (April 26, 2023)
- Italian Companies Suffer Russia Market Loss, G. Meloni, Financial Times (April 25, 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. Next key resistance comes in the form of the March 2022 high at 1.1185.EURUSD – fundamental overview
An earnings miss from UBS and deposit outflow from Santander were behind a lot of the selling we saw in the Euro on Tuesday. European bank shares were slammed and implied peak ECB policy targets fell more than 10 basis points. Key standouts on Wednesday’s calendar come from German consumer confidence reads, ECB speak, UK CBI distributive trades, Canada manufacturing sales, US durable goods, and the Bank of Canada Summary of Deliberations.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 November 2022 monthly close back above 1.2000 strengthens this prospect. Any setbacks should now be well supported ahead of 1.2000. Next key resistance comes in at 1.2667.GBPUSD – fundamental overview
The fact that BOE Pill was on the wires saying people in the UK needed to accept they were now poorer did not do anything to help the Pound in Tuesday trade. Public service net borrowing numbers were also discouraging, adding more reason for downside pressure. Key standouts on Wednesday’s calendar come from German consumer confidence reads, ECB speak, UK CBI distributive trades, Canada manufacturing sales, US durable goods, and the Bank of Canada Summary of Deliberations.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 found some renewed demand in recent sessions, perhaps on broad based risk off flow, or perhaps on reports of repatriation as investors prepare for a BOJ yield curve control shift. More color will be offered later this week when the BOJ meets. Key standouts on Wednesday’s calendar come from German consumer confidence reads, ECB speak, UK CBI distributive trades, Canada manufacturing sales, US durable goods, and the Bank of Canada Summary of Deliberations.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 suffered at the hands of lower metals prices, a sharp decline in the Yuan, and broad based risk off flow. Earlier today, Aussie inflation data came in mixed overall. Key standouts on Wednesday’s calendar come from German consumer confidence reads, ECB speak, UK CBI distributive trades, Canada manufacturing sales, US durable goods, and the Bank of Canada Summary of Deliberations.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
Economic data out of Canada has been more discouraging of late and this coupled with risk off flow and downside pressure in stocks have accounted for this latest run of weakness in the Canadian Dollar. Key standouts on Wednesday’s calendar come from German consumer confidence reads, ECB speak, UK CBI distributive trades, Canada manufacturing sales, US durable goods, and the Bank of Canada Summary of Deliberations.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 found some demand on cross related interest against the Australian Dollar. However, ultimately, the currency continues to get sold into rallies on risk off flow, especially after last week's New Zealand inflation data came in soft to open a dovish repricing of RBNZ expectations. Key standouts on Wednesday’s calendar come from German consumer confidence reads, ECB speak, UK CBI distributive trades, Canada manufacturing sales, US durable goods, and the Bank of Canada Summary of Deliberations.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 3806.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 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, above which opens the next extension towards 2,500.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.