Next 24 hours: Traders point to dovish Fed speak to reconcile price action
Today’s report: How much are investors ignoring the signs?
There is every sense right now that the market is doing its very best to hold off on reacting too much to recent economic data out of the US that would suggest the Fed should be considering less rate cuts in 2024 than what is currently being priced.
Wake-up call
- industrial production
- Deloitte CFO
- Intervention fear
- Mixed round
- Added pressure
- Trader positioning
- easy policy
- Macro themes
Peformance chart: 30-Day Performance vs. US dollar (%)
Suggested reading
- Gold Is Speaking Very Loudly Right Now, Is Anyone Listening?, J. Tamny, Forbes (April 7, 2024)
- The Stocks That Led A Stealth Q1 Value Rally, B. Albrecht, Morningstar (April 4, 2024)
Chart talk: Technical & fundamental highlights
Choose pair:
EURUSD – technical overview
The Euro has been in a multi-month consolidation since bottoming out in 2022. Setbacks have since been exceptionally well supported on dips below 1.0500, with a higher platform sought out ahead of the next major upside extension. Look for a push through the 2023 high at 1.1276 to strengthen the constructive outlook and extend the recovery run towards 1.2000. Only back below 1.0400 negates.EURUSD – fundamental overview
The Euro got a little Monday boost on the back of an upturn in production and confidence data. German industrial production jumped, and Eurozone Sentix investor confidence was less bad. Looking ahead, Tuesday’s calendar is rather thin with no first-tier risk on the docket.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 latest push to a fresh 2024 high beyond 1.2830 confirms the outlook and opens the door for the next major upside extension towards the 2023 high at 1.3143. Any setbacks should now be well supported ahead of 1.2500.GBPUSD – fundamental overview
The Pound chose to focus on the positives around the Deloitte CFO survey which showed a rise in optimism for the third consecutive quarter and sentiment above the long-term average. Looking ahead, Tuesday’s calendar is rather thin with no first-tier risk on the docket.USDJPY – technical overview
The market remains confined to a strong uptrend, with sights set on a retest and break of the multi-year high from 2022 at 151.95. A push through this level will open the next major upside extension towards 155.00. Key support comes in at 146.48, with only a weekly close below to delay the constructive outlook.USDJPY – fundamental overview
There is a very clear and natural downside pressure that remains on the Yen. At the same time, central bank officials have been very loud about their jawboning of the Yen every time USDJPY trades to 152.00. Looking ahead, Tuesday’s calendar is rather thin with no first-tier risk on the docket.AUDUSD – technical overview
There are signs of the potential formation of a longer-term base with the market trading down into a meaningful longer-term support zone. Only a monthly close below 0.6200 would give reason for rethink. Back above 0.6900 will take the big picture pressure off the downside and strengthen case for a bottom.AUDUSD – fundamental overview
Aussie data has come out mixed on this Tuesday. Westpac consumer confidence readings came in below forecast, while NAB business confidence moved in the opposite direction, coming in at 1 versus 0 previous and -3 forecast. On net, the balance has favored the Australian Dollar ever so slightly. Looking ahead, Tuesday’s calendar is rather thin with no first-tier risk on the docket.USDCAD – technical overview
Above 1.3000 signals an end to a period of longer-term 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 traded back into a consolidation after sinking to a fresh 2024 low this past Friday on the back of an awful Canada jobs report. The market is now stuck positioning ahead of tomorrow's Bank of Canada policy decision in which the central bank will likely hold, not wanting to get ahead of the Fed, but also now having more pressure to be needing to be thinking about cutting rates. Looking ahead, Tuesday’s calendar is rather thin with no first-tier risk on the docket.NZDUSD – technical overview
Overall pressure remains on the downside with the market continuing to stall out on runs up into the 0.6500 area. At the same time, there are some signs of the market wanting to put in a longer-term base. Ultimately, a break back above 0.6500 would be required to take the medium-term pressure off the downside and encourage this prospect. A monthly close below 0.5800 will intensify bearish price action.NZDUSD – fundamental overview
New Zealand business confidence and capacity utilization reads have come in softer than expected on Tuesday, though this has done nothing to weigh on the Kiwi rate. It seems most of what we're getting right now is positioning ahead of tomorrow's RBNZ decision. Looking ahead, Tuesday’s calendar is rather thin with no first-tier risk on the docket.US SPX 500 – technical overview
Longer-term technical studies continue to look quite extended after pushing to fresh record highs, begging for a deeper correction ahead. Look for rallies to be well capped in favor of lower tops and lower lows. Next key support comes in at 5110.US SPX 500 – fundamental overview
Though we have seen an adjustment of investor expectations towards the amount of rate cuts in 2024, the market still believes policy will end up erring more towards the investor friendly, accommodative side of things. This bet has kept stocks well bid and pushing record highs. Still, it's important to highlight the fact that the Fed has yet to declare a victory over inflation and could disappoint investors with less accommodative policy than desired going forward. If this happens, stocks could be in for a nasty bearish reversal.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 1900 on a monthly close basis ahead of the next major upside extension towards 2500.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 end.