Market Update by Solidecn.com

[Solid ECN]

AUDUSD

• US indices finished yesterday's trading lower with major indices erasing all of the gains from the beginning of the session. S&P 500 dropped 0.41%, Dow Jones moved 0.11% lower and Nasdaq declined 0.85%. Russell 2000 dropped 0.72%
• FOMC minutes showed that some Fed officials saw holding rates unchanged as appropriate at the March meeting amid banking turmoil. However, decision to hike by 25 basis points was ultimately unanimous
• Markets are pricing in an almost-70% chance of 25 basis point rate hike at next FOMC meeting in May
• Indices from Asia-Pacific traded mixed today - Nikkei gained, Kospi traded flat while Nifty 50 and S&P/ASX 200 pulled back. Indices from China traded slightly lower
• DAX futures point to a slightly lower opening of the European cash session today
• North Korea launched what seemed to be a new weapon system, possibly ICBM, towards the East Sea. Japanese authorities ordered residents of Hokkaido island, where the missile could land, to seek shelter inside buildings or underground. Evacuation order was later lifted
• BoJ Governor Ueda said that inflation in Japan is likely to slow and the BoJ will continue with monetary easing until inflation target is reached stably and sustainably
• RBA Deputy Governor Bullock said that pause in rate hikes in driven by job preservation and policy lags, rather than being a reaction to banking turmoil
• AUD caught a bid after a solid jobs report for March - employment increased by 53k (exp. +20.6k) while the unemployment rate stayed unchanged at 3.5% (exp. 3.6%)
• Chinese exports in USD terms increased 14.8% YoY in March (exp. -7.1% YoY) while imports were 1.4% YoY lower (exp. -6.4% YoY)
• Cryptocurrencies are trading mixed - Bitcoin gains 0.4%, Ethereum drops 0.1% while Dogecoin adds 0.6%
• Energy commodities traded lower - oil drops 0.3-0.4% while US natural gas prices decline 0.2%
• Precious metals trade a touch higher with gold adding 0.1%
• AUD and GBP are the best performing major currencies while CHF and JPY lag the most

AUDUSD jumped following solid jobs data for March from Australia. However, bulls failed to sustain a break above the 0.6710 price zone and a return below this area can be observed at press time.

[Solid ECN]

EURUSD

The US CPI report for March was released today at 1:30 pm BST. Report was expected to show a steep deceleration in headline price growth as well as slight acceleration in core measure. However, as headline CPI was expected to drop below core CPI for the first time since late-2020, it was the core gauge that was especially on watch today.

Actual report showed headline inflation more than expected, from 6.0% to 5.0% YoY, while core gauge matched expectations by accelerating to 5.6% YoY. It looks like investors acted on softer headline reading with market reaction being clearly dovish - USD slumped while US index futures jumped.

Markets odds for a 25 basis point Fed rate hike at May meeting dropped from around 73% prior to data release to around 60% now.

US, CPI inflation for March

• Headline (annual): 5.0% YoY vs 5.2% YoY expected (6.0% YoY previously)
• Headline (monthly): 0.1% MoM vs 0.2% MoM expected
• Core (annual): 5.6% YoY vs 5.6% YoY expected (5.5% YoY previously)
• Core (monthly): 0.4% YoY vs 0.4% MoM expected

Headline US CPI inflation slowed below the pace of core US CPI inflation in March.



EURUSD jumped above April 4 highs following softer than expected US CPI data for March.



US500 caught a bid following US CPI data and is attempting to make a break above the resistance zone ranging between 50% retracement and 4,165 pts mark.

[Solid ECN]

US500

Today, investors' attention turns primarily to the US CPI inflation report, which, along with the labor market data we have learned, will be a major factor in determining what the Fed will do at the next FOMC meeting in May.

Analyst consensus assumes that the headline reading for CPI inflation will drop significantly, coming in at 5.2% y/y versus the last reading of 6% y/y. The opposite is true for core inflation, which is expected to rise to 5.6% y/y vs. the last reading of 5.5%. While the headline reading is highly likely to show a decline (due in part to the high base effect), the core reading remains less certain.



The standard deviation of the consensus compiled by Bloomberg is close to 0.1%, and the analysts themselves mathematically lean more in favor of the scenario of keeping inflation unchanged/increasing to 5.6%.

How will the market react? A lower inflation reading may support market bulls, who will react positively to the resulting lower reading lowering expectations for a continuation of the interest rate hike cycle. On the other hand, however, if inflation remains high and the underlying reading manages to surprise the consensus with a reading significantly above the expected value, markets on Wall Street may react with declines, in the face of condensed uncertainty stemming from weak macro data, the prospect of further tightening and the deepening specter of recession.



From a technical point of view, the US500 index remains in the zone outlined by medium-term trend patterns, which in the past have been important zones of support and resistance. The reaction to today's data and the Fed's Minutes reading scheduled for this evening may determine the future direction of this market.

[Solid ECN]

DE30

European stock market indices launched the first cash trading session after Easter break higher. Blue chips indices from Western Europe trade 0.5-1.0% higher, following an upbeat Asian session earlier today. However, part of gains has been erased already with DAX dropping back below 15,700 pts. Taking a look at DAX futures at H1 interval (DE30) we can see that bulls failed to break above 15,900 pts area and a double top has been painted. Today's bullish price gap has been filled already and should ongoing pullback deepen further, the 15,650 pts support zone will be the first potential target for sellers. This zone is not only marked with previous price reactions but also with the neckline of the aforementioned double top. Textbook range of the downside breakout from this pattern shows a possibility of a drop to as low as 15,360 pts.

[Solid ECN]

AUDUSD

• US indices finished yesterday's trading mostly higher. S&P 500 gained 0.10%, Dow Jones moved 0.3% higher and Russell 2000 rallied 1%. Nasdaq was a laggard and finished flat
• Indices in Asia-Pacific traded mostly higher today - Nikkei and S&P/ASX 200 gained around 1.2% each, Kospi rallied 1.4% and Nifty 50 traded 0.6% higher
• Indices from China traded 0.1-0.5% lower
• DAX futures point to a higher opening of the European cash session today
• New Bank of Japan Governor Ueda said that a small rate hike would not be a problem for the Japanese financial system. Ueda also said that he agreed with PM Kishida that there is no need to revise government-BoJ joint statement
• AUD gains after Australia and China reached agreement on barley exports and Australia suspended WTO dispute against China
• Fed Williams said he expects inflation to get back under 2% by 2025
• Citigroup expects oil to drop below $70 per barrel amid slower-than-expected demand recovery in China and significant production potential in Iraq and Venezuela
• Chinese CPI inflation decelerated from 1.0 to 0.7% YoY in March (exp. 1.0% YoY). PPI inflation came in at -2.5% YoY as expected (-1.4% YoY previously)
• Bitcoin jumps 3% and trades above $30,000 mark for the first time since June 2022
• Energy commodities trade mixed - oil gains 0.5% while US natural gas prices drop 0.3%
• Precious metals benefit from USD weakness - gold gains 0.5%, silver trades 0.6% higher and platinum adds 0.4%
• AUD and EUR are the best performing major currencies while USD and NZD lag the most

AUDUSD bounced off the 0.6630 support zone and climbed back above the 0.6660 area. Improvement in Australia-China trade relations is driving today's upward move on the pair.

[Solid ECN]

Bitcoin Jumps above $30,000

Sentiment towards cryptocurrencies following Easter holidays is positive with major coins as well as smaller altcoins trading higher. Bitcoin is drawing a lot of attention today as the coin is testing a psychological $30,000 area and is trading at the highest level since early-June 2022. Bitcoin has already gained more than 90% off the early-November 2022 low. A near-term level to watch is the resistance zone ranging below $31,500, which marked the upper limit of a short-term trading range in May-June 2022.



BITCOIN trades above $30,000 for the first time since June 2022.

[Solid ECN]

EURUSD

EURUSD decreased significantly below 1.0900 with increasing probability of Fed hike

The dollar gained over 0.3% today and EURUSD fell below 1.0900 and tested a vicinity of 1.0850. The dollar is finally higher after Friday's good data from the US labor market. Due to the fact that Friday was a day off in the US, investors can fully assess the data from the US labor market only today. The data increases the likelihood of a rate hike in May to 70%.



EURUSD not only breaks out of the uptrend but falls below the 200-hour moving average. The pair is trading at its lowest level since April 3. Another important support lies around the 1.0800 level.

[Solid ECN]

Oil


Oil prices are stabilizing after the big price jump last week in response to OPEC+ decided to further cut production. The volatility decreased significantly as demand uncertainty in China and US offsets OPEC+ production cut. Of course, we could notice a further inventory draw last week but perspective of future demand is cloudy as the chance for the next interest rate hike is increasing.





As we can see the price range from the Monday a week ago is less than 3 dollars. The most important support is at 79.00 USD per barrel that is also a higher limit of bullish gap. On the other hand the nearest resistance lies at 82 USD per barrel that is also a higher limit of consolidation that starter on 1st December. In case of breaking the mentioned support, the price may decrease even to vicinity of 75 USD per barrel which is also a lower limit of the bullish gap.

[Solid ECN]

Gold


Gold is lower by about 0.6% from the perspective of the first session of the week. It is the first trading day for gold after the release of NFP jobs data from Friday when the market for gold was closed. Data from the US labor market showed that a rate hike from the Fed in May is still in the game. The data showed a further strong rise in employment above 200k and a decline in the unemployment rate to 3.5%. From the perspective of monetary policy in the US, inflation data due for release on Wednesday will be crucial. Although wages data decreased more than expected, it is still inconsistent with the inflation target of 2%.





In response to good data from the US, gold reacted to a stronger dollar (USDJPY). Gold opened with a bearish gap that later was closed. Gold is currently trading below $2,000 an ounce. There is a support of around 1985 USD per ounce that is confirmed by 50 period SMA and the upper limit of the triangle pattern.

[Solid ECN]

USDJPY

• The first market session after the release of US jobs data is mixed as investors are wondering about the future policy path from the Fed. It looks like we are observing a re-trading of the data from Friday as most markets were closed then.
• NFP came out at 236k and the unemployment rate fell to 3.5%. Wages dynamic decreased to 4.2% YoY but they are still not consistent with an inflation rate of 2%
• Most Asian stocks reversed earlier gains but on the other hand, US yields decreased also. Nikkei 225 and Kospi are the only indices that are up in the morning trading. Nikkei gains 0.4% and Kospi is higher by 0.9%
• US indices futures continue their sell-of after Friday’s NFP release that suggests another hike from the Fed in May. US100 is trading 0.5% lower and US500 is down by about 0.3%
• The US dollar is rising against all of the G10 currencies and the yen is one of the weakest, falling nearly 0.4%
• It is important to know for all investors that at 10:15 GMT (11:15 BST and 12:15 CET) the new governor of the Bank of Japan will hold the inaugural press conference which means that Kuroda era is finally ended. The market is wondering whether Ueda would decide to end or change its yield curve control program. On the other hand, Ueda said in February that an accommodative policy in Japan is still needed.
• The gold price digests the US job market data and decreases below 2000 USD per ounce in early morning trading
• Trading may be choppy today as most markets are still closed in observance of Easter Monday

The USDJPY currency pair is up nearly 0.4% as investors are reassessing the US jobs market report from Friday and are waiting for the first public news conference of the new BoJ's governor Ueda.