Market Update by Solidecn.com

[Solid ECN]

Gold

Precious metals are trading a touch lower on the day after erasing earlier gains. Higher-than-expected reading of the French CPI this morning has taken some steam off the precious metals. Gold, as well as silver and platinum, may experience higher volatility following the release of European CPI reading for March (10:00 am BST) and US PCE reading for February (1:30 pm BST).



Taking a look at GOLD at the H1 interval, we can see that bulls attempted to push precious metal's price above the $1,985 resistance zone this morning. However, the attempt turned out to be a failed one and gold started to pull back. Should the ongoing pullback deepen, the first support to watch can be found in the $1,970 area, marked with previous price reactions as well as 50- and 200-hour moving averages. Overall, gold is trading sideways in a triangle pattern and direction of the next big move may be determined by direction of the breakout from this pattern.

[Solid ECN]

EURUSD climbs back above 1.09 mark after French CPI beat

French flash CPI data for March was released today at 7:45 am BST. Report, just like reports from other European countries, was expected to show a significant deceleration in year-over-year reading. However, actual data showed a smaller than expected slowdown, just as it was the case with German data yesterday. French CPI slowed from 6.3 to 5.6% YoY in March, while the market expected a slowdown to 5.5% YoY. On a monthly basis, CPI reached 0.8% MoM, above 0.6% MoM expected by the market but below 1.0% MoM print from January.



Market reaction was small - DE30 ticked lower in a knee-jerk move before recovering losses while EURUSD moved higher and climbed back above 1.09 mark.

[Solid ECN]

DE30

German retail sales data for February was released today at 7:00 am BST. Report was expected to show a 0.5% MoM increase as well as 5.1% YoY drop in retail sales. However, actual data turned out to be much worse than expected with monthly data showing a 1.3% drop and annual data showing 7.0% YoY plunge. DE30 ticked lower following the release while EURUSD saw a minor uptick.



DE30 dipped after miss in German retail sales.

[Solid ECN]

AUDJPY

• US indices finished another trading day higher. S&P 500 gained 0.57%, Dow Jones moved 0.43% higher and Nasdaq jumped 0.73%. Russell 2000 was a laggard and dropped 0.18%
• Indices from Asia-Pacific followed into footsteps of US peers and traded higher. Nikkei and S&P/ASX 200 gained around 0.8% each, Kospi added 0.9% and Nifty 50 traded 1.0%. Indices from China traded up to 0.8% higher
• DAX futures point to a slightly higher opening of the European cash session today
• Reuters reports that Japan will set up a panel to discuss possibility of implementing digital yen backed by Bank of Japan
• Turkey has approved Finland's NATO membership bid, clearing the final hurdle for the Nordic country to join the alliance. Sweden is still waiting for approval from Turkey and Hungary
• According to Reuters report, OPEC+ JMMC is most likely to recommend leaving output cuts unchanged at a meeting on Monday
• The Japanese trade and industry ministry announced that it will impose export controls on semiconductor manufacturing equipment. While it was stated that restrictions do not target any specific country, most take it as a step against China
• Official Chinese manufacturing PMI dropped from 52.6 to 51.9 pts in March (exp. 51.6). Services gauge jumped from 56.3 to 58.2 pts (exp. 55.0)
• Japanese industrial production increased 4.5% MoM in February (exp. 2.7% MoM)
• Japanese retail sales increased 1.4% MoM in February (exp. -0.3% MoM)
• Australian private sector credit increased 0.3% MoM in February (exp. 0.4% MoM)
• Major cryptocurrencies are trading higher - Bitcoin gains 0.3%, Ethereum and Dogecoin add 0.6% each and Ripple trades 1.4% higher
• Energy commodities are trading little changed - oil drops around 0.1% while US natural gas prices climb 0.2%
• Precious metals trade mixed - gold and silver drop while platinum gains slightly
• NZD and AUD are the best performing major currencies while JPY and CHF lag the most

AUDJPY is trading higher following better than expected readings of official Chinese PMIs for March. A key near-term resistance to watch can be found in the 90.25 area, where the downward trendline and 50-session moving average (green line) can be found.

[Solid ECN]

EURUSD

EURUSD will be on watch throughout the day today. This is thanks to releases of inflation data from Europe. Flash CPI reading for March from Spain was already released at 8:00 am BST and it came in even below low expectations - 3.3% YoY vs 3.8% YoY expected (6.0% YoY previously). Such a drop can be attributed to base effects, especially in energy, as oil prices skyrocketed a year ago in the aftermath of Russian invasion of Ukraine and now they are over 30% year-over-year lower. German reading at 1:00 pm BST is also expected to show a noticeable drop - from 8.7% YoY to 7.3% YoY.



Market expectations for ECB rate hikes have dropped and now the market prices in an around-75% chance of a 25 basis point rate hike at a meeting on May 4, 2023. However, a softer CPI readings from Europe may push those expectations even lower and it could serve as a drag for EUR. Nevertheless, it should be noted that CPI data for April will be available when ECB next meets therefore today's reading may have less of an importance for rate setters in Europe at their next meeting.

Taking a look at EURUSD chart at H1 interval, we can see that the pair dropped following Spanish CPI release (orange circle) but has managed to recover all of the losses later on. Pair broke above the 1.0850 resistance zone and is now attempting to take out yesterday's daily highs in the 1.0865 area.

[Solid ECN]

US100

• US indices finished yesterday's trading higher with all major Wall Street indices adding 1% or more. S&P 500 gained 1.42%, Dow Jones moved 1.00% higher and Nasdaq jumped 1.79%. Russell 2000 gained 1.08%
• Nasdaq gained over 20% off December low and has entered a technical bull market.
• Indices from Asia-Pacific trade mostly higher. S&P/ASX 200 gained 1%, Kospi added 0.6%, Nift 50 moved 0.8% higher while Nikkei dropped 0.6%
• Indices from China traded 0.2-0.5% higher
• DAX futures point to a higher opening of the European cash session today
• Fed Chair Powell has reportedly told Republican Representatives that Fed expects 1 more rate hike in 2023
• ECB Schnabel said that banking troubles may have a disinflationary effect. On the other hand, she warned that labour costs indicate possibility of second round inflationary effects
• Fitch noted that there were 14 sovereign default events since 2020, compared to 19 sovereign default events in whole 2000-2019 period
• Chinese premier Li Qiang said that his country will strengthen macro policy adjustments and act to boost consumption and investments
• UK car production increased 13.1% YoY in February as supply chain pressures eased. This was the first monthly increase in output in three months. 81% of all cars produced in UK were exported, with EU being main destination
• New Zealand's building permits slumped 9% MoM in February. On annual basis drop reached 29.2% YoY
• Major cryptocurrencies trade mixed - Bitcoin gains 1.2%, Ethereum adds 0.1%, Dogecoin drops 0.7% and Ripple trades 3.6% lower
• Energy commodities trade mixed - oil gains around 0.3% while US natural gas prices drop 1.7%
• Precious metals trade mostly higher - silver adds 0.7%, platinum trades 0.8% higher and palladium gains 0.6%. Gold trades flat
• AUD and JPY are the best performing major currencies while USD and EUR lag the most

Nasdaq-100 (US100) trades around 20% above the December 2022 low and therefore has entered a bull market, at least from a technical point of view. However, for any larger upward move to be delivered, a break above a psychological, mid-term resistance zone in the 13,000 pts area would be required.

[Solid ECN]

US100 gains over 1%


China's tech sector rebound fuels gains on Nasdaq


US100 futures are gaining, as a higher opening in Asia and euphoria on Alibaba shares have improved sentiment around the technology sector. Analysts have been very wary of Chinese tech stocks in recent years, fearing direct government intervention in their business and margins. So far, however, China is positioning itself as a free-market economy, allowing it to compete with the United States. A few months ago, representatives of Chinese authorities at the Davos Economic Forum asserted that, contrary to Western fears, the country does not intend to centralize power and completely subordinate the financial market party. In addition, reports from the Washington Post indicated that President Joe Biden is expected to present new banking regulations. The White House was prompted to create them by the SVB bankruptcy. The Nasdaq is attempting to close the quarter with its best performance since 2020, and after several weeks of turmoil in the banking sector, investors appear 'jaded' by news of the prospect of a crisis. US bank valuations are still far from a meaningful upward correction and Joe Biden has warned that the banking crisis is far from over, against which buyers have shifted from the 'risky' financial sector to the technology market.


Another supportive factor for US equities is the sharply losing VIX index, which is seen by investors as a barometer of market fear. Compiled by the CBOE, the index extends a 1.5-week-long downward impulse.





The US100 index is trying to maintain the bullish momentum initiated 2 weeks ago, and the declining VIX may support the buyers' side even now. However, it is worth watching tomorrow and Friday's session, when we will know many interesting macro readings from the US economy.

[Solid ECN]

Ripple


Cryptocurrencies are rebounding today despite the still-uncertain news about the conflict between the CFTC and the Binance exchange. Among all the projects, Ripple (XRP) stands out again. Fintech company Ripple will hold a closed-door consultation with the Securities and Exchange Commission (SEC) on March 30. The market took the news of the warring parties meeting in court as a signal of a potential settlement. Bringing it about would be a victory for the entire decentralized finance sector in the States. It would undermine the SEC's decision-making role and reduce the fear of the prospect of restrictions proposed by Gary Gensler.


Ripple is cited by many analysts as one of the future foundations of a digital financial infrastructure based on blockchain technology. For example, recently Ripple's blockchain was able to process a $755 million transaction, in 4 seconds, for a fee of tenths of a dollar (0.01 XRP). By the crypto market, the company is seen as a major competitor to the interbank market, which charges high commissions for processing international transfers;
Iron Key Capital analysts point to Ripple as a winner in the multi-billion dollar global payments market. In addition to Ripple itself, cryptocurrencies Stellar and Algorand are also gaining today. Both of them, along with Ripple, have been pointed out as being integrated into the new ISO20022 international settlement standard. This system will replace the SWIFT standard in the coming years. Ripple's victory with the SEC is expected by Ark Invest fund manager CathieWood, among others;
The next few weeks may bring a 'rally under the event' in the price of Ripple tokens. A similar course of events is characteristic of the crypto market at the same time as it often ends in a sell-off (profit realization, so-called 'fact selling', as the decisive moment is very close. This was the case, among others, with the price of Cardano, which implemented smart contract technology in September 2021, and Ethereum Merge, in the summer of 2022.





The largest holders of Ripple so called 'whales' have increased their buying activity in view of the upcoming SEC decision.





Ripple chart, D1 interval. The price has overcome the key resistance near $0.55, set by previous price reactions. The chart, which resembles a technical saucer formation, may indicate a more permanent reversal of the downward trend.

[Solid ECN]

CHNCComp - Chart of the Day

HSCEI (CHNComp) was one of the best performing Asian indices during today's Asia-Pacific trading session. The index jumped over 2% today and painted a daily peak at 3-week high. Improved sentiment towards Chinese shares can be reasoned with recent performance of Alibaba (BABA.US) as the index and the stock are highly correlated. According to a Bloomberg report, Alibaba aims to divide the company into 6 different entities with each being responsible for its own financing and decisions like going public. This news triggered an over-14% increase in Alibaba's share price yesterday.



Taking a look at CHNComp chart at D1 interval, we can see that while the index managed to climb above the price zone ranging between 6,600 pts mark and 200-session moving average (purple line), it was later halted at 50-session moving average (green line) in the 7,000 pts area. What comes next will be crucial from a technical point of view. An inverse head and shoulders pattern can be spotted building up on the chart - a bullish pattern. However, a pullback towards the aforementioned 6,600 pts area would be needed for the pattern to take shape.

[Solid ECN]

AUDUSD

• US indices finished yesterday's trading slightly lower. S&P 500 dropped 0.16%, Dow Jones moved 0.12% lower and Nasdaq plunged 0.45%. Small-cap Russell 2000 index dropped 0.06%
• Indices from Asia-Pacific are trading higher today. Nikkei gained 1.1%, S&P/ASX 200 traded 0.2% higher, Kospi traded flat and Nifty 50 gained 0.1%. Indices from China traded 0.1-0.2% higher while Hong Kong's Hang Seng gains over 2%
• DAX futures point to a slightly higher opening of the European cash session today
• US Energy Secretary Granholm said that refilling of strategic petroleum reserve may start this year
• Shinichi Uchida, deputy governor of Bank of Japan, said that if 10-year Japanese yield climbs to 2%, BoJ will experience an unrealized loss of 50 trillion JPY on its bond portfolio (currently 10-year yield sits at 0.3%)
• United States said that China shouldn't overreact to Taiwan president's visit to the United States. This comes after China warned that meeting between US officials and Taiwan president would be seen as provocation
• Lee Bokhyun, head of South Korean financial regulator, said that South Korean authorities will consider lifting the short-selling ban this year. Ban was imposed early in the Covid pandemic
• Australian CPI inflation decelerated from 7.4 to 6.8% YoY in February (exp. 7.4% YoY). Core inflation dropped from 7.6% in January to 6.9% YoY in February
• API report pointed to a 6.08 million barrel draw in US oil inventories (exp. +0.2 mb)
• Cryptocurrencies trade higher - Bitcoin gains 1.3%, Ethereum adds 1.1% and Dogecoin jumps 2.4%
• Energy commodities trade mixed - oil gains slightly while US natural gas prices drop
• Precious metals pull back amid USD strengthening - gold drops 0.5%, silver trades 0.7% down and platinum dips 0.6%
• NZD and USD are the best performing major currencies while JPY and AUD lag the most

AUD is pulling back after a lower-than-expected CPI reading for February. AUDUSD failed to break above the 0.6710 resistance zone and is now pulling back towards the 200-hour moving average (purple line).