Daily Market Outlook, April 04, 2023

RBA Tap The Breaks On Rate Rises 

Asian equity markets traded with a mixed tone, with some centres carving out modest gains, the upside was capped given the the choppy action seen on Wall Street, where manufacturing data indicated a further retreat in inflationary pressures and a softening in labour tightness, this led US investors to hit the buy button, but buyers remorse soon set in and markets duly retreated before retesting the highs into the close of trade, some of this choppiness may have been associated with new quarter and month flows adding late support. Overnight, as expected the Reserve Bank of Australia tapped the breaks on rate rises but left the door open to future moves.

European investors will be focused on this morning’s European Central Bank’s consumer expectations survey which will provide a timely update on how inflation trends are developing, given last month’s reading where participants indicated declines in both 12 and longer term expectations, with a further retreat in energy prices of late investors are expecting a further softening in expectations. There is no data of note on the docket in the UK today, UK investors instead will eye comments from a couple of prominent Bank of England policymakers, firstly Silvana Tenreyro, who voted against each of the last three interest rate hikes, and so seems likely to point to downside risks for growth and inflation. The other is the BoE’s Chief Economist Pill who has always voted with the majority. Investors will parse their comments for any concerns regarding recent developments in the banking sector leading to a potential shift in policy. Stateside, US factory orders are expected to show a softening of 0.3% in February, given durable goods orders, which is about 40% of the total, showed a decline of 1.0% due to another fall in the volatile transport sector, this will likely be countered by non-durable orders which are expected to have seen a rise in demand for the second consecutive month, as with most developed economies the manufacturing sector continues to lag the buoyancy seen in the services sector which has been the main culprit for much of the inflationary pressure of late.

FX Options Expiries For 10am New York Cut

  • EUR/USD: 1.0665 (EU1.35b), 1.0950 (EU1.06b), 1.0150 (EU734m)

  • USD/JPY: 127.00 ($1.42b), 122.00 ($1.23b)

  • USD/CAD: 1.3600 ($1.77b), 1.3650 ($558.3m), 1.3550 ($310.3m)

  • USD/CNY: 7.00 ($2.01b), 6.90 ($2b), 6.82 ($1.41b)

  • GBP/USD: 1.2250 (GBP1.1b)

  • USD/MXN: 18.29 ($1.28b), 18.50 ($1.11b), 21.10 ($980m)

  • AUD/USD: 0.6300 (AUD451.6m), 0.6800 (AUD345.1m), 0.7200 (AUD344.4m)

  • EUR/GBP: 0.8875 (EU405.6m)

Overnight News of Note

  • Asia Shares Led Lower by Tech; Oil Extends Advance

  • Fed’s Lisa Cook Says Inflation Is Easing But More Is Needed

  • Brussels Calls On China To Use Its Influence With Russia To Rein In War

  • RBA Hold Rates At 3.6%, Says Further Tightening May Be Needed

  • BoJ Should Review YCC Under Ueda, Ex-Finance Official Says

  • New Zealand Firms Remain Downbeat As Rate Hikes Curb Demand

  • HKMA Steps Up FX Intervention To Defend Peg As Fed Signals Higher Rates

  • Interpol Does Not List Red Notice For Binance’s ‘CZ’, Despite Rumors

  • Oil Holds Biggest Gain In A Year After Shock Supply Cut By OPEC+

  • OPEC+ Wants To Make Oil Speculators Betting On Price Drop To Think Twice

  • Apple To Make Small Number Of Job Cuts In Some Corporate Retail Teams

  • Micron Says Operations Normal In China Amid Government Review

  • Teck Resources Is Said To Be Open To Offers Once Coal Spinoff Is Complete

(Sourced from Bloomberg, Reuters and other reliable financial news outlets)

Technical & Trade Views

SP500 Bias: Intraday Bullish Above Bearish Below 4080

  • Primary support is 4040

  • Primary objective is 4135

  • Below 4040 opens 3985

  • 20 Day VWAP bullish, 5 Day VWAP bullish

EURUSD Bias: Intraday Bullish Above Bearish below 1.0830

  • Primary support  is 1.07

  • Primary objective is 1.1128

  • Below 1.0700 opens 1.0660

  • 20 Day VWAP bullish, 5 Day VWAP bullish

GBPUSD Bias: Intraday Bullish Above Bearish below 1.2330

  • Primary support  is 1.2200

  • Primary objective 1.2535

  • Below 1.2170 opens 1.2100

  • 20 Day VWAP bullish, 5 Day VWAP bullish

USDJPY Bias: Intraday Bullish above Bearish Below 133.00

  • Primary resistance  is 135.15

  • Primary objective is 129.15

  • Above 136 opens 137.90

  • 20 Day VWAP bearish, 5 Day VWAP bearish

AUDUSD Bias: Intraday Bullish Above Bearish below .6696

  • Primary resistance is .6740

  • Primary objective is .6950

  • Below .6560 opens .6450

  • 20 Day VWAP bearish, 5 Day VWAP bullish

BTCUSD Intraday Bias: Bullish Above Bearish below 26500

  • Primary support 23000

  • Primary objective is 30000

  • Below 23000 opens 22400

  • 20 Day VWAP bullish, 5 Day VWAP bearish