Daily Market Outlook, April 14, 2022 Overnight Headlines Fed’s Waller: Likelihood Of Many Half-Point Hikes Ahead Sec Yellen Challenges China In New World Order Outlook US Weighs Sending Top-Level Official To Meet Zelenskyy US Extends Transit Mask Mandate To May On Covid Rise BoC’s Macklem: Banks Won’t Let 1970s Stagflation Arise PBoC Forecasted To Slash Interest Rate For Second Time Australia Labour Market Damped By East Coast Flooding Fearing Inflation, ECB To Stay Steady Unwinding Stimulus EU Warns Roubles-For-Gas Demand To Breach Sanctions UK PM Johnson Could Get Three More Fines Over Parties UK Housing Market Finds First Listings Rise In 12 Months Skittish Traders Are Bracing For $2Tln Options ExpirationThe Day Ahead Asian equity markets are mostly higher this morning following gains on Wall Street yesterday. Reports that China plans to loosen monetary policy may have supported sentiment. The US announced $800mn of additional military aid for the Ukraine. Meanwhile, the EU warned members that complying with Russian demands for its gas to be paid for in roubles would violate sanctions. The March Australian labour market report showed the unemployment rate unchanged at 4.0% and a smaller-than-expected employment gain. In contrast to yesterday’s central bank announcements, where both Canada and New Zealand raised interest rates, today’s European Central Bank update is not expected to result in any immediate policy change. Nevertheless, markets will be looking for indications over the potential timing of a rate increase from the ECB. At the last update, ECB President Lagarde announced a pivot of monetary policy in a more hawkish direction with asset purchases set to be tapered from Q2 and likely ending by early in Q3. That potentially opens the way for a rate rise in the second half of the year and markets are discounting a Q3 hike although many economists think a December move is more likely. The ECB faces a particularly acute policy dilemma as inflation is well above its target and still rising but the Eurozone is seemingly particularly vulnerable to downside growth risks resulting from the Ukrainian crisis. It seems that the more hawkish voices on the rate-setting council are prevailing for now and a rate increase will be forthcoming. Nevertheless, Lagarde seems set to hedge her bets today and not offer any new detail on the policy outlook. US March retail sales are expected to be up but that will probably be due to higher prices as the numbers are not adjusted for inflation. In real terms, sales are forecast to be down on the month, although that does follow sizeable gains earlier in the quarter and may be in part due to consumers switching to spending on services as Covid concerns recede. While Fed officials currently seem much more concerned about upside inflation risks, there are signs that consumer spending power is being eroded by high inflation and that consumer confidence is slipping. Today’s update of the University of Michigan consumer sentiment measure for April is predicted to show another fall. Most markets will be closed tomorrow for the Easter holidays. However, US industrial production data for March will be released and is predicted to show a rise driven in part by higher oil output. The New York Fed’s survey will also provide some preliminary indications on April trends.FX Options Expiring 10am New York Cut EUR/USD:1.0920-25 (747M), 1.0950 (264M), 1.1000 (940M), 1.1050 (378M) USD/JPY: 124.00 (505M), 125.00 (440M). EUR/JPY 136.00 (206M) GBP/USD: 1.3000 (666M). EUR/CHF 0.9950 (800M) AUD/USD: 0.7400 (307M). NZD/USD: 0.6925 (284M) USD/CAD: 1.2550 (289M), 1.2560-70 (923M), 1.2590-00 (497M), 1.2635-40 (385M) Technical & Trade ViewsEURUSD Bias: Bearish below 1.12 Bullish above Edges higher in Asia ahead of ECB EUR/USD opened +0.62% at 1.0894 after fall in US yields underpinned It eased to 1.0883 in early Asia on talk of EUR/AUD selling flows US yields dipped again in Asia and USD moved broadly lower EUR/USD tracked higher and was @ session high @ 1.0905/10 into the afternoon Resistance is at 10-day MA at 1.0908 and 21-day MA at 1.0978 Support at March 7 trend low at 1.0806 validated by price action ECB meeting today in a key event for the EUR/USD Market is expecting ECB to deliver a hawkish signal regarding future rate hikesGBPUSD Bias: Bearish below 1.3350 Bullish above. Bid – opens the door to a bullish key day reversal +0.15%, near the top of a busy 1.3107-1.3141 range with U.S. dollar softer UK housing market sees first sales listings rise in 12 months Sustained increase in properties on the market would likely cap prices Charts, momentum studies, 5, 10 & 21 DMAs, and 21 day Bolli bands neutral Wednesday’s bullish outside day potential key day reversal on a strong close Key day reversal would be an unusual and strong positive sterling signal 1.2997 lower 21 day Bollinger band and London 1.2973 base initial support 1.3167 April high, then 1.3174 61.8% March-April fall first resistanceUSDJPY Bias: Bullish above 120 Bearish below USD/JPY bouncing after swoon to 125.11 EBS earlier in Asia Since up to 125.46, still lower than 125.68 at start of Asia trade Position-adjustments ahead of Easter holidays name of game Tokyo players eyeing 125.00-126.00 range during span Upside targets met with trade up to 126.32 yesterday Ascending hourly Ichi cloud working as cushion all day, 125.26-40 now Support too at also ascending 100-HMA at 125.20 Japanese importer, investor bids ahead of 125.00, exporters from @126.00 Any further push up in USD/JPY contingent on higher US yields US yields heavy today, Treasury 10s @2.680%, cycle high 2.836% TuesdayAUDUSD Bias: Bullish above .7300 Bearish below Bid tone in Asia as USD and US yields edge lower AUD/USD opened unchanged at 0.7453 and moved higher from the open Talk of EUR/AUD selling helped push the AUD/USD to 0.7468 Aus jobs data came in slightly worse than expected and AUD/USD slipped to 0.7450 US yields moved lower and the AUD/USD traded back to 0.7467 Heading into the afternoon the AUD/USD is trading around 0.7455/60 Resistance is at the 21-day MA at 0.7477 and 10-day MA at 0.7484 Bids are tipped at 0.7440 with support at yesterday’s 0.7392 low Moves in US Treasury yields driving the price action at present There is a growing view that US yields and US inflation may be peaking in short-term
Source: Tickmill
