Daily Market Outlook, April 28, 2022 Overnight Headlines Australia Banks Pull Forward Hike Calls After Inflation Surprise China Cabinet Split Over Opening Stimulus ‘Flood Gates’ Treasury Yields Extend Slide Amid Signs Of Extreme Bearishness Deutsche Bank Sees 5%-6% Fed Target Rate And U.S. Recession Euro Falls To Five-Year Low Against Dollar As Growth Risks Eyed Oil Rises On Russia Gas Tension, China Stimulus Hopes Stocks Extend Sell-Off, Dollar Firm On Global Growth Fears Microsoft Waves Off Macroeconomic Worries With Bullish Forecast Alphabet’s Earnings Decline As YouTube Revenue DisappointsThe Day Ahead .Asian equity markets are mostly up this morning although Chinese indices are down. Some positive news for the US tech sector has been cited as support. Pledges of economic support from China alongside signs that the Covid outbreaks in Shanghai and Beijing may be stabilising have also helped boost sentiment. These seem to have outweighed concerns about Russian intentions regarding gas exports. US President Biden will speak about Ukraine today. The Bank of Japan left monetary policy unchanged today and generally maintained a ‘dovish’ stance with its latest update. Today’s German consumer price data for April will provide some clues on tomorrow’s update for the Eurozone as a whole. Annual inflation is expected to fall modestly from March’s level, although on a EU-harmonised basis it is expected to be unchanged. Look for tomorrow’s reading for the Eurozone to show a fall. Meanwhile, Eurozone economic confidence data for April will provide an update on the impact of the Ukrainian crisis on sentiment in the region. The first estimate of US Q1 GDP is expected to show a sharp slowdown in annualised quarterly growth to 1.3% compared with 6.9% in Q4, due to a combination of weaker inventory growth and strong import growth. However, the domestic final demand component is expected to grow more strongly than in Q4, and overall GDP growth is forecast to accelerate in Q2. This morning’s monetary policy announcement from the Swedish Riksbank is not expected to result in an immediate change in interest rates. However, recent comments from the central bank’s head suggests that they may now be close to hiking interest rates. That has led to speculation that rates may be raised following the next meeting on 30th June. Today’s update will be watched for a signal that this is likely, while in the meantime a reduction in its asset purchase programme is expected to be announced. The Lloyds Bank Business Barometer ‘s April update will be released early Friday. In March, it showed the biggest fall in business confidence since the early days of the pandemic. Confidence was down in three-quarters of the UK’s regions and nations, and across all sectors. Both pay and price inflation pressures continued to build, reflecting a tight labour market and pressure to pass on higher costs. Ahead of next week’s monetary policy update from the Bank of England, the data will be watched for any signs that these pressures are easing.FX Options Expiring 10am New York Cut EUR/USD: 1.0650 (309M), 1.0700 (567M) USD/JPY: 128.00 (405M), 129.00 (220M), 129.25 (250M) AUD/USD: 0.7060 (225M), 0.7080 (299M), 0.7100 (361M) 0.7150 (205M), 0.7250 (241M), 0.7400 (1.36BLN) NZD/USD: 0.6540-50 (402M). EUR/GBP: 0.8405-15 (293) USD/CAD: 1.2650-60 (1.9BLN), 1.2700 (401M), 1.2750-60 (831M) 1.2770-75 (490M), 1.2800 (261M), 1.2860 (387M) EUR/CHF: 1.0295 (213M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.0950 Bullish above Testing Wednesday low as USD buying continues in Asia EUR/USD opened -0.73% at 1.0559 after USD broadly moved higher It came under pressure when USD/JPY moved up early and traded to 1.0530 USD firmed again late morning when USD/CNH surged and EUR/USD fell through 1.0520 Heading into the afternoon it is close to the session low at 1.0512 Talk of a 1.0500 option barrier may discourage aggressive selling There isn’t any decent support ahead of the 2017 low at 1.0340 Only a break above the 10-day MA at 1.0729 would ease downward pressureGBPUSD Bias: Bearish below 1.30 Bullish above. GBP/USD trades below 1.25 for first time since July 2020 Cable hit new 21-month low of 1.2492 at 0544 GMT after breaking below 1.25 1.2535 = subsequent rally high, courtesy of some profit-taking on shorts GBP/USD was above 1.30 before UK retail sales data miss last Friday Safe-haven USD supported by geopolitical news and Fed expectations Putin warns West of lightning retaliation for intervention in UkraineUSDJPY Bias: Bullish above 125 Bearish below USD/JPY through 130.00 option barriers, big question looms Afternoon Asia trade sees USD/JPY break above 130.00, to 130.27 EBS Large option barriers at 130.00 knocked-out, stops above tripped Question on most minds where will Japanese officials draw the line Many spec targets achieved, threat of actual intervention towards 135? Speed of JPY weakness, volatile market not lost on Japan official-dom More option barriers tipped every 50 ticks from 130.50 USD/JPY highest since 133.84 in Apr 2002AUDUSD Bias: Bullish above .7300 Bearish below Under pressure as USD strengthens led by USD/JPY AUD/USD opened unchanged at 0.7126 after topping out at 0.7190 After trading at 0.7127 it eased to 0.7110 as USD remained in broad demand Buoyant risk assets encouraged some buying but sellers above 0.7120 capped A jump higher in USD/CNH sent AUD/USD lower again and it fell below 0.7110 AUD/USD traded 0.7097 before settling 0.7105/10 into the afternoon There is minor support at the Feb 24 low at 0.7094 Next level of decent support is at the 2022 low at 0.6967 Resistance is at the 10-day MA at 0.7273 and 200-day MA at 0.7295 AUD/USD vulnerable while global growth concerns persist
Source: Tickmill
