Daily Market Outlook, April 29, 2022

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Daily Market Outlook, April 29, 2022 Overnight Headlines China And U.S. Negotiate On-Site Audit Checks As Delistings Loom RBA To Raise Rates To 0.25% On Tuesday, To End Year At 1.50% – RTRS Poll More UK Companies See Price Increases Even As Economy Slows Dollar Towers At Two-Decade High On Growth Woes, Fed Outlook Goldman Sees Yen Falling Further With Or Without Intervention Australian Bonds Attract As RBA Hike Bets Overdone, JBWere Says Oil Heads For Longest Run Of Monthly Gains Since 2018 Diesel Squeeze Intensifies As Traders Scramble To Exit Shorts Asia Shares Brace For Worst Month In 2 Yrs On Growth Fears Apple Shares Dip After Company Warns Of A Possible $8 Billion Hit Amazon Results And Outlook Fall Short As Warehouse, Fuel Costs Soar Intel Forecasts Gloomy Quarter On Supply-Chain Woes, Shares Fall Musk Sold Billions Of Dollars In Tesla Stock After Agreeing To Buy TwitterThe Day Ahead Eurozone inflation likely edged higher this month, according to economists, who predict that the economy in the currency area grew again in the first quarter. Headline consumer price growth this month is expected to tick up to an annual rate of 7.5% from the all-time high of 7.4% in March. The core rate is also poised to set another record of 3.1% following last month’s historic peak of 2.9% Quarterly GDP growth in the three months to March is forecast at 0.3%, the same rate reported for the previous period, with the annual rate expected to rise to 5.1% from 4.6%. Much higher quarter growth was expected in the final three months of 2021, but the German economy contracted 0.7% in the timeframe. The Bank of Japan’s yield-curve control policy is weighing so heavily on the yen that intervening in the market to buy the currency would have little impact, according to Goldman Sachs Group Inc. strategist Karen Reichgott Fishman. “We find it hard to see intervention driving a sustained appreciation,” she wrote in a note, adding that rising U.S. yields should keep pushing the yen lower. Still, Fishman sees a “high risk” of the Finance Ministry instructing the BOJ to go into the market to buy the yen if the depreciation continues. Wild swings have been a hallmark of the U.S. stock market all year. It’s only gotten worse during the latest earnings period. Stocks rallied as much as 3% Thursday on the back of strong results from technology heavyweights. Meta Platforms Inc. surged 18%, while PayPal Holdings Inc. and Qualcomm Inc. each jumped more than 10% just two days after gloomy outlooks led to the biggest market selloff in seven weeks. In late trading Amazon.com Inc. plunged 10% and Intel Corp. lost 5% after disappointing forecasts. The outsize swings continued a stretch that’s seen the average S&P 500 stock move 4.2% in either direction after reporting earnings this quarter, the most since the last period of 2011, according to data from Goldman Sachs Group Inc. That compares with an average price change of 3.4% in the prior 65 quarters. USD and Fed officials, while still on blackout ahead of the May FOMC, focus on Q1 Employment Cost Indicator (ECI) data, alongside PCE core deflator figures for March, Friday at 13:30 BST. Citi Economics expects another strong increase in ECI to 1.2%QoQ in Q1, with upside risks from a potentially greater increase in employer provided benefits at the start of the year. Core PCE inflation is likely to rise 0.3%MoM and moderate slightly from 5.4%YoY in February to 5.3%YoY in March, based on already-known elements of CPI and PPI. CitiFX Quant team’s asset rebalancing model points to a rotation out of bonds and into equities, particularly US equities, with these expectations potentially contributing to Thursday’s squeeze higher in S&P (+2.96%). Month end falls trading session may see keep price action choppier than usual, particularly as we head into the FOMC and other top tier events next week.FX Options Expiring 10am New York Cut EUR/USD: 1.0400 (456M), 1.0450 (297M) 1.0565-75 (2.2BLN), 1.0600 (838M), 1.0650 (688M) 1.0700 (2.94BLN). USD/JPY: 128.40 (230M) EUR/GBP: 0.8475 (751M) AUD/USD 0.7100-10 (385M), 0.7200 (453M), 0.7250 (486M) USD/CAD: 1.2695-00 (649M), 1.2850 (740M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.0950 Bullish above Firmer into month end rebalancing and EZ data dump +0.1%, in a 1.0492-1.0530 range, as the USD eased in a low key session Apple, Amazon and Intel delivered cautious outlooks – may hit risk in NY Big moves in April suggests potential volatility on month end rebalancing Raft of European GDP and inflation data will gauge EZ economic health Charts; 5, 10 & 21 daily, weekly and monthly moving averages fall 21 day Bollinger bands and daily momentum studies head lower Bearish setup targets the long term 1.0340 low in January 2017 Close above 1.0799 21 day moving average needed to undermine downsideGBPUSD Bias: Bearish below 1.30 Bullish above. Touch firmer into a likely volatile month end +0.1% in a 1.2455-1.2496 range with only moderate month end flow Sterling and EUR/GBP often volatile on month end rebalancing after big moves Almost 60% of UK companies plan to raise prices in 2022 BoE to walk a fine line between inflation and recession May 5 Charts; momentum studies, 5, 10 & 21 day moving averages head lower 21 day Bollinger bands expand – strong bearish trending setup Targets a test of the 1.2360 low in July 2020 then 1.2252 June 2020 base Close above 1.2774 10 day moving average would undermine downside biasUSDJPY Bias: Bullish above 125 Bearish below Drops briefly on position adjustments; downside limited USD/JPY down 0.1% in Asia, mild profit-taking dip ahead of w/e pounced on Friday range of 130.95-130.36; liquidity constrained due to Japan holiday Buyers emerge ahead of 130.00, previous psychological resistance now support BOJ commitment to ultra-easy policy will continue to undermine JPY BOJ policy in contrast to Fed which is racing to raise rates Choppy week ahead, traders brace for Fed with Japan closed Tuesday-Thursday Break above 130.57, 76.4% Fibo of 1998-2011 USD decline technically bullish Immediate resistance at 131.25 Thursday high; support 130.35-40, 130.00-10AUDUSD Bias: Bullish above .7300 Bearish below Posts minor gains as focus shifts to a RBA rate hike AUD/USD rallies 0.4% in Asia after suffering a bruising 2.6% weekly fall Has held up relatively well despite rampant USD strength; RBA awaited Tue RBA hike of 0.15% priced in; will be 1st rate rise in Australia in a decade Global growth slowdown, prospects of aggressive Fed rate hikes limit rallies Weak CNY on China growth concerns amid COVID-19 lockdowns dent AUD sentiment Range of 0.7090-0.7138 Friday; resistance 0.7145-50, 0.7165-70 Support 0.7085-90, 0.7050-55; loss of latter opens test of 0.7000-05

Source: Tickmill

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