Daily Market Outlook, March 25, 2022

Daily Market Outlook, March 25, 2022 Overnight Headlines China Sees ‘Unprecedented’ Capital Outflow Since War, IIF Says Kiwi Home Owners Face Soaring Mortgage Repayments As Rates Jumps EU Countries, EU Lawmakers Clinch Deal On Rules To Rein In Tech Giants U.K. Consumer Confidence Falls Amid Sense Of Crisis On Inflation Oil Fluctuates as EU Refrains From Fresh Action On Russian Crude U.S. Promises To Deliver 15 BCM More Of LNG To Europe In 2022 Europe’s Large Diesel Stockpiles Could Run Down Fast As Russia Bites Asia Pacific Banks Sell Record Floater Notes In March As Yields Surge Asian Stocks Fall Friday With China Tech Giants, Paring Weekly Gain FAA Warns Boeing May Not Win Certification For 737 MAX By YR End The Day Ahead Asian equity markets are mixed this morning but are set to record a second weekly rise according to an index of Asia-Pacific shares. Front-month Brent crude oil fluctuated overnight and has risen by about 10% over the course of the week to near $120 a barrel. The US and the EU are expected to provide details of an agreement to reduce Europe’s dependency on Russia energy by increasing imports of US liquefied natural gas. The transition, however, will take time. Official UK data released this morning showed a fall in February retail sales (excluding fuel) of 0.7%m/m, weaker than market expectations for a rise of 0.5%. The volume of sales is still up by 4.6% on the year. Overnight, UK GfK consumer confidence fell by 5 points to -31, the lowest since November 2020. The outlook for consumer spending looks particularly uncertain given the impact of higher inflation. The Office for Budget Responsibility predicted the biggest fall in real household disposable incomes in the coming financial year since the ONS data began in the 1950s despite fiscal support announced by the Chancellor in his Spring Statement. Ahead, the latest update for the German IFO business survey will be watched. Anticipate a drop in the headline index to a one-year low of 94.0 in March from 98.6, especially given the country’s close energy links with Russia. The decline is expected to be driven mostly by the expectations component (to 92.0 from 99.2), while a less severe fall is likely for the current assessment index. Yesterday’s flash PMIs showed more moderate declines than forecast for both manufacturing and services, so the risk could be that the IFO index falls by less than forecast. But the data will probably add to evidence that Russia’s invasion of Ukraine will weigh on output but, at the same time, add to inflationary pressures. In the US, the final reading of the University of Michigan consumer sentiment index for March is expected to be confirmed at 59.7, the lowest for over a decade, reflecting inflation concerns. Central bank speakers today include the Fed’s Williams and Barkin. The possibility of a 50bp hike at the Fed’s next meeting in May has not been ruled out.G10 FX Options Expiries for 10AM New York Cut(Hedging effect can often draw spot toward strikes pre expiry if nearby (P) Puts (C) Calls ) EUR/USD: 1.0925 (453M), 1.1000 (1.69BLN) 1.1100 (574M) USD/JPY: 118.50 (300M), 119.00 (325M) 119.25 (1.03BLN) AUD/USD: 0.7375 (410M). USD/CAD: 1.2400 (330M) 1.2610-15 (517M), 1.2650 (646M), 1.2670 (360M) 1.2700 (594M). NZD/USD: 0.7000 (232M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.12 Bullish above EUR/USD opened unchanged around 1.1000 after holding 1.0960/70 or third day After trading 1.0995 early Asia EUR/USD drifted higher when USD/JPY sold off USD/JPY fell over 0.50% after streaking higher for the past week EUR/USD traded to 1.1035 before settling around 1.1030 A close above the 21-day MA at 1.1028 may prompt more short-covering EUR/USD support building 1.0960/70 where it held past three days A break below 1.0960 needed to maintain downward momentumGBPUSD Bias: Bearish below 1.3350 Bullish above. +0.1%, supported by a softer USD in a 1.3183-1.3210 range, steady flow UK consumer confidence slides as inflation, war worries grow UK car production suffers weakest February since 2009 Data supports the Bank of England's cautious rate hike stance Charts; momentum studies - 5, 10 & 21 daily moving averages conflict 21 day Bollinger bands contract - mixed signals favour range trading 1.3322, 50% of Feb-Mar fall and 1.3000 March and 2022 low range parametersUSDJPY Bias: Bullish above 116 Bearish below USD/JPY and JPY crosses pull back some from fresh highs yesterday Verbal intervention, BoJ FX-speak, pre-weekend position adjustments cited US yields remain firm, sideways, not a factor, Treasury 10s @2.360% Japanese importer good buyers at Gotobi Tokyo fix, on weekend demand USD/JPY to fresh recent high of 122.44 EBS before pull-back to 121.55 Presumed 122.50 option barriers helped cap market, more every 50 ticks up Risk mood less on in Asia, Nikkei -0.2% @28,062, E-Minis +0.1% @4517 Recent moves into peripherals in spotlight, good retail, some investor flowsAUDUSD Bias: Bullish above .7100 Bearish below AUD/USD opened +0.17% at 0.7513 after bouts of AUD/JPY buying supported After trading at 0.7500 early Asia it edged higher when USD broadly eased USD/JPY led the USD lower - falling over 0.50% at one stage AUD/USD traded to 0.7525 before settling around 0.7515 into the afternoon Resistance is at Oct 28 high at 0.7555 with sellers tipped ahead of 0.7550 More resistance is at the 61.8 of the 0.8007/0.6967 move at 0.7609 Support is at former resistance at 0.7440 and the 10-day MA at 0.7386 AUD/USD overbought and may correct if AUD/JPY is forming a top

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