Daily Market Outlook, April 8, 2022

Daily Market Outlook, April 8, 2022 Overnight Headlines China’s Covid Zero Policy Defended As Shanghai Cases Top 21,000 Japan's Feb Current Account Swings Back To Surplus From Big Deficit BoJ Is Likely To Adjust Policy As Soon As July, According To An Ex-Official Congress Submits Bill Stripping Russia's Trade Status, Banning Their Oil Imports House Approves $55Bln In COVID Aid For Restaurants, Other Hard-Hit Firms Fed’s Bullard: Fed ‘Behind The Curve,’ Sees Rates Now At 3.5% By Year's End New York’s $220Bln Election-Year Budget Is Stuffed With Tax Breaks Canada Speeds Up Deficit Reduction In ‘22 Budget, Sees Deficits Of C$53Bln Dollar Inches Up To New Two-Year Peak, Set For Best Week In Four Treasury's Yellen Calls For Crypto Regulation To Reduce Risks, Fraud 10-Year US Treasury Yield Touches 3-Year High Following Hawkish Fed Oil Headed For 3% Weekly Fall On Emergency Stocks Release IEA Agree To Release 120Mln Barrels Of Oil Over Six Month Period India Says It Is Exploring Ways To Support IEA Members' Oil Release Asia Stocks Slide Amid Fed, China Virus Worries; US Futures Waver Toshiba Climbs On Plans To Review Privatization BidsThe Day Ahead Stocks headed for a weekly loss on Friday as the prospect of aggressive global rate hikes finally began to rattle investors, while bonds fell and the dollar looked set for its best week in a month. MSCI's broadest index of Asia-Pacific shares outside Japan was steady in morning trade and down about 1.5% for the week so far. Japan's Nikkei fell 0.2% on Friday to head for a weekly loss of nearly 3%. A late rally had lifted Wall Street indexes modestly, but they are also all down for the week led by a 2.5% loss for the rates-sensitive Nasdaq . U.S. futures were flat. Federal Reserve policymakers are ready to start cutting the central bank's asset holdings from May and are prepared to move rates higher 50-basis-points at a time to curb inflation, meeting minutes and remarks from officials showed this week. War in Ukraine and the shockwave it has sent through commodity prices, as well as lingering damage to supply chains from the pandemic has heaped even more pressure on consumer prices and is adding to a sense of a major shift in trends. Risk of a populist upset in French presidential elections has also sent jitters through markets – dragging on French debt and the euro – ahead of the first round of voting on Sunday. A victory for far-right leader Marine Le Pen over incumbent Emmanuel Macron, while still unlikely, is now within the margins of error, opinion polls show and the euro edged down to a one-month low of $1.0858 in morning trade. Elsewhere long-end Treasuries have borne the brunt of this week's selling in hemorrhaging bond markets as traders see it hit hardest by the Fed cutting bond holdings. The benchmark 10-year Treasury yield is up 25 basis points (bps) to 2.6409% this week, and was steady in Asia trade on Friday. The 30-year yield is up 22 bps.The U.S. dollar has been the primary beneficiary and the dollar index , which measures the greenback against a basket of six major currencies, hit an almost two-year high of 99.904 on Friday. Today’s economic data calendar is very light with nothing of note in the UK or the US. In the Eurozone, yesterday’s German industrial production data for February showed a monthly rise of 0.2%. That is a more modest gain than those seen in January and December but was the fifth consecutive increase. Output data for Spain, due imminently, are also expected to post a rise. The European industrial sector may for now be benefiting from some easing in supply chain restrictions. However, there are concerns that the Ukrainian crisis and new Covid restrictions in China could lead to new bottlenecks and that demand could fall off amid rising uncertainties. The heads of the central banks of Cyprus, Greece and Ireland are scheduled to appear in a joint session at a Greek economic forum. Given rising expectations that the European Central Bank will may soon start to tighten monetary policy, markets are likely to be particularly interested in what they have to say about the likely impact on their respective bond markets. There have already been tentative signs of the spreads between the bond yields of various Eurozone members widening and there will be some concern that this could go further. However, ECB Chief Economist Lane earlier this week said that the ECB had a range of tools to combat any ‘fragmentation’ and today’s speakers can be expected to make similarly reassuring comments. A strong Canadian labour market today will reinforce expectations that the Bank of Canada will tighten monetary policy aggressively next week. An interest rate rise is already seen as a near certainty and the majority of forecasters appear to expect a hike of 50 basis points rather than the more usual 25bp. 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: EUR amounts 1.0825 711m 1.0850 617m 1.0975 450m 1.0995 3.2b 1.1050 368m- GBP/USD: GBP amounts 1.3195 330m 1.3220 452m- USD/JPY: USD amounts 121.50 325m 123.00 425m 123.25 355m 124.00 936m 125.00 400m- USD/CHF: USD amounts 0.9300 250m- USD/CAD: USD amounts 1.2350 599m 1.2395 595m 1.2475 528m 1.2500 589m 1.2635 350m 1.2650 975m 1.2665 581mTechnical & Trade ViewsEURUSD Bias: Bearish below 1.12 Bullish above EUR/USD opened -0.13% at 1.0881 after USD broadly strengthened EUR/USD came under pressure early Asia and remained heavy throughout Heading into the afternoon it is at the session low at 1.1856 EUR moved lower against most currencies in Asia as Ukraine uncertainty persisted Market has stopped pricing in a swift, diplomatic end to the Russia-Ukraine crisis EUR/USD seems destined to at least test the March 7 trend low at 1.0806 Sellers tipped ahead of 1.0940 with resistance at 1.0990 where 10 & 21-day MAs convergeGBPUSD Bias: Bearish below 1.3350 Bullish above. Short lived early gain, 1.3000 remains vulnerable -0.05% at the base of a 1.3067-1.3088 range with modest interest on D3 EUR/GBP trades near base of a 0.8305-0.8326 range with occasional heavy flow UK hiring growth slows in March due to worker shortages Skills shortages post Brexit, and older workers retiring fuel wage pressure Charts; momentum studies conflict - 5, 10 & 21 day moving averages ease 21 day Bollinger bands slip - setup suggests the base is the weak side First major support 1.3001 2022 low, then 1.2996 lower 21 day Bolli band Thursday's 1.3108 high then last week's 1.3181 top are key resistanceUSDJPY Bias: Bullish above 120 Bearish below USD/JPY up to 124.23 EBS early Asia before charging down to 123.66 Japanese exporters good sellers on 124, offshore longs, specs join in later Catalyst for steep decline comments from ex-BoJ Hayakawa Talk preposterous given recent BoJ pronouncements but hit a nerve Some players likely wanted to pare down longs pre-weekend anyway Good bounce since to 124.00 area, Japanese importers buy from lows 123.50-124.50 core range for now affirmed? Should hold into weekend Large, $936 mln option expiries at 124.00 exert some gravitational pull US yields also lower from fresh cycle highs early, but bouncing again Yield on US Treasury 10s @2.658%, 2s @2.508% currentlyAUDUSD Bias: Bullish above .7300 Bearish below Trades with heavy tone in narrow range in Asia AUD/USD opened -0.40% at 0.7481 and traded in 0.7473/87 range Heading into the afternoon it is trading just below 0.7480 AUD/USD vulnerable as equity and commodity markets looking toppish Support at last week's 0.7456 low as close below would complete bearish outside day More support at 21-day MA at 0.7439 as break would suggest top is in place Resistance is at the 10-day MA at 0.7507 and break would ease pressure

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/daily-market-outlook-april-8-2022"
via IFTTT

Euro Gets a Chance for a Rebound After ECB Minutes Release

The specter of stagflation in the EU greatly complicates the ECB potential to effectively use monetary policy. It becomes clear that commodity supply disruptions and trade contraction cement high inflation, while real output growth forecasts become less rosy as consumer demand may eventually begin to sag under the burden of rapid price increases. These concerns were reflected in the minutes of the last ECB meeting, which was released today. The release of the Minutes somewhat cheered up the Euro.The document showed that most ECB policymakers believe that policy tightening should be started earlier and conducted faster than previously expected. This is not surprising as inflation in the Eurozone is breaking records - in March there was a sharp spike in price growth to 7.5%, due to the rally in commodity markets, in particular energy:According to members of the Governing Council of the ECB, inflation will remain above the target in 2023, while inflation targets set for 2024 have already been achieved. APP asset purchases have also reached their stated objective, so the ECB is considering adjusting QE (decreasing monthly volume of bond purchases on the open market).Since inflation is caused by rising prices for basic raw materials, the ECB has fair fears that it is transitory and follows fluctuations in commodity prices on world markets. Clearly, this is not the type of inflation that needs to be addressed with rapid policy tightening. But since the period of commodity inflation has been going on for too long, first due to post-pandemic imbalances, then due to the protracted Russian military operation, cost-push inflation may eventually gain a foothold in the inflation expectations of EU households. Then, of course, the ECB will also make a mistake, but only because it was late with decisive actions and the agents in the economy began to have expectations of future inflation already divorced from the ECB forecasts.The ECB minutes were able to convince the debt market that rates would rise faster, with German 2-year bond yields up nearly 10bp. after release: Apparently, the market regarded such rhetoric as a really serious step by the ECB towards normalization of policy. In this regard, EURUSD has a chance for a rebound, at least the technical picture is now conducive to this. The pair is approaching the previous yearly low, where a double bottom pattern could form. Nevertheless, the market may not wait for the movement close to 1.08 and move to an upside bounce on higher levels (1.0850 – 1.0875), since the gap between the policies of the ECB and the Fed is beginning to narrow and the progress in slapping direct sanctions on Russia energy exports seems to stall (which was the biggest factor of poor Euro performance at the start of the week):

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/euro-gets-a-chance-for-a-rebound-after-ecb-minutes-release"
via IFTTT

Market Spotlight: NZDCAD Patter Play on Watch

NZDCAD Triangle On Watch Price action in NZDCAD is worth monitoring here. Following the rally across February and into early March price has since been caught in a block of consolidation under the bear channel top. The consolidation has developed into a contracting triangle pattern, hemmed in by the channel top. In light of the previous rally, I’ll be watching for a breakout and continuation higher in coming sessions with .8751 the trigger level, targeting .8854 and .8975 thereafter.The pair is currently in a standoff given the pullback we are seeing in risk assets recently. However, CAD potentially has more to lose if the correction in oil prices deepens. Meanwhile, the recent hawkish shift in RBNZ sentiment still has further room to develop meaning that NZD might be better supported over the medium-term.Keep An Eye OnLittle on the data sheet this week bar CAD employment figure son Friday. However, the more important element to note is broader risk appetite. Both currencies remain under pressure on the back of recent Fed hawkishness. As this theme resolves, the greater focus will likely remain on oil prices which, if they remain subdued, should allow NZDCAD to rally. Current retail positioning is around 60% short, showing plenty of room for a breakout higher to develop near term.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/market-spotlight-nzdcad-patter-play-on-watch"
via IFTTT

Market Spotlight: DXY Soars On Hawkish FOMC Minutes

Fed Pushing Ahead in MayThe US Dollar has been higher today on the back of the release of the March FOMC minutes yesterday. The minutes confirmed the hawkish shift within the Fed, revealing members’ intentions to begin scaling back the central bank’s balance sheet by $95 billion a month starting in May. Coming on the back of hawkish comments from Fed’s Brainard this week, regarding a quickened pace of balance sheet run-off, the minutes helped lift USD firmly.Discussions around future rate hikes were also decidedly bullish with the minutes showing support for larger .5% increases. The minutes noted that: “Many participants noted that one or more 50 basis point increases in the target range could be appropriate at future meetings, particularly if inflation pressures remained elevated or intensified.”USD had been somewhat muted since the March FOMC with markets seemingly turning their attention to longer term growth concerns. However, with the minutes putting the focus back on near-term hawkishness, USD looks to be finding its feet once again.Technical ViewsDXYThe Dollar Index is breaking out once again this week with price now moving beyond resistance at the 99.39 level. The index found solid support along the 97.90 level, with price now testing above the bull channel and knocking on the door of 99.88. With MACD and RSI bullish, the focus is on further upside with the 100.93 level the next upside marker to note.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/market-spotlight-dxy-soars-on-hawkish-fomc-minutes"
via IFTTT

The Crude Chronicles - Episode 130

Oil Traders Cut Longs FurtherThe latest CFTC COT institutional positioning report shows that oil traders reduced their net-long positions once again last week. Upside positions has been steadily paired over recent weeks, reflected in the continuing weakness we’ve seen in oil prices. Crude futures are currently down around 27% from their YTD highs with price now retesting the 95.93 level following the failure at 129.78.China Concerns MountPrices have come under pressure recently as concerns mount over the widening lockdowns in China. The world’s second-largest economy has reintroduced regional lockdowns in response to soaring COVID rates, leading to expectations of reduced demand. Additionally, there are growing concerns over the impact that surging inflation will have on economic growth going forward, in the US and elsewhere around the globe, raising further question over longer term demand for oil.Historic, Coordinated SPR ReleaseOil prices have come under further pressure this week following news that the International Energy Agency plans to release 60 million barrels of emergency oil. This announcement comes on the back of the US announcing a much larger 180-million-barrel release, aimed at bringing oil prices back under control. This marks the largest release from the US SPR and comes alongside increased calls for domestic oil companies to accelerate their drilling operations in a bid to lift output. Alongside the US release, around 31 countries in the IEA have committed to the co-ordinated release of a further 60 million barrels over the next six months.EIA Reports Surprise SurplusThe latest report from the Energy Information Administration this week has also contributed to the bearish tone in oil markets. The EIA reported a surplus of 2.4 million barrels last week, this was in stark contrast to the -2.9 million barrel drawdown forecast and marks a sharp reversal from the prior week’s 3.4 million barrel draw.Bearish Risks But Don't Rule Out Further UpsideThese recent developments within the supply/demand environment, concerns over demand from China, along with news of historic co-ordinated oil releases, means that the near-term outlook for oil looks vulnerable to further downside. However, there are still clear upside risks around the conflict in Ukraine. With violence having escalated recently and with peace talks yet to produce a deal, any further escalation in violence would likely produce upside shocks in oil prices though, with how backed in the conflict has become now, it would likely take a significant escalation to cause a meaningful upside move.Technical ViewsCrude OilCrude prices are now testing below the recent contracting triangle pattern and back inside the broken bull channel. For now, the move still appears corrective and, while 95.93 holds, further upside remains in focus. Below there, however, 83.75is the next big support to note with the bull channel low coming in just beneath.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/the-crude-chronicles-episode-130"
via IFTTT

Gold futures, H4 | Potential For Bounce!

Type: Bullish BounceKey Levels:Resistance: 1949.2Pivot: 1916.8Support: 1904.5Preferred Case:Prices are consolidating in a triangle pattern . We see the potential for further bullish continuation from our Pivot at 1916.8 in line graphical overlap and 61.8% Fibonacci retracement towards our 1st resistance at 1959.0 in line with 100% Fibonacci Projection . Our bullish bias is further supported by RSI being at levels where bounces previously occurred.Alternative Scenario:If prices were to reverse, they can potentially reach our 1st support at 1904.5 in line with 78.6% Fibonacci projection .Fundamentals:With continuation of Russo-Ukraine invasions and inflation, we might expect a slight bullish turn towards the precious metal.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/gold-futures-h4-or-potential-for-bounce"
via IFTTT

Wheat Futures ( ZW1! ), H4 Bearish Dip

Type: Bearish DipKey Levels:Resistance: 1064'0Pivot: 1031'6Support: 982'2Preferred Case:Prices are on bearish momentum and abiding by a descending trendline We see the potential for a dip from our Pivot at 1031'6 in line with 50% Fibonacci Retracement towards our 1st support at 982'0 in line with 100% Fibonacci Projection . Prices are trading below our Ichimoku cloud resistance, further supporting our bearish bias.Alternative Scenario:Price might continue to climb towards the 1st resistance level of 1064'0 in line with 50% Fibonacci retracement and 61.8% Fibonacci Projection .Fundamentals:No Major News

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/wheat-futures-zw1-h4-bearish-dip7"
via IFTTT

NZDCHF H4 | Potential For A Rise

Type: Bullish BounceKey Levels:Resistance: 0.6506Pivot: 0.64282Support: 0.63897Preferred Case:With price expected to bonce off the Ichimoku cloud support and the ascending trend line support, we have a bullish bias that price will rise to our 1st resistance at 0.6506 in line with the 61.8% Fibonacci projection from our pivot of 0.64282 in line with the pullback support and 61.8% Fibonacci retracement.Alternative Scenario:Alternatively, price may break pivot structure and head for 1st support at 0.63897 in line with the 78.6% Fibonacci projection.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/nzdchf-h4-or-potential-for-a-rise"
via IFTTT

USDCAD H4 | Potential For A Rise

Type: Bullish BounceKey Levels:Resistance: 1.27113Pivot: 1.25423|Support: 1.24285Preferred Case:On the H4, with price moving above the Ichimoku cloud, we have a bias that price will rise to our 1st resistance at 1.27113 in line with the horizontal pullback resistance and 61.8% Fibonacci retracement from our pivot at 1.25423 in line with the horizontal pullback support.Alternative Scenario:Alternatively, price may break pivot structure and head for 1st support at 1.24285 in line with the 78.6% Fibonacci retracement

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/usdcad-h4-or-potential-for-a-rise"
via IFTTT

Investment Bank Outlook 07-04-2022

CIBCFX FlowsCross-play dominated the AU$, earlier move to 0.7519 then reversed back. Trade surplus for February narrowed to AU$7.46bn against economists’ forecast of AU$11.65bn. Those numbers had the AU$ landing at 0.74915. Activity slowed after that, Westpac’s Bill Evans brought forward RBA rate hike call to June. Support seen at 0.7475 and resistance 0.7550. Tomorrow, RBA will release semi-annual Financial Stability Review.$YEN had some excitement but short-lived. It was bought up to 123.92 then returned to 123.47. Like the Aussie, action dried up. Two BoJ speakers, both defending easy monetary policy, nothing new. Most speculators are long $YEN, only the Japanese retail traders are short.EUR$ firmed up little, thanks to cross play. Market is positioned short €AU$ and the move which started yesterday is likely to continue into European session.CitiEuropean OpenFOMC minutes brought about some volatility in markets, although Citi Economics did not find anything materially new or surprising. USD continued to be bid in the NY session, although it was flat in Asia, G10 currencies kept to a tight range against the dollar, with the exception of AUD and NZD which saw notable losses. UST yields were down marginally in Asia. Oil prices and US equities continued their decline post European close. The former however, saw an uptick in Asia, while the latter was mostly flat. We note that AUD trade balance printed lower than expected today, at AUD 7457mn vs AUD 11650mn consensus.Looking ahead, we note that the UN General Assembly is set to vote today on whether to suspend Russia from the Human rights council, while the EU debate on sanctions extends to today. USD will watch Fedspeak and initial jobless and continuing claims. EUR sees German IP and European retail sales datasets, in addition to ECBs minutes. CHF sees unemployment rate information, GBP sees Pill speak, while CAD will receive the government’s budget. MXN will see inflation prints alongside Banxico minutes. HUF will see trade balance and a one-week deposit rate decision, in which we are not expecting a hike. UYU sees a rate decision, in which markets expect a 75bps hike.G10 FX–USD continued to strengthen on the release of FOMC minutes, although it held flat in Asian trading. G10 FX held a tight range around the dollar, with commodity linked currencies a tad in the red. Antipodean currencies were the only ones that saw notable moves with AUD at -0.47% and NZD at -0.32%.–EMFX was little changed on the day, with THB the only mover at -0.3%, as it returns from holiday.–Our etraders flag that volumes are sharply lower, led by EUR (-50% against recent averages). The flow in platforms is matching price action with AUD, NZD, CNH all struggling and net sold by all client types. JPY is outperforming a touch with our spot desk seeing some selling USDJPY out of Tokyo, though little else to warrant the move.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/investment-bank-outlook-07-04-2022"
via IFTTT

EURAUD, H4 | Potential For Dip!

Type: Bearish ReversalKey Levels:Resistance: 1.47264 Pivot: 1.4612 Support: 1.43219Preferred Case:Prices are on bearish momentum and abiding by a descending trendline. We see the potential for a dip from our Pivot at 1.4612 in line with 78.6% Fibonacci Projection towards our 1st support at 1.43219 which is a graphical swing low.Alternative Scenario:Alternatively, prices may go higher to 1st resistance at 1.47264 in line with 100% Fibonacci Projection.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/euraud-h4-or-potential-for-dip"
via IFTTT

GBPAUD, H4 | Potential For Bounce!

Type: Bullish BounceKey Levels:Resistance: 1.77358Pivot: 1.7173Support: 1.70163Preferred Case:Prices are at a pivot. We see the potential for bounce from our Pivot at 1.7173 which is an area of Fibonacci confluences towards our 1st resistance at 1.77358 in line with 61.8% Fibonacci retracement. RSI is on bullish momentum.Alternative Scenario:Alternatively, prices may dip towards our 1st support at 1.70163.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/gbpaud-h4-or-potential-for-bounce"
via IFTTT

AUDNZD, H4 | Potential For Bounce!

Type: Bullish BounceKey Levels:Resistance: 1.09212 Pivot: 1.0843Support: 1.08116Preferred Case:Prices is on ascending trendline. We see the potential for a bounce from our Pivot at 1.0843 in line with 50% Fibonacci retracement towards our 1st resistance at 1.09212 at 161.8% Fibonacci Projection. Prices are on trading above our Ichimoku clouds, further supporting our bullish bias.Alternative Scenario:Alternatively, prices will dip towards our 1st support at 1.08116 in line with 61.8% Fibonacci retracement.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/audnzd-h4-or-potential-for-bounce"
via IFTTT

S&P500 Forecast: Potential Jump Ahead?

The US stock index S&P500 has pulled from the resistance at the level of 4580.00 and dropped. There is a broken downtrend on South. The downtrend might offer significant support to the asset’s price, advancing its reversal and jump. Hence, it is important to follow the candlestick formations around the broken downtrend.Brent oil is heading downwards, targeting the supporting level of 97.00. On the other side, a triangle is about to form soon. So, it is likely that oil might pull from the level of 97.00 and jump.The USD/CAD pair has tested the supporting level of 1.2450 for the second time in a row, leaving a candle with a very long shadow behind. In principle, it is obvious that the lower boundary of the range did not break. Therefore, the asset’s price is likely to jump till the level of 1.2870.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/sp500-forecast-potential-jump-ahead"
via IFTTT