Daily Market Outlook, April 12, 2023
Markets Marking Time Ahead of CPI & FOMC Minutes Combo
Asian equities produced another subdued session taking their lead from lacklustre trading on Wall Street as investors pare risk exposure ahead of today's double whammy of US inflation data followed by the minutes from the FOMC meeting. The Nikkei 225 continues to trade with a 28k handle, comments from Warren Buffett on Japanese stocks have added further support to the bid tone as the investment stalwart believes that Japanese investments offer excellent opportunities at current valuations.
With no data of note on the European data docket focus is firmly Stateside with this afternoon's US CPI data, investors are expecting US annual CPI inflation to have retreated further from last month's 6.0%, the consensus amongst economists is for a decline to 5.1%. However, the concern for investors is that the US tracks the trend in the Eurozone, with ‘core’ inflation remaining stubbornly elevated, annual inflation in prices ex food and energy is expected to show a marginal rise to 5.6% from 5.5%. This creates a further conundrum for the FOMC as they need to thread the needle between growth concerns and tightening fiscal conditions when weighing their next rate move. The tightening fiscal conditions are particularly pronounced in credit conditions and their potential impact on growth is an issue that investors will hope receives some attention in the FOMC March meeting minutes released this evening. At the press conference in March Fed Chair Powell appeared decidedly less hawkish that the stance taken in speeches earlier in the month, specifically he referenced tighter credit conditions as an important input for negating future interest rate rises, however, these comments all came as the banking crisis was unfolding, as such the focus of the committee may have shifted to a more defensive stance, the minutes will be parsed by investors for a better understanding of the debate between officials and to focus going forward.
FX Options Expiries For 10am New York Cut
(In bold represent larger expiries, more magnetic when trading within daily ATR)
EUR/USD: 1.0900-10 (2.974 BN)
USD/CHF: 0.9105 (950M), 0.9165-75 (756M)
GBP/USD: 1.2300 (894M), 1.2500 (483M)
AUD/USD: 0.6700 (565M), 0.6750 (1.2BLN)
USD/JPY: 132.15-25 (967M), 133.00 (410M), 134.10-15 (1.1BN)
Overnight News of Note
Asia Stocks Pare Gains Wednesday As Traders Wait On US CPI
US Inflation Expected To Have Eased To Lowest Level In Two Years
Fed’s Meeting Minutes To Detail How Officials Weighed Bank Risks
Japan March Wholesale Inflation Slows For 3rd Straight Month
IMF: More Flexible BoJ Yield Control Can Prevent Sharp Market Reaction
BoJ May End Yield Curve Control By September: MUFG Markets Chief
Fed’s Harker Fed To Sift Data To See If More Rate Hikes Are Needed
Fed's Kashkari: Hopeful Signs Calm Is Being Restore In Bank Sector
Fed’s Williams Says One More Hike Is ‘Reasonable Starting Place’
Fed’s Goolsbee Calls For Policy Caution Amid Credit Uncertainty
ECB’s Villeroy: Euro Zone Inflation At Risk Of Getting Entrenched
UK Worker Supply Rises At Fastest Pace In Two Years, Survey Says
UK House Sales At Pre-Covid Levels After 'Mini-Budget' Shock
US Dollar Dips Wednesday Ahead Of Key US Inflation Data
China 10-Year Bond Yield Drops To Lowest Since November
Treasury Flows From Abroad Have Collapsed, BNY Mellon Says
Banks That Shored Up First Republic Pushed To Boost Reserves
Goldman Sachs To Expand Japan Banking Services, Nikkei Says
(Sourced from Bloomberg, Reuters and other reliable financial news outlets)
Technical & Trade Views
SP500 Bias: Intraday Bullish Above Bearish Below 4070
Primary support is 4000
Primary objective is 4207
Below 3985 opens 3950
20 Day VWAP bullish, 5 Day VWAP bullish
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EURUSD Bias: Intraday Bullish Above Bearish below 1.0930
Primary support is 1.07
Primary objective is 1.1128
Below 1.0700 opens 1.0660
20 Day VWAP bullish, 5 Day VWAP bullish
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GBPUSD Bias: Intraday Bullish Above Bearish below 1.24
Primary support is 1.2250
Primary objective 1.2659
Below 1.22 opens 1.2010
20 Day VWAP bullish, 5 Day VWAP bullish
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USDJPY Bias: Intraday Bullish above Bearish Below 133.00
Primary resistance is 135.15
Primary objective is 129.15
Above 136 opens 137.90
20 Day VWAP bearish, 5 Day VWAP bearish
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AUDUSD Bias: Intraday Bullish Above Bearish below .6696
Primary resistance is .6740
Primary objective is .6950
Below .6560 opens .6450
20 Day VWAP bearish, 5 Day VWAP bearish
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BTCUSD Intraday Bias: Bullish Above Bearish below 29000
Primary support 23000
Primary objective is 30500
Below 23000 opens 22400
20 Day VWAP bullish, 5 Day VWAP bullish
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!