Daily Market Outlook, April 06, 2023
Markets Winding Down, Could Labour Data In The US Spoil The Holiday Spirit?
Asian equities are trading with a subdued tone heading into the holiday weekend with most money centres winding down for early closure tomorrow. The risk tone has softened in the past couple of sessions driven by concerns that weaker data prints out of the US whilst seemingly dovish from a rates pricing perspective, investors sense a growing fear that the data points to a slow down in growth that hints towards recession, however, overnight a glimmer of optimism came from a better than expected Caixin services data out of China, which pointed towards a significant uptick in services activity, giving the China re-opening narrative a much needed shot in the arm. The standout underperformer on the overnight session was the Nikkei225 which traded down over 1% after reports that the BoJ Director Momma suggested the recent retreat in global bond yields provided the BoJ with a window to exit its Yield Curve Control strategy, leaving investors increasingly uneasy about the termination of the accommodative monetary policy environment.
For European investors with Easter widely celebrated across the continent the data docket is scant today. In the UK, investors will parse March PMI construction data providing a timely insight to the highly cyclical construction sector, especially given February’s blowout number for activity, the highest in nearly nine months, investors will be keen to see if a trend is emerging or the number was an anomaly. The February read also highlighted that input cost inflation was at its lowest since November 2020 and supply chain issues were also at pre-Covid lows, the only concern with the February data was seen in employment wage costs which remain stubbornly elevated leading to recruitment bottlenecks.
While European markets are closed for Easter tomorrow the US labour department will still deliver its monthly Non Farm Payrolls report, last month's release once again demonstrated continued tightness in the US employment landscape with another upside surprise in the headline number. Markets are braced for another robust reading of circa 250K jobs added, however, the unemployment rate is set to nudge down from 3.6% to 3.5%. The wage data output may provide some relief as recent readings have started to suggest a slowing in wage growth despite the tightness in the overall employment environment, investors would welcome another tick down in this part of the report.
FX Options Expiries For 10am New York Cut
(In bold represent larger expiries, more magnetic when trading within daily ATR)
EUR/USD: 1.0875 (EU1.02B), 1.0400 (EU848.5M), 1.0920 (EU732.5M)
USD/JPY: 142.00 ($885.4M), 131.00 ($881.7M), 127.00 ($756M)
USD/CAD: 1.3455 ($2.02B), 1.3750 ($1.73B), 1.3600 ($1.05B)
AUD/USD: 0.6725 (AUD647.8M), 0.6610 (AUD490M), 0.6800 (AUD482.4M)
GBP/USD: 1.1700 (GBP403.7M), 1.1400 (GBP403M)
USD/CNY: 7.2850 ($500M), 6.8820 ($303.4M)
USD/MXN: 18.10 ($461.7M), 18.20 ($334.6M)
NZD/USD: 0.6325 (NZD455.3M
Overnight News of Note
Asian Stocks Slide, Bond Yields Depressed As Recession Worries Weigh
China’s Services Activity Surges To More Than Two-Year High
China Asks WTO To Investigate US-Japan-Dutch Chip Curbs
RBA Says Banks Are Strong, Households Resilient To Higher Rates
McCarthy Stresses Need To Speed Up Arms Deliveries To Taiwan
North Korea: US-South Korea Drills Push Tension To 'Brink Of Nuclear War'
Dollar Edges Higher Ahead Of Non-Farm Payrolls Data On Friday
Oil Set For Third Weekly Gain On OPEC+ Cuts, Inventory Draws
Drugmaker AbbVie Trims Profit Forecasts On IPR&D Expenses
Costco Falls On Lowest US Sales Growth In Almost Three Years
(Sourced from Bloomberg, Reuters and other reliable financial news outlets)
Technical & Trade Views
SP500 Bias: Intraday Bullish Above Bearish Below 4080
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 - Target Hit, New Pattern
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 26500
Primary support 23000
Primary objective is 30000
Below 23000 opens 22400
20 Day VWAP bullish, 5 Day VWAP bearish
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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!