official Market Update by Solidecn.com

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USCAD drops after Candian jobs data beat

The Canadian jobs report for March was released today at 1:30 pm BST. Report release was brought a day forward as Canada will be observing Good Friday tomorrow. Data turned out to be a huge positive surprise. Employment change turned out ot be much higher-than-expected with both full-time and part-time jobs showing decent increases. As a result, the unemployment rate avoided an expected uptick to 5.1% and stayed unchanged at 5.0% instead.

 

Canada, jobs report for March

• Employment change: +34.7k vs +12.9k expected (+21.8k previously)
• Unemployment rate: 5.0% vs 5.1% expected (5.0% previously)
• Full-time employment: +18.8k vs +31.1k previously
• Part-time employment: +15.9k vs -9.3k previously

 

USDCAD climbed to the short-term resistance zone near 1.3490 prior to the release. However, the pair pulled back following better-than-expected data. A support zone near 1.3460 handle, marked with previous price reactions as well as the lower limit of the upward channel. However, bulls managed to defend the area and erased the majority of the drop in the first minutes following the release.

[Solid ECN ✔️]

Bitcoin

Cryptocurrencies are retreating from recent record highs as the sell-off on the Nasdaq gains strength and concerns around a slowing US economy have increased. A weakening consumer could mean lower risk appetite and a narrower range of potentially interested buyers of speculative assets. A recession would likely do nothing good for the crypto market. With its declining reaction in recent days, bitcoin has confirmed that its role as a recession or banking crisis hedging asset is still uncertain. Is the king of cryptocurrencies in for a trend change?

 

 

A change in the crypto trend?

The on-chain market sentiment vector is pointing to levels close to greed, which could signal an impending correction. It's also worth noting that BTC's volatility has been drying up in recent days, which has historically heralded an imminent, sudden price movement.

 

 

Looking at the chart of BITCOIN on the D1 interval, we can see that the RSI indicator has risen since the beginning of the year, but since then it has been recording lower and lower levels, although the price of the largest cryptocurrency has been steadily rising. This phenomenon is called a bearish divergence, and it can signify the weakening strength of buyers and a change in the trend. The closest support level for declines is the 23.6 Fibonacci retracement of the upward wave initiated on March 11, when the cryptocurrency rebounded sharply amid the collapsing SVB.

 

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DOGECOIN

• Wall Street finished yesterday's trading higher as market odds for Fed rate hike in May dropped following another streak of disappointing data from US jobs market
• Market now sees around 50% chance of 25 bp rate hike in May and around 50% chance of Fed leaving rate unchanged and pausing rate hike cycle
• S&P 500 gained 0.36%, Dow Jones traded flat, Nasdaq rallied 0.76% and Russell 2000 moved 0.13% higher
• Indices from Asia-Pacific traded higher today - Nikkei gained 0.1%, Kospi added 1.3% and indices from China traded up to 0.8% higher
• Liquidity during today's European trading session is expected to be very thin as majority of stock exchanges from the Old Continent will be shut in observance of Good Friday
• Japanese household spending increased 1.6% YoY in February (exp. 4.2% YoY)
• Major cryptocurrencies trade mixed - Bitcoin drops 0.1%, Litecoin gains 0.1%, Ethereum trades 0.3% higher and Dogecoin slumps 2.8%
• AUD and NZD are the best performing major currencies while JPY and CAD lag the most

DOGECOIN is one of the worst performing cryptocurrencies today. The coin has almost fully erased the price jump triggered by Elon Musk changing Twitter logo to Shiba Inu.

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EURUSD

USD is trading slightly higher today but EURUSD remains above 1.09 mark and maintains the uptrend. The latest drop in US yields shows that USD still has room to drop. If NFP data shows sub-200k jobs gain, it would be a strong sign of the labour market cooling down. However, it will not be a sign of a crisis yet. Nevertheless, readings that are significantly below 200k would likely encourage the Fed to pause the rate hike cycle and not raise rates at the May meeting. On the other hand, should we once again see strong job gains and strong earnings growth, rate hike at the May meeting may be still in play.

 

[Solid ECN ✔️]

Ethereum

Sentiment in the cryptocurrency market remains mixed, with major projects moving in a sideways trend. Investors are concerned that Ethereum's correction after the Shapella upgrade will result in more sell-offs.

 

 

What after the Shapella Upgrade?

• Since December 2020, investors have been able to deposit their ETH on the Ethereum Beacon chain and receive blockchain rewards and profits. However, they couldn't withdraw those funds until the recent upgrade. So far, the declines after the Shapella are relatively small;
• Before the update, all staked ETH was worth nearly $32 billion (about 15% of supply). According to K33 Research, even with small withdrawals, about $2.4 billion in ETH could hit the market as investors will want to withdraw some funds from the Beacon chain. With crypto market liquidity drying up, this could trigger a deeper correction;
• On the other hand, Bernstein Fund analysts pointed out that of the 18 million ETH staked, nearly 70% were locked into liquidity protocols, allowing investors to de facto trade funds through decentralized Lido-type protocols, which will take off much of the downward pressure. 
• According to analysts, the 30% of investors who deposited ETH in the Beacon chain without using liquidity protocols are likely to have the highest level of conviction and will not be willing to sell. It is also worth noting that the seamless ability to deposit and withdraw ETH may encourage more investors to staking and drive capital flowing into the chain;
• Passive ETH returns of 5 or 6% per year are no longer as attractive compared to the 0 interest rate period, when investors could not count on comparable yields from regulated fixed income assets. In addition, staking is to some extent subject to risks associated with crypto market regulation. Rewards for ETH staking will decline as the number of stakers increases.

 

News

1. According to the Block 'open interest' report, the ETH options market (call options vs. put options) before the update showed the highest level since May signaling possible downward pressure
2. The U.S. Treasury Department has indicated that the decentralized asset market poses a threat to national security.
3. Divly revealed a report according to which only 1.62% of US cryptocurrency holders paid tax on their investments. The report is disputed by tax law specialists;
4. According to Bloomberg, Singaupur's central bank is working to unify cryptocurrency-friendly regulations 
5. According to a survey by CoinGecko and Blockchain Research, 75% of cryptocurrency investors hold NFTs

 

Ethereum chart, H4 interval. Looking at the chart, we can see that the price reached before the Shapell update was roughly similar to the peak of the price rally before the Ethereum Merge. If the declines accelerate the key for the price could be the demand reaction around $1700 zone, where we can see SMA200 (red line), 23.6 Fibonacci retracement of the upward wave started last June and previous important price reactions.

 

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USDJPY

• The first market session after the release of US jobs data is mixed as investors are wondering about the future policy path from the Fed. It looks like we are observing a re-trading of the data from Friday as most markets were closed then.
• NFP came out at 236k and the unemployment rate fell to 3.5%. Wages dynamic decreased to 4.2% YoY but they are still not consistent with an inflation rate of 2%
• Most Asian stocks reversed earlier gains but on the other hand, US yields decreased also. Nikkei 225 and Kospi are the only indices that are up in the morning trading. Nikkei gains 0.4% and Kospi is higher by 0.9%
• US indices futures continue their sell-of after Friday’s NFP release that suggests another hike from the Fed in May. US100 is trading 0.5% lower and US500 is down by about 0.3%
• The US dollar is rising against all of the G10 currencies and the yen is one of the weakest, falling nearly 0.4%
• It is important to know for all investors that at 10:15 GMT (11:15 BST and 12:15 CET) the new governor of the Bank of Japan will hold the inaugural press conference which means that Kuroda era is finally ended. The market is wondering whether Ueda would decide to end or change its yield curve control program. On the other hand, Ueda said in February that an accommodative policy in Japan is still needed. 
• The gold price digests the US job market data and decreases below 2000 USD per ounce in early morning trading
• Trading may be choppy today as most markets are still closed in observance of Easter Monday

 

The USDJPY currency pair is up nearly 0.4% as investors are reassessing the US jobs market report from Friday and are waiting for the first public news conference of the new BoJ's governor Ueda.

 

[Solid ECN ✔️]

Gold 

Gold is lower by about 0.6% from the perspective of the first session of the week. It is the first trading day for gold after the release of NFP jobs data from Friday when the market for gold was closed. Data from the US labor market showed that a rate hike from the Fed in May is still in the game. The data showed a further strong rise in employment above 200k and a decline in the unemployment rate to 3.5%. From the perspective of monetary policy in the US, inflation data due for release on Wednesday will be crucial. Although wages data decreased more than expected, it is still inconsistent with the inflation target of 2%.

In response to good data from the US, gold reacted to a stronger dollar (USDJPY). Gold opened with a bearish gap that later was closed. Gold is currently trading below $2,000 an ounce. There is a support of around 1985 USD per ounce that is confirmed by 50 period SMA and the upper limit of the triangle pattern.
 

[Solid ECN ✔️]

Gold 

Gold is lower by about 0.6% from the perspective of the first session of the week. It is the first trading day for gold after the release of NFP jobs data from Friday when the market for gold was closed. Data from the US labor market showed that a rate hike from the Fed in May is still in the game. The data showed a further strong rise in employment above 200k and a decline in the unemployment rate to 3.5%. From the perspective of monetary policy in the US, inflation data due for release on Wednesday will be crucial. Although wages data decreased more than expected, it is still inconsistent with the inflation target of 2%.

 

 

In response to good data from the US, gold reacted to a stronger dollar (USDJPY). Gold opened with a bearish gap that later was closed. Gold is currently trading below $2,000 an ounce. There is a support of around 1985 USD per ounce that is confirmed by 50 period SMA and the upper limit of the triangle pattern.

 

[Solid ECN ✔️]

Oil

Oil prices are stabilizing after the big price jump last week in response to OPEC+ decided to further cut production. The volatility decreased significantly as demand uncertainty in China and US offsets OPEC+ production cut. Of course, we could notice a further inventory draw last week but perspective of future demand is cloudy as the chance for the next interest rate hike is increasing.

 

 

As we can see the price range from the Monday a week ago is less than 3 dollars. The most important support is at 79.00 USD per barrel that is also a higher limit of bullish gap. On the other hand the nearest resistance lies at 82 USD per barrel that is also a higher limit of consolidation that starter on 1st December. In case of breaking the mentioned support, the price may decrease even to vicinity of 75 USD per barrel which is also a lower limit of the bullish gap.

 

[Solid ECN ✔️]

EURUSD

EURUSD decreased significantly below 1.0900 with increasing probability of Fed hike

The dollar gained over 0.3% today and EURUSD fell below 1.0900 and tested a vicinity of 1.0850. The dollar is finally higher after Friday's good data from the US labor market. Due to the fact that Friday was a day off in the US, investors can fully assess the data from the US labor market only today. The data increases the likelihood of a rate hike in May to 70%.

EURUSD not only breaks out of the uptrend but falls below the 200-hour moving average. The pair is trading at its lowest level since April 3. Another important support lies around the 1.0800 level.
 

[Solid ECN ✔️]

Bitcoin Jumps above $30,000

 

Sentiment towards cryptocurrencies following Easter holidays is positive with major coins as well as smaller altcoins trading higher. Bitcoin is drawing a lot of attention today as the coin is testing a psychological $30,000 area and is trading at the highest level since early-June 2022. Bitcoin has already gained more than 90% off the early-November 2022 low. A near-term level to watch is the resistance zone ranging below $31,500, which marked the upper limit of a short-term trading range in May-June 2022.

 

 

BITCOIN trades above $30,000 for the first time since June 2022.

 

[Solid ECN ✔️]

DE30

European stock market indices launched the first cash trading session after Easter break higher. Blue chips indices from Western Europe trade 0.5-1.0% higher, following an upbeat Asian session earlier today. However, part of gains has been erased already with DAX dropping back below 15,700 pts. Taking a look at DAX futures at H1 interval (DE30) we can see that bulls failed to break above 15,900 pts area and a double top has been painted. Today's bullish price gap has been filled already and should ongoing pullback deepen further, the 15,650 pts support zone will be the first potential target for sellers. This zone is not only marked with previous price reactions but also with the neckline of the aforementioned double top. Textbook range of the downside breakout from this pattern shows a possibility of a drop to as low as 15,360 pts.

 

 

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NATGAS

US natural gas prices (NATGAS) trade around 2.5% higher today. NATGAS has already jumped more than 10% off the Thursday low. New set of weather forecasts for the United States can be named as a reason behind improved sentiment towards natural gas this week. As one can see on the image below, a new set of forecasts (issued on April 10, 2023) shows that temperatures in many US states, including the key Midwest heating region, are expected to be below-average in the next 8-14 day period. Above-average temperatures are only expected to hold in the southern states while forecasts issued on April 3, 2023 were for above-average temperatures in almost all across the United States.

 

 

Taking a look at NATGAS chart at H1 interval, we can see that the price climbed to and tested $2.24 per MMBTu resistance zone today, marked with previous price reactions and a 23.6% retracement of the downward impulse launched in early-March 2023. However, the first attempt to break above it turned out to be a failure.

 

 

Weather outlook for the United States grew colder over the past week (April 3 forecast - left, April 10 forecast - right).

 

[Solid ECN ✔️]

US Index

US Dollar weakened after International Monetary Fund's (IMF) global economy outlook report, and the current US situation at the Washington summit was also commented by US Treasury Secretary Janet Yellen. The content of the commentary was in line with what today's Axios analysis and didn't surprised financial markets. Yellen emphasized the resilience and strength of the U.S. economy and the stability of the banking sector but the comment failed to help the dollar index (USDIDX).

 

The situation in the US economy was again commented on by John C. Williams, head of the New York Fed. The dollar index is weakening as investors following the IMF analysis saw the Fed's rate hike cycle coming to an end which may herald the lack of significant support for the dollar's strength that has been building since 2022, with US systemic uncertainty in the background. Although the chances of a hike in May increased after the NFP data, its fate is still uncertain and its impact on USD strength almost 'theoretical'.

 

IMF

• IMF head of markets research Gourinchas conveyed that the Fed, the European Central Bank and the Bank of England are nearing the end of their rate hike cycles;
• The IMF expects U.S. economic growth to reach 1.6% in 2023, compared to the 1.4% estimated in January, and  1.1% y/y growth in 2024 (a staggered slowdown).

 

 

Yellen

• The banking system in the United States is healthy, with strong capital and liquidity positions, the global financial system is resilient;
• Given the war in Ukraine and recent pressures on banking systems, we remain cautious on inflation risks;
• Price pressures in the United States remain excessive, but have declined over the past six months.

 

 

Fed Williams

• I don't think we need to change our balance sheet policy in the near term. QT is proceeding at a rapid pace;
• The banking system has really stabilized after the last crisis. If inflation falls, we will have to lower interest rates.
• One more rate hike is reasonable but we will watch the data including retail sales and CPI inflation;
• If inflation becomes more persistent, we will have to adjust policy accordingly;
• Bank failures have increased uncertainty about the outlook. We need to see a decline in core inflation;
• We have brought policy to a restrictive level. The impact of the credit turmoil in the banks is uncertain and it is too early to estimate its impact.

 

 

USDIDX chart, H4 interval. The dollar index reacted by falling below the 38.2 Fibonacci retracement of the wave started in Q1 2021, near 105 points. Since mid-March, when investors learned the extent of the banking sector's problems, the bulls have had a clear problem with rising above the SMA100 (black line).

 

[Solid ECN ✔️]

Solana

The Solana is gaining 12% today, thanks to Thursday's scheduled launch of the Saga phone, running Android powered by Solana's blockchain. Solana developers can create decentralized financial applications (DeFi) and token projects (NFT) on its blockchain. The rally supported Bitcoin's rise above $30,000, which sent a bullish signal for the entire crypto market. Nevertheless, altcoin's gains remain somewhat muted:

• Solana's rapid rise was supported by liquidations of $2.7 million worth of short positions on the contracts. The market expects the Saga smartphone to allow users to create their own NFTs from anywhere and access an ecosystem of Solana-based applications and projects driving adoption. The estimated price of the device in June is expected to be around $1,000;
• The total blocked value (TVL) in DeFi applications increased by nearly 40% from $208 million in Q1 2022 to $294 million according to DeFiLlam. It is worth pointing out that the increase came at a very difficult time for the cryptocurrency market as a whole. On the other hand, however, the volume of NFT token trading fell from around $30 million in January to $20 million in March

 

Weekly trading volume of NFT tokens on Solan.

 

 

SOLANA chart, H4 interval. The price of the cryptocurrency has climbed above the SMA200 and the 23.6 Fibonacci retracement of the December 2022 downward wave. Bulls may want to test $26 level, which indicates the local peaks after the cascading sell-off caused by the collapse of FTX.

[Solid ECN ✔️]

AUDJPY 

• Indices on Wall Street ended yesterday's session in mixed sentiment. Investor sentiment was weighed down primarily by uncertainty over the US CPI inflation reading scheduled for today, which will be one of the final key clues creating the FOMC's decision at its next meeting in May. 
• The S&P 500 ended trading unchanged on a daily basis. The Dow Jones gained 0.29%, and the Russell 2000 small-cap index gained 0.8%. The Nasdaq index of technology companies was the weakest performer, losing 0.43%.
• Asia-Pacific indices traded mostly higher - the Nikkei gained 0.6%, the S&P/ASX 200 gained 0.4%, the Kospi gained 0.2% and the Nifty 50 traded 0.15% higher.
• In the FX market, we are seeing capital outflows to the currencies of the antipodes, namely the New Zealand dollar and the Australian dollar. The EURUSD pair is trading slightly up and testing the resistance zone at 1.093. At the moment, the Japanese yen and the US dollar are experiencing the biggest declines.
• Federal Reserve and ECB bankers have warned that we may see elevated inflationary pressures all the time, current inflation targets should remain in place, and higher interest rates may be present for an extended period.
• Wells Fargo warned that the S&P500 index could experience a near 10% correction due to deteriorating economic conditions in the US.
• Elon Musk stated that Twitter will be a profitable business as early as next quarter.
• Yields on Chinese 10-year Treasury bonds fell to their lowest levels since November 2022, due to increased expectations of continued interest rate cuts in the country. Yesterday, China reported a sharp decline in inflation growth to 0.7%, compared to an earlier reading of 1%.
• An index measuring construction activity in China in March reached its highest level in more than a decade.
• Deutsche Bank analysts expect Bank of Japan Governor Ueda to end the YCC in 2 weeks. 
• Australian weekly consumer confidence surprised on the upside with a reading of 79.3 (previously 78.2).
• The lower house of the Swiss parliament rejects a CHF 109 billion bailout package for Credit Suisse.
• Energy commodities are trading at mixed levels this morning. WTI crude oil is gaining 0.21%, while natural gas is off 1.0%.
• Gold continues its recent upward momentum and is currently breaking out above the 2019 USD level. 
• There is weak sentiment in the cryptocurrency market. Bitcoin is currently losing nearly 1%, and Ethereum is losing 1.5%. 

[Solid ECN ✔️]

US500

Today, investors' attention turns primarily to the US CPI inflation report, which, along with the labor market data we have learned, will be a major factor in determining what the Fed will do at the next FOMC meeting in May. 

 

Analyst consensus assumes that the headline reading for CPI inflation will drop significantly, coming in at 5.2% y/y versus the last reading of 6% y/y. The opposite is true for core inflation, which is expected to rise to 5.6% y/y vs. the last reading of 5.5%. While the headline reading is highly likely to show a decline (due in part to the high base effect), the core reading remains less certain.

 

 

The standard deviation of the consensus compiled by Bloomberg is close to 0.1%, and the analysts themselves mathematically lean more in favor of the scenario of keeping inflation unchanged/increasing to 5.6%.

 

How will the market react? A lower inflation reading may support market bulls, who will react positively to the resulting lower reading lowering expectations for a continuation of the interest rate hike cycle. On the other hand, however, if inflation remains high and the underlying reading manages to surprise the consensus with a reading significantly above the expected value, markets on Wall Street may react with declines, in the face of condensed uncertainty stemming from weak macro data, the prospect of further tightening and the deepening specter of recession.

 

 

From a technical point of view, the US500 index remains in the zone outlined by medium-term trend patterns, which in the past have been important zones of support and resistance. The reaction to today's data and the Fed's Minutes reading scheduled for this evening may determine the future direction of this market.

[Solid ECN ✔️]

EURUSD

The US CPI report for March was released today at 1:30 pm BST. Report was expected to show a steep deceleration in headline price growth as well as slight acceleration in core measure. However, as headline CPI was expected to drop below core CPI for the first time since late-2020, it was the core gauge that was especially on watch today.

 

Actual report showed headline inflation more than expected, from 6.0% to 5.0% YoY, while core gauge matched expectations by accelerating to 5.6% YoY. It looks like investors acted on softer headline reading with market reaction being clearly dovish - USD slumped while US index futures jumped.

 

Markets odds for a 25 basis point Fed rate hike at May meeting dropped from around 73% prior to data release to around 60% now.

 

US, CPI inflation for March

• Headline (annual): 5.0% YoY vs 5.2% YoY expected (6.0% YoY previously)
• Headline (monthly): 0.1% MoM vs 0.2% MoM expected
• Core (annual): 5.6% YoY vs 5.6% YoY expected (5.5% YoY previously)
• Core (monthly): 0.4% YoY vs 0.4% MoM expected

 

 

Headline US CPI inflation slowed below the pace of core US CPI inflation in March.

 

 

EURUSD jumped above April 4 highs following softer than expected US CPI data for March.

 

 

US500 caught a bid following US CPI data and is attempting to make a break above the resistance zone ranging between 50% retracement and 4,165 pts mark.

[Solid ECN ✔️]

USDCAD

The Bank of Canada did not change interest rates as widely expected. Current interest rate remains at 4.50%. This is the second meeting during which interest rates have not been raised. According to analysts, a series of aggressive hikes has yet to be fully reflected within the economy therefore, there is no need to continue raising interest rates at the moment.

 

The Latest inflation data fell sharply to 5.2% in February compared to the 5.9% in January. And according to forecasts, the next inflation data in April is expected to be even lower, between 4.1 and 4.4%. On the other hand labour market remains tight fueling the economic growth, which in the first quarter seems to be stronger that it was projected in January.

 

 

BoC stated that it continues to assess whether monetary policy is sufficiently restrictive to reliece price pressures and remains prepare to raise interest rates further if needed. Governing Council stressed that bringing back inflation target to the 2% has the highest priority. 

 

CAD firms after Bank of Canda Policy decision. USDCAD is down 0.2% at 1.34379 versus 1.34670 ahead of the decision.

[Solid ECN ✔️]

AUDUSD

• US indices finished yesterday's trading lower with major indices erasing all of the gains from the beginning of the session. S&P 500 dropped 0.41%, Dow Jones moved 0.11% lower and Nasdaq declined 0.85%. Russell 2000 dropped 0.72%
• FOMC minutes showed that some Fed officials saw holding rates unchanged as appropriate at the March meeting amid banking turmoil. However, decision to hike by 25 basis points was ultimately unanimous
• Markets are pricing in an almost-70% chance of 25 basis point rate hike at next FOMC meeting in May
• Indices from Asia-Pacific traded mixed today - Nikkei gained, Kospi traded flat while Nifty 50 and S&P/ASX 200 pulled back. Indices from China traded slightly lower
• DAX futures point to a slightly lower opening of the European cash session today
• North Korea launched what seemed to be a new weapon system, possibly ICBM, towards the East Sea. Japanese authorities ordered residents of Hokkaido island, where the missile could land, to seek shelter inside buildings or underground. Evacuation order was later lifted
• BoJ Governor Ueda said that inflation in Japan is likely to slow and the BoJ will continue with monetary easing until inflation target is reached stably and sustainably
• RBA Deputy Governor Bullock said that pause in rate hikes in driven by job preservation and policy lags, rather than being a reaction to banking turmoil
• AUD caught a bid after a solid jobs report for March - employment increased by 53k (exp. +20.6k) while the unemployment rate stayed unchanged at 3.5% (exp. 3.6%)
• Chinese exports in USD terms increased 14.8% YoY in March (exp. -7.1% YoY) while imports were 1.4% YoY lower (exp. -6.4% YoY)
• Cryptocurrencies are trading mixed - Bitcoin gains 0.4%, Ethereum drops 0.1% while Dogecoin adds 0.6%
• Energy commodities traded lower - oil drops 0.3-0.4% while US natural gas prices decline 0.2%
• Precious metals trade a touch higher with gold adding 0.1%
• AUD and GBP are the best performing major currencies while CHF and JPY lag the most

 

 

AUDUSD jumped following solid jobs data for March from Australia. However, bulls failed to sustain a break above the 0.6710 price zone and a return below this area can be observed at press time.