official Market Update by Solidecn.com

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NATGAS

US natural gas prices took a hit yesterday as analysts mounted their calls that the end of the heating season in the United States is near. While recent weather forecasts pointed to a period of below-average temperatures, average temperatures in this period of the year are usually high enough for demand for heating to drop significantly. Expectations for today's EIA natural gas storage report (3:30 pm BST) also strongly hint that the heating season in the US is drawing to close - median estimate is for a 25 billion cubic feet increase in stockpiles. If confirmed, this would be the second inventory build of 2023 and the first one since mid-January. 

 

 

Taking a look at NATGAS chart at H4 interval, we can see that price has halted recent upward correction at the resistance zone marked with $2.24 handle and the 23.6% retracement of the downward move launched at the beginning of March 2023. Price launched a pullback and move back to the $2.08 per MMBTu. After a few hours of struggle in the area, sellers managed to push the price below the $2.08 mark this morning. Volatility on the NATGAS market is likely to be elevated around 3:30 pm BST when the EIA report is released. Should analysts be mistaken with their forecasts and US natural gas inventories actually drop, NATGAS could see a price spike.

 

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Ethereum

Ethereum gains after US lower PPI reading and finished Shanghai update

• Risky assets 'anti-dollar' on wave of weak dollar, after lower than expected PPI inflation reading from US
• The highly anticipated Shanghai Hard Fork did not cause Ethereum's declines
• Vitalik Buterin, the Ethereum founder, indicated that after the Shanghai update, the project has already passed the main milestones necessary for further development
• The second largest cryptocurrency, Ethereum soared above key resistance on a wave of rising risk sentiment. The headline PPI inflation reading from the U.S. came in well below expectations, coming in at 2.7% versus 3% forecast and 4.6% previously. The data supported sentiment among risk assets and increased the chances of no Fed rate hike in May. Along with the cryptocurrency market, Wall Street index futures also gained today.

 

The Ethereum Shanghai modification introduced yesterday, contrary to the predictions of many analysts including JP Morgan, did not cause a cascading sell-off and rapid withdrawals of Ethereum from the Beacon chain. In the face of a definite increase in risk sentiment, the market did not see the Ethereum fork as a 'catalyst' for profit realization. The modification has ensured that investors will get the opportunity to 'staking' Ethereum smoothly, without having to lock up their funds on the network for years to come. By many analysts, Ethereum is pointed out as the main candidate to 'dethrone' Bitcoin in the next few years, mainly because of its technological superiority and utility functions. Among other things, decentralized applications and smart contracts are built on the ETH blockchain.

 

Looking at the chart of ETHEREUM, on the H4 interval, we see that Ethereum has reached the euphoria peak of the summer of 2022. On March 13, the price broke above the SMA200 (red line) signaling a further bullish trend. Since the beginning of the year, the price of ETH has risen nearly 67% against Bitcoin's 82% rise.

 

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AUDUSD

Looking technically at the chart of the AUDUSD currency pair, the quotation broke out of the downward channel at the top some time ago, and we are currently observing a test of the key resistance in the area of 0.6785. If it is overcome, the way towards 0.6885 may be opened.

 

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Palladium

Looking technically at the chart, PALLADIUM price is approaching key short-term resistance at $1578, which penetrates from the upper limit of the local 1:1 pattern, as well as previous price reactions. In the event of an upward breakout, an upward movement toward $1730 could be triggered.

 

 

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Gold

• Wall Street indices rallied over 1% yesterday and USD sank as soft PPI reading  boosted hopes that end of high inflation is near
• S&P 500 gained 1.33%, Dow Jones moved 1.14% higher, Nasdaq rallied 2% and Russell 2000 traded 1.3% higher
• Indices from Asia-Pacific traded mostly higher today - Nikkei gained 1.2%, S&P/ASX 200 advanced 0.5%, Kospi added 0.4% and Nifty 50 traded 0.1% higher. Indices from China gained as well
• DAX futures point to a higher opening of the European cash session today
• Fed Chair Powell and People's Bank of China Governor Yi Gang spoke on the phone on Tuesday and discussed economic and financial situation in the United States and China
• ECB Nagel said that core inflation remains very high and that another rate hike is coming in May
• BoJ Governor Ueda said he expects Japanese inflation to drop below 2% in the second half of current fiscal year (April 2023 - March 2024)
• ECB Wunsch said that considerations for the May meeting are between 25 and 50 basis point rate hike and final decision will depend on April inflation. Wunsch said that market pricing is of ECB terminal rate seems reasonable but it is unlikely that quick rate cuts will follow rate peak
• Yi Gang, PBoC Governor, expects Chinese GDP growth at around 5% in 2023
• Reuters reports that London Stock Exchange will offer regulated trading and clearing in Bitcoin futures and options
• Morgan Stanley's base-case scenario for 2023 is for S&P 500 to end the year at 3,900 pts after painting a cycle low in the 3,000-3,300 pts area 
• New Zealand's manufacturing PMI dropped from 52.0 to 48.1 in March
• Cryptocurrencies are trading higher - Bitcoin gains 1.7%, Ethereum rallies 5.7% and Dogecoin jumps 4.3%
• Energy commodities trade slightly higher - oil gains 0.1% while US natural gas prices climb 0.5%
• CHF and EUR are the best performing major currencies while AUD and USD lag the most

Gold continues to rally on weak USD. Precious metals is testing $2,050 resistance zone marked with 2020 and 2022 highs.
 

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DOGECOIN

Elon Musk has told Morgan Stanley analysts that he wants to make Twitter the world's largest financial institution. Although the process is a long way off and its finale uncertain, Twitter announced yesterday that it will indirectly make stock and cryptocurrency trading available to users. The beneficiary of this news was Dogecoin, a cryptocurrency associated with Elon Musk and Twitter. The likeness of a dog that is the symbol of Dogecoin, recently at the initiative of Musk himself, momentarily changed the well-known Twitter logo.

 

 

The platform is set to begin a partnership with eToro and will start sharing price information from TradingView. Musk noted that almost all of the companies that have left the platform in recent months have already returned to it although Stellaantis and Volkswagen are still dangling. Ultimately, Twitter is expected to offer investors a range of functions through travel arrangements to financial services. In China, for example, payments giant Tencent offers payments through its WeChat messaging app. Cryptocurrency investors are hoping that Dogecoin will find its unique place on Musk's platform. The market is anticipating the next move from Musk, and any news of a possible promotion of Dogecoin payments on Twitter could result in a euphoric bump.

 

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NZDUSD

The New Zealand dollar is the best performing currency in the G10 today. This is mainly due to the weakness of the USD, which discounted following the release of PPI inflation data from the US, which showed a decline in the headline reading from 4.6% to 2.7% y/y. Thus, the NZDUSD pair took advantage of the favorable technical situation and filled the inverted head-and-shoulders, bearish pattern that appeared on the H1 interval.

This type of price formation usually heralds a trend reversal - in this case to an upward one. After crossing the level of 0.6455, the upward movement accelerated, and the stock is currently struggling with the 61.8% measurement set on the last downward wave. In the case of a breakout above, the bulls can direct their attention towards the next resistance zone at 0.6335. On the other hand, in the event of a pullback and selling pressure, support remains at the level of 0.6245.

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German index breaks above 16 000 pts for the first time in 15 months

New week on the global financial markets began in upbeat moods with indices from Asia-Pacific, especially China, trading higher today. European futures also traded higher throughout the Asian session but have caught an additional bid after opening of the European cash session. German DAX (DE30) is trading 0.5% higher and trades above the 16,000 pts mark for the first time in 15-months! The next resistance zone in-line is marked with all-time highs in the area ranging below 16,300 pts mark - less than 2% above current market price.

 

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CHNCOMP

Indices from Asia-Pacific gained during the first trading session of a new week. Chinese indices were top-performers with CHNComp gaining over 3% and CH50cash adding 2.4%. Hong Kong shares also performed well with HKComp adding over 2%. There were no specific news behind the jump. However, there was data from China on new home prices for March released over the weekend. While on an annual basis prices were 0.8% YoY lower, month-over-month data showed a 0.5% MoM increase, This was the third monthly increase in a row and the fastest pace of price growth in 21 months. It could be a hint that demand and overall situation in the Chinese property market may be improving.

 

 

Indices from China may also see some moves during the next Asian session as some top-tier economic reports from the country are scheduled for release. Monthly activity data for March (industrial production, retail sales and urban investments) as well as Q1 GDP report will be released at 3:00 am BST. Economists expect improvement in monthly readings for March, especially in retail sales and industrial production. Also, Q1 GDP growth is seen reaching 2.2% QoQ, after a lack of growth (0.0% QoQ) in Q4 2022. On an annual basis, Chinese GDP is expected to have grown by 4% YoY in Q1 2023.

 

Taking a look at CHNComp chart at D1 interval, we can see that the index is making another attempt at breaking above the resistance zone marked with 23.6% retracement in the 7,120 pts area. From a technical point of view, a break above could trigger an upward move towards the 7,850 pts area - above a year-to-date high from late January.

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Alphabet price dips after Samsung deal concerns! 

Alphabet Inc. (Googl.US) stock price declines nearly 4% due to the concerns raised by the potential loss of revenue from Samsung. Googl.US price is currently trading at $105. 

According to the news that came out this morning, Google's employees reportedly panicked after discovering that Samsung Electronics is considering replacing Google Search with Microsoft's Bing AI as the default search engine on its devices. This change would practically mean the end of a 12 year partnership with Google. 

This switch could potentially lower an estimated $3 billion in annual revenue for Google. Despite Google’s deal with Samsung being significantly less valuable than the deal with Apple, the similar contract with Apple is up for renewal this year. This contract is tied to an estimated $20 billion. Apple will likely keep a close eye on Samsung’s negotiations with Google, which could potentially allow Apple to strengthen its bargaining power with both contractors. 

Google is now racing to build an all-new search engine powered by AI and upgrading the existing one with new features as competitors like Bing are posing a serious threat to the tech giant’s search business. Despite negotiations still ongoing, Google developers are working on a brand new set of features named "Magi" for the upcoming search engine. Google sees a significant risk related to the rise of AI-powered competitors like recently demonstrated ChatGPT by OpenAI.

(Googl.US) Stock price action is currently trading in rising consolidation channel with 200d SMA close to crossover 50d SMA signaling trend reversal. 

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EURUSD

Bulls are losing momentum this session, while the euro against the dollar pulls back below the 1.10 level. The correction in the U.S indices is supporting the USD’s recovery, however, the pair is currently testing an important support zone. If the price stays above the uptrend line, the bullish scenario could resume again. However, if a breakout of this zone appears, then a further pullback cannot be excluded.

 

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Oil

 

OIL.WTI is retreating by almost 2.5% today as a result of several factors. One is the US dollar, which has not been this strong for a long time as a result of rising yields. Another is the US reserve sales of over 1 million barrels last week. This is not much, but it shows that the US may want to stabilize the oil market. Perhaps the most important factor is Russia's powerful exports at levels last seen before the attack on Ukraine. Russia's exports are doing well, primarily to Asian countries, including India, from where fuel in turn flows to Europe in record volumes. 

 

 

A massive bump in WTI oil. After a test of 80 USD, the upper limit of the upward gap can be expected to be tested.

 

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AUDUSD

The Australian dollar is one of the best performing major currencies today. RBA minutes turned out to be neither dovish, nor hawkish. On one hand, the document showed that RBA members considered a rate hike before ultimately deciding on leaving rates unchanged. On the other hand, the document noted that the Bank should reassess whether there is still need to undertake additional tightening. AUD, however, caught a bid following release of better-than-expected GDP data from China. The Chinese economy grew at a pace of 4.5% YoY in Q1 2023, much faster than 4.0% YoY expected by economists. Moreover, retail sales data for March showed a 10.6% YoY jump - also better than the 8.0% YoY increase expected. Industrial production data for March missed estimates but showed higher growth than in February.

Taking a look at AUDUSD chart at D1 interval, we can see that the pair bounced off an important mix of support today - an intersection of 50- and 200-session moving average (orange circle). Demand side reaction to this technical support hints that another upward impulse may be about to start. In such a scenario, resistance zone in the 0.6780 area, marked with 38.2% retracement of October 2022 - January 2023 upward move may be the next target for the bulls.

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EURUSD

Statements by the CEOs of major US banks today sounded 'disinflationary' today. CEO of Bank of America, Moynihan indicated that inflation rates in the US are falling and BofA's CEO, Bortwhick conveyed that the bank is seeing lower mortgage demand. Both of these comments look rather unfavorable for the 'greenback' and may suggest that the Fed will reconsider a possible rate hike in May. But James Bullard, the St.Louis Fed chair known for his hawkish stance, spoke on the situation in the US economy - his comments strengthened the dollar. Nevertheless, EURUSD is rebounding and trying to face a key short-term resistance level.

    

Fed Bullard

• Forecasts of a recession in the US ignore the strength of the labor market, and savings from the pandemic still have to be used after all, boosting demand;
• With little tangible progress on inflation, interest rates must continue to rise;
• The risk of banking stress causing widespread problems seems to have diminished, but we are still watching the situation closely;
• The Fed should avoid giving extensive decision guidance at its next meeting and keep all options on the table as possible;
• I still see an appropriately restrictive interest rate of 5.50%-5.75%. We are leaning toward keeping the rate longer until inflation is brought under control.

 

EURUSD is trying to stop the declines. However, the short-term resistance line in the form of the SMA200 on the M15 interval may prove crucial.  The US Congress is scheduled to vote on the debt ceiling bill next week.

 

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GBPUSD Gained after higher than expected UK CPI reading!

• UK CPI (M/M) Mar: 0.8% (est 0.5%; prev 1.1%)
• UK CPI (Y/Y) Mar: 10.1% (est 9.8%; prev 10.4%)
• UK CPI Core (M/M) Mar: 0.9% (est 0.6%; prev 1.2%)
• UK CPI Core (Y/Y) Mar: 6.2% (est 6.0%; prev 6.2%)

 

Details of today's inflation report. High UK inflation is largely driven by food prices. This is likely to prompt the BoE to make another 25bp hike.

 

 

Details of today's inflation report. High UK inflation is largely driven by food prices. This is likely to prompt the BoE to make another 25bp hike.

 

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EURGBP

The British pound is the best performing currency in the broad FX market at the moment. The EURGBP pair is trading close to 0.35% down today, triggered by a strong UK CPI reading. The UK's March CPI inflation reading came in at 10.1% YoY against a forecast of 9.8% and the previous reading of 10.4%. Core inflation continued unabated and came out at 6.2% against an expected fall to 6.0%. It had previously been 6.2%.

 

As reported by Reuters, the decline in price pressures in the UK economy is disappointing, raising the prospect of another interest rate hike in the UK. The swaps market is currently pricing in an 80% chance of a 25 basis point hike at a future BoE meeting. Let's remember that the UK has the highest inflation rates among Western European countries and is the only one struggling with double-digit inflation.

 

UK Finance Minister Jeremy Hunt said Wednesday's data confirms why the government must continue its efforts to bring inflation down.

 

 

The EURGBP pair lost ground sharply after raising the odds of the BoE continuing its interest rate hike cycle. The currency pair has drifted below support levels set by exponential moving averages, so a further reaction to these levels could be a key factor creating further movement in the pair.

 

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Bitcoin Dips Below $30K

 

On Wednesday in morning trading hours Bitcoin and other cryptocurrencies plummeted below significant levels. Despite a strong decline in prices no fundamental information was released to the public. Drop occurred in 20 minutes and led to the liquidation of over $25 million worth of BTC futures long positions.

 

BTC fell below $30k level and ETH back below $2000. Long squeeze may be caused by investors digesting Gary Gensler Congressional Hearing, which took place yesterday.

 

 

BTC dips and is trading near support level marked with green zone. On MACD indicator a bearish divergence occurred which suggest that bullish momentum is weakening.

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Gold falls back to early April levels!

Currently, the probability for a 25bp hike in May is rated at 88%, but on the other hand, the probability for a hike in June is rated at 29%, so adding up the probability, it is expected that a hike will happen anyway. 

 

From the current market perspective, we are seeing a decidedly stronger dollar, which is gaining along with treasury yields, which are above 3.6% for 10-year treasury yields. In addition to this, the BoJ is hinting that there should be no change in the yield curve management program at its April meeting, which is also propping up the dollar. In response, gold is losing heavily and falling not only below $2,000 per ounce, but already below $1,980 per ounce. Silver, on the other hand, is below $25 per ounce and losing almost 2%. 

 

 

Gold is falling to its lowest level since early April. The next important support near the 23.6 Fibo retracement at $1950 per ounce.

 

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Bitcoin 

The major cryptocurrency has once again been pushed off the $30,000 level signaling a possible backdrop for a larger correction of the huge upward movement. Should the declines deepen, the 23.6 Fibonacci retracement of the upward wave, which began in November 2022, at $27,400, and the SMA100 (black line), which may overlap with the 38.2 Fibo at the psychological zone of $25,000, may prove to be important levels.

 

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Oil

The US Energy Information Administration released an official weekly report on US oil inventories at 3:30 pm BST today. API estimates released yesterday in the evening showed crude inventories falling more or less in-line with estimates. However, government report showed quite major deviations from both expectations and yesterday's API releases. Crude oil inventories dropped 4.58 mb - much more than expected. On the other hand, gasoline inventories data showed a surprising 1.3 mb build while distillate inventories dropped much less than expected.

EIA report on US oil inventories

• Oil inventories: -4.58 mb vs -2.5 mb (API: -2.67 mb)
• Gasoline inventories: +1.3 mb vs -1.9 mb (API: -1.0 mb)
• Distillate inventories: -0.35 mb vs -1.8 mb (API: -1.9 mb)

Oil is trading slightly higher following the release. However, scale of the move did not exceed 0.3% and does not change much in the overall technical picture. Taking a look at OIL.WTI at D1 interval, we can see that price dropped below $80 mark today and even briefly moved into territory of a bullish price gap that was triggered by the most recent OPEC cuts.