2023 Market Forecast by Solid ECN

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Swiss Franc Recovers Amid Policy Changes and Low Inflation​

The Swiss franc has stabilized around 0.91 against the USD, recovering from significant losses earlier in the year that pushed it to a six-month low. This happened due to major differences in the monetary policies anticipated for the U.S. and Switzerland. In March, Switzerland saw its lowest inflation in over two years, dropping to 1%. This supports the Swiss National Bank's (SNB) claim that inflation pressures are easing.

Amid low business confidence and falling retail sales, the SNB is expected to increase interest rates in its June meeting. After the SNB's surprising rate cut in March—the first central bank to do so amid global inflation concerns—the franc had fallen sharply.

Additionally, the lower inflation forecast has enabled the central bank to ease its support of the franc. Consequently, foreign currency reserves have grown for the third consecutive month since hitting a seven-year low in November.​

 

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Canadian Dollar Rises Amid Eased Global Tensions​

Solid ECN – The Canadian dollar surged beyond 1.37 against the USD this April, bouncing back from its five-month nadir of 1.382 on April 16th. This improvement came as concerns about global risks eased with resolving tensions in the Middle East, and unimpressive US economic data weakened support for the US dollar.

In Canada, the prices of industrial products increased by 0.8% in March, aligning with forecasts and a slight dip from the prior month’s revised increase of 1.1%. Furthermore, new house prices in March held steady, defying expectations of a slight rise, with the annual change in the New Housing Price Index showing a decline of 0.4%. In the US, demand for the dollar as a safe-haven asset declined following assurances from Iran of no retaliatory strikes against Israel, coupled with a slowdown in the US manufacturing and services industries that heightened anticipation of interest rate reductions.

For further clues, the focus now shifts to upcoming US economic reports, including the GDP data on Thursday and the Federal Reserve’s PCE price index on Friday.​

 

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WTI Oil Stabilizes at $82 Amid Rate Cut Delays​

Solid ECN – WTI crude oil prices were stable at around $83 per barrel on Thursday. This followed a decrease in prices the day before. Investors are assessing how the delayed cuts in US interest rates might affect future oil demand. There is concern that the Federal Reserve might maintain higher rates longer due to strong recent inflation and job data.

Looking forward, markets are focused on Thursday's upcoming US GDP data and the Fed's preferred PCE price index report on Friday to get more clarity. Despite this, the latest official figures revealed a significant drop in US crude inventories, which fell by 6.37 million barrels last week, surprising many who had expected an increase of 1.6 million barrels.

On another note, concerns about supply have lessened as tensions in the Middle East have reduced. Iran and Israel have indicated that they will not take further military action against each other. Also, oil tankers, previously stopped due to disruptions in the Red Sea, have resumed their deliveries. This helps ease market tightness abroad and supports countries in stocking up on oil.​

 

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Swiss Franc Stabilizes as Inflation Eases, Rate Hike Possible​

The Swiss franc has stabilized at about 0.91 against the USD, recovering from significant losses earlier in the year that dropped to a six-month low. This change happened due to substantial differences in the anticipated monetary policies of the US and Switzerland. In March, Switzerland's yearly inflation rate decreased to a low of 1%, not seen in over two years, reinforcing the Swiss National Bank’s (SNB) statement that inflation pressures are easing.

This comes as business optimism declines and retail sales shrink, prompting speculation that the SNB might increase interest rates in its next meeting in June. Previously, the franc fell sharply when the SNB unexpectedly cut rates in March, becoming the first major central bank to do so amid current global inflation concerns.

Additionally, with a more stable inflation forecast, the central bank has been able to reduce its support for the franc, leading to an increase in foreign currency reserves for the third consecutive month since hitting a seven-year low in November.​

 

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Bitcoin's Bearish Engulfing Pattern and Future Predictions​

Solid ECN – Bitcoin's price pulled back from $62,733, which coincides with 38.2% Fibonacci support. The BTCUSD pair rose and tested the EMA 50 at around $65,288 in today's trading session. As of this writing, digital gold began to follow the primary trend, which is bearish, and interestingly, it formed a bearish engulfing pattern.

The technical indicators provide mixed signals. The RSI hovers below 50, but the Awesome Oscillator bars are green and marching towards the signal line.

From a technical perspective, the primary trend remains downward as long as the price hovers within the bearish flag. The bearish wave will likely continue if the 78.6% Fibonacci resistance level holds. As its initial target, it would aim for the 23.6% Fibonacci level, followed by the $60,000 psychological level.​

 

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Euro Struggles Amid Varied Economic Signals​

Solid ECN – The euro continues to struggle, hovering around $1.07, as investors examine a wide range of economic reports and their implications for the future actions of the ECB and the Federal Reserve. Recent data from the European Central Bank shows that inflation expectations dropped to their lowest point since December 2021, at 3.0%.

Furthermore, there has been no change in the growth of lending, leading analysts to believe that ECB officials may lower interest rates for the first time in June. On the other hand, the US dollar remains strong, driven by ongoing inflation concerns and robust consumer spending, indicating that the Fed may not reduce borrowing costs until at least September.​