2023 Market Forecast by Solid ECN

[SOLID ECN LLC]

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.​

 

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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.​

 

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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.​

 

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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.​

 

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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.​

 

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AUDUSD​

• US indices finished yesterday's trading mostly higher. S&P 500 gained 0.10%, Dow Jones moved 0.3% higher and Russell 2000 rallied 1%. Nasdaq was a laggard and finished flat​
• Indices in Asia-Pacific traded mostly higher today - Nikkei and S&P/ASX 200 gained around 1.2% each, Kospi rallied 1.4% and Nifty 50 traded 0.6% higher​
• Indices from China traded 0.1-0.5% lower​
• DAX futures point to a higher opening of the European cash session today​
• New Bank of Japan Governor Ueda said that a small rate hike would not be a problem for the Japanese financial system. Ueda also said that he agreed with PM Kishida that there is no need to revise government-BoJ joint statement​
• AUD gains after Australia and China reached agreement on barley exports and Australia suspended WTO dispute against China​
• Fed Williams said he expects inflation to get back under 2% by 2025​
• Citigroup expects oil to drop below $70 per barrel amid slower-than-expected demand recovery in China and significant production potential in Iraq and Venezuela​
• Chinese CPI inflation decelerated from 1.0 to 0.7% YoY in March (exp. 1.0% YoY). PPI inflation came in at -2.5% YoY as expected (-1.4% YoY previously)​
• Bitcoin jumps 3% and trades above $30,000 mark for the first time since June 2022​
• Energy commodities trade mixed - oil gains 0.5% while US natural gas prices drop 0.3%​
• Precious metals benefit from USD weakness - gold gains 0.5%, silver trades 0.6% higher and platinum adds 0.4%​
• AUD and EUR are the best performing major currencies while USD and NZD lag the most​

AUDUSD bounced off the 0.6630 support zone and climbed back above the 0.6660 area. Improvement in Australia-China trade relations is driving today's upward move on the pair.​

 

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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).​

 

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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.​

 

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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%.​