ForexLive European FX news wrap: Dollar gains fade as Europe returns 0 (0)

Headlines:

Markets:

  • CHF leads, NZD lags on the day
  • European equities slightly higher; S&P 500 futures flat
  • US 10-year yields down 0.4 bps to 3.411%
  • Gold up 0.5% to $2,000.28
  • WTI crude down 0.3% to $79.51
  • Bitcoin up 3.2% to $30,090

It was a largely quiet session as European traders returned from the Easter break, only to gain a sense of trepidation ahead of key US data to come later in the week.

Equities opened with some decent optimism but has seen gains slowly pared back, with US futures also little changed now. Meanwhile, European bond yields are holding higher in trying to play catch up to Treasury yields – which jumped after the US jobs report on Friday. The latter is not really doing much today after having held lower earlier in the session.

In FX, the dollar retraced its post-NFP gains with EUR/USD climbing back above 1.0900 and GBP/USD also pushing back above 1.2400 during the session. USD/JPY is down slightly by 0.3% to 133.25 but off the lows close to 133.00 from earlier in the day.

Meanwhile, commodity currencies were more mixed with USD/CAD flattish around 1.3500 and NZD/USD down slightly by 0.1% to 0.6210 as the kiwi continues to struggle somewhat since the drop last Thursday.

Elsewhere, gold is hugging the $2,000 mark again as traders continue to contemplate the rates and dollar outlook. Then, we have Bitcoin rising back above the $30,000 mark for the first time since June last year.

This article was written by Justin Low at www.forexlive.com.

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Nasdaq Composite Technical Analysis 0 (0)

On the daily chart below for the Nasdaq
Composite, we can see that after bouncing on the 61.8% Fibonacci
retracement
level, the market started a strong rally towards
the key 12274 resistance.

The break of the trendline of the bullish flag is also another confirmation
that the buyers are in control and want to extend the rally possibly above the
key resistance. The moving
averages
have crossed to the upside on the flag breakout and the trend now is
firmly upwards. As the market now returns to the regular trading regime after
the Easter Holidays, we may see the buyers trying a breakout again.

Nasdaq Technical Analysis

On the 4 hour chart below, we can
see that after the rally stalled near the 12274 resistance and pulled back, it
found support at the red long period moving average. The buyers piled in there
and looks like the rally is restarting.

The NFP
report
is also being interpreted as goldilocks since the jobs market remains
strong but the wage inflation keeps on moderating. The next big event is the US CPI report tomorrow where we may see
another big rally if the data misses expectations.

On the 1 hour chart below, we can
see that there’s a mini range between the 12100 resistance and the 50%
Fibonacci retracement level at 11915. For the buyers a break above the resistance
should give the conviction to target the 12274 level. On the other hand, the
sellers are likely to jump onboard in case the price falls below the 11915
support and then target the previous swing low at 11650.

This article was written by ForexLive at www.forexlive.com.

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US March NFIB small business optimism index 90.1 vs 90.9 prior 0 (0)

  • Prior 90.9

This is the 15th straight month that the index has come in below its 49-year average of 98, as business sentiment continues to dawdle to start the new year. NFIB notes that:

„While prospects for the economy continue to dim, the widely expected
recession has not yet appeared. Fourth quarter growth was shaded
down to 2.6%, inventory accumulation accounted for 60% of the total
growth. Weakness in residential construction took 1.2 percentage
points off of the growth rate and will continue to be a negative in the
first quarter numbers. Hiring plans fell to their lowest level since May
2020.

„There are major uncertainties ahead, most immediate is concern that
a banking crisis could develop. This usually results from too many risky
loans going bad, including auto and consumer credit. However, the
current issue resulted from poor risk management. The Fed kept rates
too low for too long, encouraging the growth of risky assets. Lots of
investments looked good with a 2% cost of funds and bank savings
paid virtually nothing.“

This article was written by Justin Low at www.forexlive.com.

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Fed rate hike in the balance as we gear towards the key risk events this week 0 (0)

Let’s take a look at how the odds for the May decision have changed since two weeks back:

  • 27 March: No change (85%), +25 bps (15%)
  • 29 March: No change (59%), +25 bps (41%)
  • 31 March: No change (42%), +25 bps (58%)
  • 5 April: No change (58%), +25 bps (42%)
  • 7 April*: No change (29%), +25 bps (71%)
  • 11 April: No change (33%), +25 bps (67%)

*after the US non-farm payrolls

And as mentioned countless times since then, the shift in pricing is definitely no coincidence to the story in the bond market – where we are seeing 10-year Treasury yields continuing to hold above the key threshold around 3.30% for now.

In turn, we have also seen the dollar be brought towards the edge before finding a bid again after the jobs report on Friday last week.

As such, it’s all about the Fed outlook right now and expect the volatility to continue as we gear towards the key risk events lined up for this week here.

This article was written by Justin Low at www.forexlive.com.

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Dow Jones Technical Analysis 0 (0)

On the daily chart below for the
Dow Jones, we can see that after the major breakout of the trendline and the 32684 resistance, the market rallied strongly and
managed to break above the key 33538 resistance consolidating just above it.
The trend is now bullish as we can see from the moving
averages
.

The market seems to be trading
again on the goldilocks scenario where inflation comes down on its own without
major losses in the labour market. In fact, the latest NFP
report
showed moderating wage inflation with a tight jobs market. The next big
event is US CPI tomorrow.

Dow Jones technical analysis

On the 4 hour chart below, we can
see more closely the consolidation just above the 33538 resistance. This may be
due to both negative and positive news we got the last week coupled with the
Easter Holidays that led to lower liquidity and a more cautious price action.
Today European traders come back from the holidays and the market should come
back to its normal trading regime. The key releases to watch this week are the
US CPI tomorrow and the US Jobless Claims on Thursday.

In the 1 hour chart below, we can
see the mini range highlighted by the blue rectangle. The buyers will want to
see a break above the upper bound of the range to start piling in and extend
the move to higher highs with 34477 as the ultimate target. The sellers, on the
other hand, will want to see a break below the lower bound of the range to jump
in and target lower lows with 32684 as the major target.

This article was written by ForexLive at www.forexlive.com.

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BOJ’s Ueda: A small rate hike would not be a big issue for the financial system 0 (0)

  • But Japan is not in a situation where rates can be raised significantly
  • 2% inflation target is not so easy to meet
  • Negative interest rates provide the basis for current monetary stimulus
  • Appropriate to continue negative interest rates for now
  • We are at a stage now to wait and see on December policy tweaks
  • Yield target, ETF purchases have had side effects
  • But that does not mean it was a mistake to adopt them

He is mixing a lot of different remarks in there but the bottom line is that they are still seeing the current policy settings as appropriate to continue with. However, they are leaving the door open to potentially perform a policy pivot down the road – depending on economic and financial circumstances.

This article was written by Justin Low at www.forexlive.com.

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FMAS:23 – Build Relationships with Brokers and Traders 0 (0)

In less than
one month the Finance Magnates Africa Summit (FMAS:23) be officially underway, bringing
together the online trading industry’s biggest players and brands in Africa.
The marquee summit of the year will be held at the prestigious Sandton
Convention Centre in Johannesburg, South Africa on May 8-10, 2023.

FMAS:23 is
uniquely geared towards traders and brokers, with a special atmosphere designed
to maximize networking and engagement opportunities. This includes the opening
Blitz Party.

Attendees can look
to mingle with their peers, other traders, or the biggest brands as well as networking
with the best in the business. This is your chance to live the life of luxury,
meeting the most influential people in finance and start the expo off on the
right foot.

With
just one month to go until FMAS:23, there is still time to register and sign up today for the biggest event of the year!

Why Network
with Other Traders and Brokers?

Every FM event provides
and unforgettable opportunity to bridge all types of individuals and attendees.
FMAS:23 will be no exception, with its opening party and 2 full days of content
and exhibitions.

The content
stream will cover every element of the online trading industry. All kinds of
attendees, be it traders, brokers, or others, will be able to explore these
sessions and discussions at length, as well as engage with speakers and brands
in a one-on-one setting.

This forum is
of particular interest to a growing swath of traders looking to speak directly
to brokers. For brokers, FMAS;23 comes at the perfect time for the retail
trading industry, given the interest and hype of the growing market in
Africa.

With so much of
the industry looking to attract new business and traders, the decision to attend
FMAS:23 this May is easy. Given the excitement, potential, and opportunities with
a fresh, untapped market, FMAS:23 will be providing a special opportunity for brokers,
traders, and all other attendees to network, engage, and learn from one another.

Nowhere else do
attendees have the opportunity to speak directly with so many leaders and
traders in one place in Africa. Individuals can also expect to learn about and
engage with the biggest brands from the retail trading space. This is one event
that you cannot afford to miss.

Use FMAS:23 to
build long-lasting relationships with other brokers, traders, or both. The
countdown has already begun to May 8. Will you be in Johannesburg to celebrate
the biggest event of the year in Africa?

All prospective
attendees are invited to dive into the in-depth agenda, which is already live and available for access. See what sessions hold the most appeal
– with so many angles and areas of focus, there is something for everyone.

This article was written by ForexLive at www.forexlive.com.

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Further remarks by Ueda: Financial markets anxiety have not completely abated 0 (0)

  • Financial markets regaining stability after recent jitters
  • Will do utmost to achieve price stability
  • Aiming to achieve price target together with wage hikes (Himino)
  • BOJ faces task of making various efforts to sustain monetary easing (Uchida)

Ueda also goes on to acknowledge that the current monetary easing stance is „intense“. I’m guessing that’s a nod to how they are feeling about things and will be hoping to make it less „intense“ in the future. The yen is little changed on his remarks so far today.

This article was written by Justin Low at www.forexlive.com.

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Silver price hits a nine-year high due to higher industrial demand: an OctaFX analysis 0 (0)

● The
global economy’s focus on transition to clean energy is creating an additional
demand for silver, which is used in solar panels and EVs, that will only grow
in the future.

● According
to Silver Institute research, 2023 will be the year of the biggest-in-decades
deficit in the physical silver market.

● The
easing of monetary policy by world central banks and the inflation slowdown
support the fundamental growth of silver prices.

Gold and silver often go hand in hand when discussing precious metals. Both
metals have been objects of desire for thousands of years, and each has been
found on every continent of the world.

Just
like gold, silver is used in jewellery. However, its demand in industry, where
it is used six times more often than gold, creates a strong interest among
investors.

Nevertheless,
there is relatively little information available on silver, which makes
potential investors more vulnerable to losses.

OctaFX
experts expect that silver reserves will continue to decline in 2023, leading
to a potential increase in its value. Silver prices could reach a nine-year
high of $30, highlighting its strong potential for well-informed investors.

Decarbonization and electrification will
lead to a major increase in demand

Much of
the silver value is determined by its industrial demand and supply
fundamentals. It is estimated that approximately 60% of silver is used for
industrial purposes such as electronics manufacturing, solar cell production,
automotive industry, and soldering, while only 40% is available for investment
in the form of jewellery, silver coins, and bars.

Industrial
demand is growing due to the electrification of automobiles, 5G deployment, and
governments’ commitment to using renewable energy sources, such as solar
panels.

The
demand for renewable energy is a key driver of growth. Silver is an essential
component of solar power generation panels, with approximately 100 million
ounces consumed annually. According to the IEA 2022 renewables report,
electricity from wind and solar photovoltaics (PV) will more than double in the
next five years, providing almost 20% of global power generation in 2027.

This is
expected to lead to a significant increase in the amount of silver consumed in
the coming years. According to projections from BMO Capital Markets, the annual
consumption of silver in the solar industry could grow by 85%—to 185 million
ounces—within a decade.

Silver’s
excellent electrical conductivity makes it an indispensable component in the
automotive industry, especially in electric vehicles (EV), which contain twice
as much silver as petrol cars. Furthermore, charging stations for EVs will
require a substantial amount of silver as well.

By-product silver production is expected to
be the key trend of the next decade

Most of
the silver supply is generated as a by-product of base metals mining, with
zinc, lead, and copper mining accounting for 59% of silver production.
Specialised silver mines are costly, as they are very large projects, and their
number is therefore declining. The supply of silver as a by-product of non-precious
metals production is expected to rise in the coming years.

Mexico,
China, and Peru are still the largest silver producers in the world, with Peru
leading in silver reserves. However, Peru’s reserves are declining, while
China’s are increasing. The growth in production has not kept up with the
significantly increasing demand. Extrapolating the data on reserves and
production suggests that the reserves may be completely depleted in 20 years or
sooner, given the average life of a silver mine being 10 years.

Market momentum kept silver prices low in
2022 and drove them up in 2023

Looking
at the silver price dynamics over the last 5 years, it becomes clear that a new
bullish trend in this market began around mid-2020. Since then, the silver
price has lost some of its growth, dropping to $22. The main constraint was the
strong dollar, which in turn reacted to the tightening of the Fed’s monetary
policy.

The
correlation is quite strong—together with the end of the inflationary shock and
the change of the dovish tone, the silver price found support at $18 and has
been consistently bullish since August 2022.

Inflation
expectations are positively correlated with precious metals and are a leading
indicator, especially when combined with the EURUSD effect. In the current
environment of declining inflation and lower interest rates coupled with
additional stimulus amid the banking crisis, investors believe in the beginning
of a new business cycle. This will reduce the strength of the dollar and
provide significant support to silver, possibly boosting its price to $30 in
2023.

This article was written by ForexLive at www.forexlive.com.

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BOJ governor Ueda says agreed with Kishida no immediate need to revise joint statement 0 (0)

  • Agreed that there was no immediate need to change 2013 joint statement with government
  • Discussed need to guide policy flexibly given economic uncertainty
  • Monetary stimulus has helped pull Japan out of deflation

It’s his first official day on the job and for now, there is no need to ruffle any feathers. The time will come when the government will seek the BOJ to pull away from its ultra easy monetary policy stance, but it is not this day. The positive wage developments from the shunto negotiations is a first step. Now, we will have to see how the inflation outlook and financial conditions play out in the months ahead before any hints of a potential policy pivot may come about.

This article was written by Justin Low at www.forexlive.com.

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