• Dollar trims losses as the tension continues to build
• Wells Fargo reports beat on earnings, profit rise on higher rates
• JP Morgan joins in on the earnings beat
• Fed’s Bostic: Recent developments are consistent with us hiking one more time
• ECB’s Wunsch: May policy decision is between 25 bps and 50 bps rate hikes
• ECB’s Lagarde says expect euro area inflation to continue to fall
• France March final CPI +5.7% vs +5.6% y/y prelim
• Spain March final CPI +3.3% vs +3.3% y/y prelim
• Germany March wholesale price index +0.2% vs +0.1% m/m prior
• Switzerland March producer and import prices +0.2% vs -0.2% m/m prior

Markets:

• EUR leads, GBP lags on the day
• European equities higher; S&P 500 futures down 0.1%
• US 10-year yields up 0.7 bps to 3.458%
• Gold down 0.3% to $2,033.95
• WTI crude up 0.3% to $82.25
• Bitcoin up 1.6% to $30,797

It was a bit of a quiet session as markets are contemplating the reaction to the US CPI data earlier in the week. The dollar slumped in trading yesterday and was under some light pressure early on, before paring losses to sit steadier now.

As things stand, we are seeing some key technical levels being contested across multiple dollar pairs and that could still result in a break lower in the greenback before the weekend. But for now, it looks like we have to wait on the US retail sales later today.

There was just some light pushing and pulling among major currencies with EUR/USD easing from 1.1070 to 1.1045 during the session while GBP/USD fell from 1.2530 to 1.2490 as the dollar regains a bit more poise.

AUD/USD also fell from 0.6790 to 0.6765 while USD/CAD inched higher from 1.3315 to 1.3335 at the moment. As you can see, the changes are relatively light, all things considered.

In the equities space, European stocks are still pushing for further gains while strong bank earnings is helping to see US futures keep calmer, with Dow futures rising at the expense of tech stocks.

It’s over to the next big data to see if we will get the potential dollar breakdown or if the greenback is going to be making a stand ahead of the weekend.

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

The rotation between value and tech stocks is taking hold as part of the initial reaction to the bank earnings in the past 20 minutes or so. Wells Fargo and JP Morgan reported hefty beats on earnings while not really showing much signs of stress or credit concerns. That will help to ease the mood further after the banking turmoil last month.

Dow futures have risen as a result, up by 0.2%, while Nasdaq futures are down by 0.5% now ahead of US trading. S&P 500 futures are caught in a bind between the two, keeping flat at the moment.

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

The details for JP Morgan:

• EPS $4.10 (vs $3.38 estimate)
• Adj. revenue $39.34 billion (vs $36.83 billion estimate)
• FICC sales and trading revenue $5.70 billion (vs $5.25 billion estimate)
• Investment banking revenue $1.56 billion (vs $1.54 billion estimate)
• Equities sales and trading revenue $2.68 billion (vs $2.75 billion estimate)

Looking across, PNC also reported a strong earnings beat with the credit details (allowance for credit losses of $5.4 billion was stable) also not really indicating signs of any major worries. That should be a relief for equities, at least with regards to bank stocks, ahead of the open.

However, overall sentiment remains tepid with S&P 500 futures still down 0.1% for now.

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

The banks are the first to report but I would say that perhaps there will be more scrutiny on regional banks this time around. But now we are getting the earnings report from Wells Fargo.

• EPS $1.23 (vs $1.13 estimate)
• Profit $4.99 billion (vs $3.79 billion a year ago)
• Net interest income $13.34 billion (vs $13.09 billion estimate)
• Revenue $20.73 billion (vs $20.03 billion estimate)

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

• This comes as lagged price pressures fade out
• Rapid wage growth is keeping core inflation up and will remain high for some time
• This will take some time before easing slowly
• Outlook remains surrounded by considerable uncertainty
• Risks to the growth outlook are tilted to the downside

All things being equal, the ECB is likely to lean more towards a 25 bps rate hike next month. The narrative now is that price pressures are still holding up, in particular core inflation, and that is validating their decision to push with at least one more rate hike.

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

• OPEC oil output fell by 86k bpd to 28.8 mil bpd in March
• Sees world oil demand to rise by 2.32 mil bpd this year (unchanged from prev. forecast)
• Recent reopening of China still not sufficient to reverse declining trend in global refinery intakes
• Any economic weakness from rate hikes could weigh on US summer demand
• Demand outlook for OECD also remains challenging

As you would expect, the report fits the narrative of their decision to surprise with cutting production as they warn that demand conditions could be affected in the coming quarter. Besides that, the output decline fits with the planned cuts from before and some outages; all before incorporating the decision here.

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

• EUR/USD tries for a break above 1.1000 again
• ECB policymakers reportedly converging towards 25 bps rate hike in May
• Japan senior lawmaker says appropriate for BOJ to not change YCC for now
• UK February monthly GDP 0.0% vs +0.1% m/m expected
• Germany March final CPI +7.4% vs +7.4% y/y prelim
• Eurozone February industrial production +1.5% vs +1.0% m/m expected

Markets:

• CHF leads, JPY lags on the day
• European equities a little higher; S&P 500 futures up 0.1%
• US 10-year yields up 0.3 bps to 3.424%
• Gold up 0.6% to $2,026.23
• WTI crude down 0.4% to $82.75
• Bitcoin up 0.9% to $30,230

Markets are continuing to digest the US inflation data from yesterday but it seems like the verdict is that the dollar might be set for another round of weakness before the weekend.

EUR/USD is pushing above 1.1000 with the high hitting 1.1030, though there are some large option expiries that could be holding back price action for now. Meanwhile, GBP/USD also jumps up to its highest in ten months above 1.2500 as buyers are angling for a technical break higher as well.

USD/CHF is also sinking to its lowest levels since February 2021, testing waters around 0.8900 now after the drop below 0.9000 in trading yesterday.

Alongside the dollar, the yen is the laggard as bond yields remain little changed on the day. That is seeing the likes of EUR/JPY and CHF/JPY also race to fresh highs for the year at 146.75 and 149.60 respectively.

European equities are holding higher mostly with French stocks leading the charge, as the CAC 40 looks for a breakout upon hitting fresh record highs. That is keeping the commodity currencies slightly higher on the day as well.

If you’re wondering why if markets are convinced of a 25 bps rate hike by the Fed in May, that the dollar is still weakening, it’s all about what comes next as outlined here.

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

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Africa Summit (FMAS:23) is almost here, taking place in just a few short weeks
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This is due in part
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Get ready to rub shoulders
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See you in Johannesburg
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This article was written by ForexLive at www.forexlive.com.

On the daily chart below for
XTIUSD, we can see that the price is now threatening a major breakout of the
range. The market has been stuck in this range since December 2022. We got a
breakdown in mid-March as the market feared an immediate recession due to the
little banking crisis after the Silicon Valley Bank collapse.

As the Fed backstopped the crisis
with emergency lending tools and the fear faded, the price rebounded and came
back into the range. Then we got a surprise OPEC+
production cut the last week that made the market to gap up and
open $6 higher than the previous close. That gap hasn’t been filled yet and the
market kept on bidding with the price now at the top of the range.

XTIUSD technical analysis

On the 4 hour chart below, we can
see more closely the price action and the gap created by the OPEC+ news. It’s
also worth noting that the latest push to the upside is diverging with the MACD. This may be a sign that the
momentum isn’t really there, and it may turn into a fakeout.

Today we have the US Jobless Claims report and the market may go
into risk-off if the data miss again expectations signalling that the labour
market may be finally weakening. This should be bearish for oil as the market
will look at lower demand ahead. If the data beats expectations, then we may
see a real breakout and oil may reach the $90 handle.

On the 1 hour chart below, we can
see how the price is about to break yesterday’s high. The buyers may want to
wait for the economic data to confirm the breakout and pile in aggressively.
The sellers, on the other hand, will want to see worse economic data and a
further confirmation from the technicals, where a break below the trendline would end the strong bullish
momentum and bring the price down to fill the gap.

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

He says that new BOJ governor, Kazuo Ueda, is right to have judged that there is no need to change the yield curve control (YCC) settings for now. This is consistent with what he said last month already, in which he mentioned that „it is my understanding that Mr. Ueda will continue with the BOJ’s current stance“.

Do be reminded that if we are to see the BOJ change up its view on monetary policy, it would need a sort of unspoken validation from the government. And it doesn’t seem like we are at that point yet.

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