The Fed is out with the details of semiannual Financial Stability Report. In it they say:

• Persistent inflation, tighter monetary policy remain most cited potential risk to the financial system
• ‚Policy uncertainty,’ including escalating geopolitical tensions and upcoming US elections, cited by 60% of respondents as potential financial stability risk
• Commercial real estate and banking sector stress less frequently cited as stability risk than in Fed’s fall 2023 survey
• Nearly two-thirds of respondents mentioned policy uncertainty as a risk, significantly higher than in the October report
• Cyberattacks, US-China tensions, Middle East conflicts also listed as risks, while nonbanks and Ukraine-Russia war have dropped off risk list
• Leverage at hedge funds reached highest level since data collection began
• Concerns over uninsured deposits and other factors continued to generate funding pressures for a subset of banks
• 1,804 of more than 9,000 eligible institutions tapped the Bank Term Funding Program; 95% of those had assets of less than $10 bln

The Federal Reserve’s Financial Stability Report is a semi-annual publication that assesses and details the stability of the financial system in the United States. The key elements of this report include:

1. Risk Analysis: It identifies and analyzes potential risks to financial stability, which could include issues like asset price volatility, borrowing by businesses and households, leverage within the financial sector, and funding risks.

2. Current Assessment: The report provides an assessment of the current financial system conditions, noting any vulnerabilities that might pose risks to stability.

3. Potential Shocks: It evaluates the system’s susceptibility to shocks from domestic and international sources, such as economic downturns, geopolitical tensions, and major policy changes.

4. Regulatory and Policy Developments: The report also discusses the impact of regulatory and legislative changes on financial stability, including new rules or modifications to existing regulations.

5. Economic Outlook: Although primarily focused on stability, the report often includes insights into the broader economic environment, including aspects like inflation rates, employment, and economic growth, which all influence financial stability.

6. Stress Testing and Scenarios: The report might include results from stress tests conducted on banks to assess their resilience in adverse economic scenarios.

The goal of the Federal Reserve’s Financial Stability Report is to promote market transparency by providing a thorough analysis of the financial system’s robustness, and to signal to lawmakers, regulators, and the public about potential risks that could undermine financial stability. This helps in forming policies and taking measures to mitigate identified risks.

CLICK HERE for the full report.

This article was written by Greg Michalowski at www.forexlive.com.

The Bank of Canada’s Macklem is on the wires saying:

• At first glance, federal budget does not really change fiscal track since the Nov 2023 fall economic statement
• Budget contains spending measures and new taxes; federal government’s commitment to stick to fiscal guard rails is helpful
• Reiterates bank will be looking for evidence that the recent downward momentum in inflation is sustained
• Canadian inflation is continuing to become less broad-based; things are moving in the right direction
• Overall we see downside risks to the inflation outlook are lower than they were
• There are some signs of stress in household finance, mostly in non-mortgage holders; delinquencies have moved up but they are not at alarming levels
• Geopolitical tensions are a source of deep concern in the international community
• If there is a spike in oil prices that is something we’ll have to take into account

This article was written by Greg Michalowski at www.forexlive.com.

USD

• The Fed left interest rates unchanged as expected at the last meeting with basically no
  change to the statement. The Dot Plot still showed three rate cuts for 2024 and
  the economic projections were upgraded with growth and inflation higher and the
  unemployment rate lower.
• The US CPI beat expectations for the third
  consecutive month, while the US PPI came in line with forecasts.
• The US NFP beat expectations across the board
  although the average hourly earnings came in line with forecasts.
• The US ISM Manufacturing PMI beat expectations by a big margin with
  the prices component continuing to increase, while the US ISM Services PMI missed with the price index dropping to
  the lowest level in 4 years.
• The US Retail Sales beat expectations across the board by a
  big margin with positive revisions to the prior figures.
• The market now expects the first rate cut in
  September.

CAD

• The BoC left interest rates unchanged at
  5.00% as expected changing a line in the statement that indicated less concern
  about inflation and thus the possibility of a cut in June if the trend remains
  intact.
• The latest Canadian CPI came in line with expectations although
  the underlying inflation measures eased further.
• On the labour market side, the latest report missed
  expectations across the board although we saw an uptick in wage growth which is
  something that the BoC is watching closely.
• The Canadian Manufacturing PMI
  improved slightly in March while the Services PMI weakened further. Both the
  measures remain in contractionary territory.
• The market expects the first rate
  cut in June.

USDCAD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that USDCAD pulled
back into the blue 8 moving average and
bounced as the buyers stepped in to position for a rally into new highs. From a
risk management perspective, the buyers will have a much better risk to reward
setup around the 38.2% Fibonacci retracement level
and even better around the 61.8% Fibonacci retracement level as they will also
find the confluence of the
previous resistance now turned support.

USDCAD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that besides the
38.2% Fibonacci retracement level, we can also find a trendline adding
confluence around the 1.37 handle. This is where we can expect the buyers to
step in with a defined risk below the trendline to position for a rally into
new highs. The sellers, on the other hand, will want to see the price breaking
lower to pile in and target a drop into the 61.8% Fibonacci retracement level.

USDCAD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the price
has been diverging with
the MACD, which
is generally a sign of a weakening momentum often followed by pullbacks or
reversals. The price broke below the trendline support, so we have higher
chances to see a drop all the way down to the major trendline. We have a black
counter-trendline acting as resistance now, so if the price gets there, we can
expect the sellers to step in to position for a drop into the major trendline.
If the price were to break to the upside though, the buyers will likely pile in
to position for a rally into new highs.

This article was written by FL Contributors at www.forexlive.com.

The poll shows that no economists are anticipating a rate hike before the end of June. But 21 of 61 economists do see that rates could rise during Q3 this year. Meanwhile, 17 of 55 economists forecast that rates will be raised during Q4 instead. The median forecast sees the upper end of the overnight call rate at 0.25% in Q4 and staying there until late 2025.

Of a smaller sample size of 36 economists who provided a specific forecast on when the BOJ might move, 19% are seeing a move in July. But October is the favourite, with roughly 36% expecting a move then. Meanwhile, 31% are seeing the BOJ move in „2025 or later“.

With regards to the Japanese yen, nearly all economists (91%) say that Tokyo will step in at some point to stop the currency from weakening further.

As for the levels they expect, 16 of 21 economists expect action at 155 for USD/JPY. The remainder see a move at 156 (2), 157 (1), and 158 (2) instead.

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

Yesterday, the Nasdaq Composite ended another day
negative with the buyers struggling to find some footing. It could have been a
mix of hawkish Fed’s Williams comments where he didn’t rule out a rate hike if
the data called for such a move, and some jitteriness due to some rumours of an
Israeli retaliation in the following 24/48 hours. Tonight, Israel did retaliate
as it carried out airstrikes on Iran, but eventually it was seen as a limited
retaliation with even Iran downplaying it. This might finally put this thing
behind our backs, and we could see some positive risk sentiment today.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq
Composite is
now getting very close to the key 15453 level. We can also notice that the
price got a bit overstretched as depicted by the distance from the blue 8 moving average. In
such instances, we can generally see a pullback into the moving average or some
consolidation before the next move.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the
price got overstretched on this timeframe as well. If we were to get a final
push into the 15453 level, we can expect the buyers to step in with a defined
risk below it to position for a rally back into the 15929 level. The sellers,
on the other hand, will want to see the price breaking lower to increase the
bearish bets into the next support at
15162.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we have
a trendline
defining the current downward momentum where we can find the red 21 moving average for confluence. If we
get another pullback, we can expect the sellers to step in around the trendline
with a defined risk above it to position for new lows. The buyers, on the other
hand, will want to see the price breaking higher to pile in and position for a
rally into the 15929 level.

This article was written by FL Contributors at www.forexlive.com.

As the
closing bell approaches, all eyes are turning to Netflix, the streaming giant,
poised to release its latest financial report. With share prices hovering
around the same level for the past month, can the data dump boost the company’s
stock?

Analysts
are optimistic about Netflix’s revenue and earnings, expecting growth compared
to both the previous quarter and the same period last year. Additionally,
there’s anticipation surrounding Netflix’s partnership with TKO Group Holdings to bring
WWE content to its platform, marking a significant expansion into live sports.

Projections
put Netflix’s revenue at $9.26 billion, up 13% from the same quarter last year,
with earnings per share expected to reach $4.68, a significant increase from
$3.06 a year ago. Analysts are eyeing adjusted profits of $2.07 billion.

The big
question mark, however, hangs over subscriber growth, with estimates ranging
widely. Netflix itself has projected anywhere between 1.8 million and 13.1
million new subscribers, based on previous quarters‘ performances.

After a
dip in 2022, Netflix saw a resurgence in subscriber numbers in 2023, partially
attributed to cracking down on password sharing. Despite
some backlash from users, the company’s subscriber base grew by 12% in the
fourth quarter of 2023, reaching 260.28 million paid memberships worldwide.

The
upcoming earnings report is also expected to shed light on the WWE deal, which
will see Netflix broadcasting the popular „Raw“ program starting in
2025. This move into live sports content represents a significant growth
opportunity for Netflix, signaling its ambition to diversify its offerings.

The
10-year partnership with TKO Group Holdings, which also owns UFC, positions
Netflix as a major player in the live-streaming entertainment landscape. The
exclusive rights to air „Raw“ in the US, Canada, UK, and Latin
America underscore Netflix’s commitment to expanding its audience and content
library.

Investor
expectations are high, especially given the recent volatility in Netflix stock. Despite short-term
fluctuations, the company’s shares have soared by over 80% in the past year,
reflecting confidence in its long-term prospects.

However,
Netflix’s earnings report comes at a time of uncertainty in the broader market,
with tech stocks facing headwinds amid rising US
bond yields and concerns about inflation. Netflix’s results will be closely
watched as a barometer of sentiment towards big tech companies, potentially
shaping market trends in the coming weeks.

This article was written by FL Contributors at www.forexlive.com.

USD

• The Fed left interest rates unchanged as expected at the last meeting with basically no
  change to the statement. The Dot Plot still showed three rate cuts for 2024 and
  the economic projections were upgraded with growth and inflation higher and the
  unemployment rate lower.
• The US CPI beat expectations for the third
  consecutive month, while the US PPI came in line with forecasts.
• The US NFP beat expectations across the board
  although the average hourly earnings came in line with forecasts.
• The US ISM Manufacturing PMI beat expectations by a big margin with
  the prices component continuing to increase, while the US ISM Services PMI missed with the price index dropping to
  the lowest level in 4 years.
• The US Retail Sales beat expectations across the board by a
  big margin with positive revisions to the prior figures.
• The market now expects the first rate cut in
  September.

NZD

• The RBNZ kept its official cash rate
  unchanged as
  expected with no change as the central bank continues to state that the OCR
  will need to remain at restrictive level for a sustained period.
• The latest New Zealand inflation data printed in line with expectations
  supporting the RBNZ’s patient stance.
• The labour market report beat expectations across the
  board with lower than expected unemployment rate and higher wage growth.
• The Manufacturing PMI improved in February remaining in
  contraction while the Services PMI increased further holding on in
  expansion.
• The market expects the first cut in
  August.

NZDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that NZDUSD is
struggling to break below the key support zone
around the 0.5870 level. This is where we can expect the buyers to pile in with
a defined risk below the zone to position for a rally into the major trendline. The
sellers, on the other hand, will want to see the price breaking lower to
increase the bearish bets into the low at 0.5780, although they will have a
much better risk to reward setup around the trendline where they will also find
the 61.8% Fibonacci retracement level
for confluence.

NZDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we got a spike
lower tonight following the news of Israeli retaliation against Iran but the
market faded the move completely as Iran downplayed the airstrikes. We can also
notice that we have a strong divergence with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, it might be a signal for a bigger reversal, and it
might even end up being a double bottom with the
major trendline as the target. In fact, the buyers will likely increase the
bullish bets into the major trendline if the price were to break above the
neckline at 0.5933.

NZDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
clearly the divergence with the MACD which has been going on since the 0.60
handle. We can also notice that we have a minor resistance zone around the 0.59
handle where we can also find the red 21 moving average for
confluence. This is where the sellers are likely to step in with a defined risk
above the level to position for a break below the key support zone. The buyers,
on the other hand, will want to see the price breaking higher to increase the
bullish bets into new highs.

This article was written by FL Contributors at www.forexlive.com.

Headlines:

• ECB’s de Guindos: Appropriate to loosen restrictive policy if inflation conditions are met
• BOJ’s Noguchi: Some big firms are benefiting from a weaker yen
• PBOC deputy governor says will keep yuan exchange rate basically stable
• PBOC cautions against ‚one-sided‘ pursuit of credit expansion
• Switzerland March trade balance CHF 3.54 billion vs CHF 3.66 billion prior
• Eurozone February current account balance €29.5 billion vs €39.4 billion prior
• German economy likely expanded in Q1 – Bundesbank
• Dollar’s dominant status as world’s reserve currency set to endure – Morgan Stanley

Markets:

• GBP leads, JPY lags on the day
• European equities a little higher; S&P 500 futures up 0.3%
• US 10-year yields down 0.6 bps to 4.579%
• Gold up 0.9% to $2,382.41
• WTI crude down 0.9% to $81.95
• Bitcoin up 3.3% to $62,857

Major currencies were relatively muted during the session, as the dollar kept steadier for the most part. The greenback fell in trading yesterday but it hasn’t really amounted to much in the grand scheme of things.

EUR/USD is flat on the day at 1.0671, holding within a 25 pips range, while USD/JPY is also little changed at around 154.45 currently. The pound is a little higher at 1.2473 but remains in a consolidation phase just under 1.2500.

Meanwhile, commodity currencies are also lightly changed with USD/CAD down just 0.1% to 1.3756 and AUD/USD up 0.1% to 0.6441 on the day.

In the equities space, we are seeing a light bounce in the risk mood. However, it is still early in the day and we’ll see if Wall Street will want to carry on with that appetite.

It’s a bit of a slower week in general as there isn’t any major economic data releases. And that seems to be how markets are taking to things in general as of late. On weeks when there is big data, we do get some notable moves across the board. But on weeks like this, it can be quite the slugfest at times.

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

USD

• The Fed left interest rates unchanged as expected at the last meeting with basically no
  change to the statement. The Dot Plot still showed three rate cuts for 2024 and
  the economic projections were upgraded with growth and inflation higher and the
  unemployment rate lower.
• The US CPI beat expectations for the third
  consecutive month, while the US PPI came in line with forecasts.
• The US NFP beat expectations across the board
  although the average hourly earnings came in line with forecasts.
• The US ISM Manufacturing PMI beat expectations by a big margin with
  the prices component continuing to increase, while the US ISM Services PMI missed with the price index dropping to
  the lowest level in 4 years.
• The US Retail Sales beat expectations across the board by a
  big margin with positive revisions to the prior figures.
• The market now expects the first rate cut in
  September.

GBP

• The BoE left interest rates unchanged as expected but with Haskel and
  Mann this time voting for a hold instead of a hike.
• The employment report missed expectations with a big jump
  in the unemployment rate although the wage growth increased.
• The UK CPI beat expectations with Services inflation
  remaining sticky, which continues to support the BoE’s patient stance.
• The latest UK PMIs showed the Services PMI missing expectations
  slightly and the Manufacturing PMI beating.
• The market expects the first rate
  cut in August.

GBPUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPUSD is
pulling back into some key resistance levels
with even a possible break and retest pattern around the 1.25 handle. In fact,
we can see that the sellers will have two short opportunities:

• The first one around the 1.25 handle where they
  will also find the confluence of the
  38.2% Fibonacci retracement level
  and the blue 8 moving average.
• The second one around the 1.26 handle where they
  will find the confluence of the trendline, the
  61.8% Fibonacci retracement level and the red 21 moving average.

The buyers, on the other hand, will need to break
above the trendline to turn the trend around and start targeting a new cycle
high.

GBPUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see more clearly the
bearish setups around the 1.25 and the 1.26 handles. If the price were to break
above the 1.25 resistance zone, we can expect the buyers to increase the
bullish bets into the trendline targeting a break above it. There’s not much
else to glean from this chart, so we need to zoom in to see some more
details.

GBPUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price has been diverging with
the MACD, which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, the ultimate target for the pullback should be the
base of the divergent formation around the 1.26 handle with a break above it
confirming a reversal. In case, we get a rejection from the 1.25 resistance,
the buyers might lean on the black counter-trendline to position for a rally
into the major trendline. The sellers, on the other hand, will want to see the
price breaking lower to increase the bearish bets into new lows.

Upcoming Events

Today we get the latest US Jobless Claims figures,
while tomorrow we conclude the week with the UK Retail Sales.

This article was written by FL Contributors at www.forexlive.com.

Morgan Stanley says that the dollar’s dominant status as the world’s reserve currency is set to persist. That is in part due to its credible challengers, such as the Chinese yuan, being rather lacking at the moment.

While there have been some concerns about the dollar’s reign at the top recently, Morgan Stanley argues that the greenback can still hold its own. That despite worries about US debt levels and some signs of reserve managers diversifying away from the dollar.

„We expect USD’s dominant reserve currency status to endure despite ongoing challenges from an increasingly multipolar world. This supports our current preference for USD and should provide long-term support, though periods of weakness are to be expected on cyclical conditions and valuations.“

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