Sample Category Title

UK PMI Services was finalized at 52.9 in March, down from February's 53.5. PMI Composite was finalized at 52.2, down from prior month's 53.1.

Tim Moore, Economics Director at S&P Global Market Intelligence, noted that the UK service sector returned to growth in Q1 2023 due to improved business and consumer confidence, as well as a sustained rebound in new orders. Export sales also boosted the service economy, with the fastest rise in new orders from abroad in over eight years.

Moore highlighted that prices charged by service sector businesses increased at the weakest rate in 19 months, signaling that competitive pressures and improved supply conditions would likely reduce consumer price inflation in the coming months.

Full UK PMI services release here.

NZDUSD advanced to a seven-week high of 0.6378 in the wake of a bolder-than-expected 50bps rate hike by the Reserve Bank of New Zealand early on Wednesday.

The pair has been developing northwards within a bullish channel since the drop to 0.6083 on March 10th, having already climbed above its simple moving averages (SMAs). Encouragingly, the RSI and the MACD are sending clear positive signals at the moment, with the former trending up confidently above its 50 neutral mark and the latter gaining ground within the positive region.

The next hassle could be the channel’s upper boundary, which overlaps with the 61.8% Fibonacci retracement of the latest downleg at 0.6392. A successful move higher could retest the 0.6465 constraining zone ahead of the 2023 top of 0.6536. Should the bulls push for new highs, the door would open for the long-term resistance trendline drawn from the 2021 high of 0.7463.

If selling pressures resurface, the price may initially seek support within the key 0.6270-0.6255 region, where the 50-day SMA, the 38.2% Fibonacci level, and the falling constraining line from March 2021 lows are located. The channel’s lower boundary and the 20-day SMA are within a breathing distance at 0.6233, while the tentative ascending trendline from March lows could also come under consideration near the 23.6% Fibonacci of 0.6190 before the focus turns to the 200-day SMA at 0.6155. Another failure here could squeeze the price towards the previous low of 0.6080.

In a nutshell, NZDUSD is positively charged in the short-term picture. A decisive extension above 0.6392 could renew bullish pressures.

GBPCAD has been hovering inside the rather tight 1.6535-1.6862 rectangle since mid-March.  The first test of the upper boundary was unsuccessful, but the bulls appear determined to make another attempt. They have been holding all the cards since the September 26, 2022 low of 1.4038, achieving an impressive 20% rally despite the BoE’s measured approach.

The bulls are actively looking for sufficient evidence to stage another upleg. However, the momentum indicators appear to be less enthusiastic about this prospect. The Average Directional Movement Index (ADX) is pointing to a trendless market, which can also be deemed as preparing the ground for the next move.

In the meantime, the RSI is exhibiting some bullish tendency and the stochastic oscillator is trying to find its direction. The latter is hovering below its overbought territory and the resistance set by its moving average (MA). A failure to break above its MA could be seen as a bearish signal. Having said that, the convergence of the 50- and 100-day simple moving averages (SMAs) and the tightness of the Bollinger Bands probably means that a sizeable move is imminent.

If the bulls maintain control of the market, their immediate target would be to break the much-talked May 6, 2021 high of 1.6862. Τhe path would then be clear until the 1.7080 area defined by the October-November 2021 highs. Even higher, the bulls would like to test the resistance posed by the February 21, 2022 high of 1.7358.

If the bears manage to take over the reins, their first target could be the lower boundary of the current rectangle at 1.6535. The dynamic 50- and 100-day SMAs at the 1.6535-1.6555 range could prove tougher to crack. If successful, the bears would be faced with the 1.6100 level, where the 61.8% Fibonacci retracement of the February 21 – September 26 downtrend currently resides.

To sum up, the market has reached a short-term balance. Bulls appear to have the upper hand but need support from momentum indicators to achieve a break above 1.6862.

USDJPY had been trending lower since its upward sloping channel broke to the downside in early March. Although the pair attempted a rebound, it is now on the retreat again after the congested region that includes the 50-day simple moving average (SMA) and the upper Boundary of the Ichimoku cloud rejected further advances.

The momentum indicators currently suggest that near-term risks are tilted to the downside. Specifically, the RSI has flatlined below its 50-neutral mark, while the stochastic oscillator is falling after posting a bearish cross.

If negative tendencies persist, the price could initially challenge the 130.40 support. Sliding beneath that floor, the pair may descend towards the March low of 129.63 before the 128.05 hurdle gets in the way. A break below the latter could set the stage for the 2023 bottom of 127.21.

Alternatively, should the positive momentum strengthen, immediate resistance could be met at the 50-day SMA, currently at 133.00. Piercing through that ceiling, the price might test the 135.05 resistance zone. If that barricade fails, the bulls could then target the 2023 high of 137.90.

Overall, USDJPY seems to be experiencing another round of weakness after its latest bounce faltered. Nevertheless, a lower low is required for the pair to extend its downtrend.

Equity markets are treading water in the middle of the week as investors weigh up what is next for the Fed following the surprise decline in JOLTS job openings, how much further the RBNZ will go in light of today's decision and what the OPEC+ cut means for oil prices and inflation.

There's been a lot to take on board over the last few days and it's been a real mix of good and bad news. The JOLTS data yesterday could be the first signs of weakness in the US labour market and that is huge. Without it, the Fed will find it very hard to make the argument that it is pausing the tightening cycle. Now it needs to be backed up and the jobs report on Friday could start that process.

RBNZ not done with tightening despite huge rate hikes over the last year

The RBNZ is clearly not of the view that it is close to being able to pause its tightening cycle, despite having raised rates extremely aggressively over the last year or so. The central bank surprised markets by raising the OCR by 50 basis points and there's likely to be more to come. As we're seeing elsewhere, New Zealand has its own issues with inflation, most notably an extremely tight labour market. There may be some economic pain ahead as the central bank tries to get to grips with that.

Oil holds gains after OPEC+ cut but remains around recent highs

Oil prices are consolidating after the early week surge in the aftermath of the OPEC+ announcement. The decision to cut output has proven to be very controversial, much like the two million barrel reduction in October, but just like that, there's no guarantee it will lead to dramatically higher prices.

In fact, at this stage crude is only trading around the highs of the last four months and it's tested these levels on a number of occasions. A break above here could be a bullish signal but at this point, we are still seeing plenty of resistance. Recent stress in the banking system has led to weaker economic expectations and lower interest rate forecasts and the cut could simply be a response to that.

At this point, the only thing that's clear is that OPEC+ has no appetite for Brent prices below $80 a barrel. That could make any future foray below there challenging as the group has now shown not only will it cut production, it will do so without warning. That is clearly the message they wanted to send.

Gold edging ever closer to record highs

Gold smashed through $2,000 on Tuesday as the latest JOLTS data showed openings declining and significantly so, in one of the first signs of the labour market cooling. It's still very early days but the data will be a little encouraging for the Fed, especially if paired with a softer jobs report on Friday.

We've heard a number of announcements of mass layoffs in tech and banking in recent months but that hasn't yet been reflected in the data and it could be that we now start to see slack appearing. It comes at a good time as the Fed could do with a reason to pause the tightening cycle and the response we saw in yields and gold yesterday suggests investors believe it may now get that.

For gold, it's only traded at this level on two days ever so that doesn't leave much guidance in terms of technical levels, beyond the all-time highs around $2,070. A weaker jobs report on Friday could see that tested, especially in what will likely be extremely thin trade given the bank holiday.

What will be the next bullish catalyst for Bitcoin?

We're continuing to see choppy trade in bitcoin but importantly, pullbacks have been small and brief which may reassure the crypto crowd that there's more to come. It's just hard to know at this point whether the rebound is sustainable, what the next bullish catalyst will be, or even how it will respond to Friday's jobs report if it is at the weaker end of the spectrum. Whatever happens, it promises to be a fascinating one to follow.

The Kiwi dollar rose around 80 pips in early Wednesday, after the Reserve Bank of New Zealand, in its policy meeting today, surprised markets by increasing its official cash rate by 50 basis points, against widely expected 25 basis points raise.

The latest decision pushed the interest rate to 5.25%, the highest in over 14-years, as the central bank raised rates by 500 basis points in total since October 2021.

RBNZ’s argued its hawkish stance by the fact that inflation is still too high and persistent that leaves the door open for further hikes, on their way to put inflation under control and push it towards central bank’s 1-3% target.

Economists expect the RBNZ to push towards estimated 5.5% terminal rate, which would be an initial signal of an end of tightening cycle, based on the central bank’s expectations that inflation, which hit 7.2% in the fourth quarter, will start to ease after recent drastic increase in borrowing cost starts to show stronger results.

However, the central bank will remain ready to act more if inflationary pressures persist, as upside risks are still high.

The NZDUSD pair jumped to a seven week high after the RBNZ’s decision and pressure pivotal barriers at 0.6390 (Feb 9/14 double top) after the rally emerged above falling and thickening daily Ichimoku cloud (cloud top lays at 0.6334) and also probed above Fibo resistance at 0.6364 (61.8% of 0.6538/0.6084).

Bulls faced headwinds on approach to 0.6390 target, where strong offers are seen, though remain in play, underpinned by bullish daily studies.

Consolidation should ideally stay above daily cloud top, with deeper dips to be contained at 0.6300 zone (broken Fibo 50% / 100DMA) to keep bulls in play for attack at 0.6390 pivot and possible acceleration higher on break.

Caution on loss of 0.6300 zone handle, which would risk violation of lower pivots at 0.6277/68 (daily Tenkan-sen / daily cloud base.

Res: 0.6346; 0.6379; 0.6390; 0.6430.
Sup: 0.6311; 0.6297; 0.6268; 0.6257.

Eurozone PMI Services was finalized at 55.0 in March, up from Februar's 52.7. PMI Composite was finalized at 53.7, up from prior month's 52.0. Both indexes were at their 10-month highs.

Looking at PMI Composite of some member states, improvements were seen in Spain (58.2, 16-month high), Italy (55.2, 16-month high), France (52.7, 10-month high), and Germany (52.6, 10-month high). Ireland dropped to 52.8, 2-month low.

Joe Hayes, Senior Economist at S&P Global Market Intelligence said eurozone economy is rebounding from the slowdown seen in late 2022, and for now, appears to be clear of a recession.

He noted that March's economic activity increase was driven by strong growth in the service sector, but highlighted that growth varies across countries, with significant contributions from Spain and Italy. However, modest activity levels in Germany and France suggest a more conservative outlook for the eurozone's overall economic health.

Hayes also mentioned that the case for further interest rate hikes remains strong, as inflation rates, though cooling from their peaks, continue to run high, especially in the service sector.

Full Eurozone PMI composite release here.

Daily Pivots: (S1) 163.76; (P) 165.09; (R1) 165.98; More...

GBP/JPY only breached 165.99 retreat briefly and retreated. Intraday bias remains neutral first. On the upside, sustained break of 165.99 resume the whole rebound from 155.33 to 169.26 resistance next. On the downside, however, break of 162.95 minor support will mix up the outlook and turn intraday bias to the downside for 158.24 support instead.

In the bigger picture, as long as 38.2% retracement of 123.94 (2020 low) to 172.11 (2022 high) at 153.70 holds, medium term bullishness is retained. That is, larger up trend from 123.94 (2020 low) is still in progress. Break of 172.11 high to resume such up trend is expected at a later stage.

Daily Pivots: (S1) 143.71; (P) 144.57; (R1) 145.18; More....

Intraday bias in EUR/JPY remains neutral for consolidation below 145.66 temporary top. Rebound from 137.37 could be extending. On the upside, break of 145.66 will target 148.38 high. However, break of 143.12 minor support will mix up the outlook again and turn bias to the downside for 138.81 support instead.

In the bigger picture, as long as 55 week EMA (now at 139.78) holds, larger up trend from 114.42 (2020 low) is still in progress for 149.76 long term resistance. However, sustained break of 55 week EMA will bring deeper fall to 38.2% retracement of 114.42 to 148.38 at 135.40. Decisive break there will raise the chance of trend reversal, and target 61.8% retracement at 127.39.

Daily Pivots: (S1) 0.8734; (P) 0.8760; (R1) 0.8791; More...

EUR/GBP is holding inside near term range of 0.7171/8864 despite yesterday's dip. Intraday bias remains neutral for the moment. On the upside, break of 0.8864 will target 0.8924 resistance first. Firm break there should resume larger rise from 0.8545 through 0.8977 high. However, decisive break of 0.8717 support will resume the decline from 0.8977 instead.

In the bigger picture, outlook remains rather mixed for now, except that price actions from 0.9267 (2022 high) are part of the long term range pattern from 0.9499 (2020 high). With 0.8720 support intact, rise from 0.8545 is in favor to continue through 0.8977. However, firm break of 0.8720 will argue that such rebound has completed, and open up deeper fall through this support level.