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With few important data releases, today was supposed to be a transitory trading session after yesterday’s (very disappointing) US manufacturing ISM and ahead of the key US Services ISM and labour market data later this week. However an empty calendar doesn’t by definition mean investors abstaining from further finetuning positions. After yesterday’s weak ISM, one could have expected investors to give some more consideration to lower growth rather than to inflation risks. However, this wasn’t really the case. In technical trading, US yields are gaining 5/8 bps across the curve. The US 2-y still struggles to hold above the 4% psychological barrier (4.02%). The 10-y yield (3.48%) maintains some breathing space above the key 3.40/3.32% key support area. On this side of the Atlantic, German yields show a similar pattern, rising between 6 bps (2-y) and 8.5 bps (10/30-y). In a broader perspective, core bond yields are building some kind of sideways pattern at lower levels compared to the peak levels reached early March. This ‘relative loosing’ combined with receding event risk, continues to support equities. The Eurostoxx 50 today jumped above the early March YTD top and even nears the end 2021 multi-year peak. US indices also open little changed. Interesting to see the (equity) market reaction in case of stronger than expected US data later this week. In this respect, already keep an eye at JOLTS job openings, to be released after finishing this report. Oil maintains yesterday’s jump higher (Brent $85.5/b).

For USD trading, today’s session really marked some kind of interlude with mostly range trading between the established barriers. DXY hovers near the 102 big figure. EUR/USD tried a first ‘real’ attack on the 1.0930 resistance, but the test was rejected, even despite a constructive global risk sentiment (currently 1.089). USD/JPY gains a few ticks (132.9), but also didn’t break any technically relevant level. Of late, sterling was an area of remarkable calm, both in risk-on and risk-off episodes. This pattern was quite abruptly overthrown today. EUR/GBP nosedived from the 0.878 area to currently change hands near 0.873. The key 0.8720 support is within reach. To be honest, we didn’t see the exact trigger. The move occurred when headlines from BoE’s Tenreyro hit the screens. However, she firmly held to her well-known highly dovish stance as she raised the case for ‘an earlier and faster reversal’ of the current hiking cycle to prevent inflation to drop below 2% later in the BoE’s policy horizon. It didn’t stop the sterling ‘break-out’. Markets are maybe repositioning for a more positive (less negative) UK growth outlook. However, we’re convinced that this will change the BoE’s (dovish) reaction function anytime soon.

News Headlines

The ECB published results of its February Consumer Expectations Survey. Median expectations for inflation over the next 12 months continued to decline, moving down from 4.9% in January to 4.6%. Expectations for inflation three years ahead edged down from 2.5% to 2.4%. Consumers expected their nominal income to grow by 1.2% over the next 12 months, down from 1.3% in January. Expectations for nominal spending growth over the next 12 months rose slightly to 3.9%, from 3.8% in January. Economic growth expectations for the next 12 months continued to increase, rising to -0.9% from -1.2% in January 2023. Expectations for the unemployment rate 12 months ahead declined to 11.5%, compared with 11.6% in January. Consumers expected growth in the price of their home over the next 12 months to increase slightly to 2.6%, compared with 2.5% in January. Expectations for mortgage interest rates 12 months ahead rose slightly to 5%.

Swedish housing starts in apartments and single-house families are expected to half this year to 25.5k, according to the nation’s construction federation. The new forecast in its bi-annual report compares to 38.5k put forward last fall. Housing construction has not been this low in a decade. Rising interest rates are the main reason with the federation expecting the Riksbank to raise policy rates even further to 4%, compared to currently 3%. The grim situation also affects employment in the construction industry. The number of employed people is estimated to decrease by 21k between 2022 and 2024. Overall, Swedish GDP is forecast to decrease by 1.6% in 2023 - to reverse to an increase of 1.2% in 2024. The Swedish krone holds near historically low levels around EUR/SEK 11.30. The 2019 top of 11.43 is final resistance ahead of the 2009 top at 11.79

In this technical blog, we will look at the past performance of the 4-hour Elliott Wave Charts of GBPCAD. In which, the rally from the 10 February 2023 low unfolded as an impulse sequence and showed a higher high sequence with a bullish sequence stamp. Therefore, we knew that the structure in GBPCAD is incomplete to the upside & should see more upside to complete the impulse sequence. So, we advised members not to sell the pair & buy the dips in 3, 7, or 11 swings at the blue box areas. We will explain the structure & forecast below:

GBPCAD 4-Hour Elliott Wave Chart From 4.02.2023

Here’s the 4hr Elliott wave Chart from the 4/02/2022 Weekend update. In which, the rally to 1.6866 high ended 5 waves from the 2/10/2023 low in wave (1) & made a pullback in wave (2). The internals of that pullback unfolded as Elliott wave double three correction where wave W ended at 1.6676 low. Then a bounce to 1.6792 high ended wave X & started the next leg lower in wave Y towards 1.6602-1.6483 blue box area. From there, buyers were expected to appear looking for new highs ideally or for a 3 wave bounce minimum.

GBPCAD 4-Hour Latest Elliott Wave Chart From 4.03.2023

This is the latest 4hr Elliott wave Chart from the 4/03/2023 update. In which the pair is showing a reaction higher taking place, right after ending the double correction within the blue box area. Allowed members to create a risk-free position shortly after taking the long position at the blue box area.

Daily Pivots: (S1) 131.83; (P) 132.79; (R1) 133.38; More...

USD/JPY is staying in consolidation from 133.74 and intraday bias remains neutral. Overall, rise from 129.62 is seen as the third leg of the corrective pattern from 127.20. Sustained break of 55 day EMA (now at 133.34) will target 137.90 resistance. On the downside, break of 131.75 minor support will turn bias to the downside for 129.62 first. Break there will bring retest of 127.20 low.

In the bigger picture, corrective pattern from 127.20 might be extending. But after all, down trend from 151.93 is expected to resume at a later stage. Break of 127.20 will resume this down trend and target 61.8% projection of 151.93 to 127.20 from 137.90 at 122.61. This will now be the favored case as long as 137.90 resistance holds.

Daily Pivots: (S1) 0.9097; (P) 0.9146; (R1) 0.9177; More...

USD/CHF is still extending the corrective pattern from 0.9058 and intraday bias stays neutral. Another rise cannot be ruled out. But upside should be limited by 0.9474 fibonacci level. On the downside, firm break of 0.9058 will resume larger down trend from 1.1046.

In the bigger picture, fall from 1.1046 (2022 high) should still be in progress with 38.2% retracement of 1.0146 to 0.9058 at 0.9474 intact. Prior rejection by 55 week EMA was a medium term bearish sign. Break of 0.9058 will resume such decline towards 0.8756 support (2021 low). But overall, this fall is still as a leg in the long term range pattern from 1.0342 (2016 high). So, downside should be contained by 0.8756 to bring reversal.

Daily Pivots: (S1) 1.0822; (P) 1.0869; (R1) 1.0951; More...

Intraday bias in EUR/USD remains mildly on the upside. Current rise from 1.0515 should target a test on high first. Decisive break there will resume larger up trend from 0.9534 to 1.1273 fibonacci level next. On the downside, break of 1.0787 support will turn bias back to the downside for 1.0711 support instead.

In the bigger picture, rise from 0.9534 (2022 low) is in progress with 38.2% retracement of 0.9534 to 1.1032 at 1.0460 intact. The strong support from 55 week EMA (now at 1.0625) was also a medium term bullish sign. Next target is 61.8% retracement of 1.2348 (2021 high) to 0.9534 at 1.1273. Sustained break there will solidify the case of bullish trend reversal and target 1.2348 resistance next (2021 high).

Daily Pivots: (S1) 1.2320; (P) 1.2372; (R1) 1.2470; More...

Intraday bias in GBP/USD remains on the upside for the moment. Up trend from 1.0351 is resuming and further rise should be seen to 1.2759 fibonacci level. Firm break there will target 61.8% projection of 1.0351 to 1.2445 from 1.1801 at 1.3095. On the downside, below 1.2393 minor support will turn intraday bias neutral first. But retreat should be contained above 1.2203 resistance turned support to bring another rally.

In the bigger picture, the rise from 1.0351 medium term term bottom (2022 low) is in progress for 61.8% retracement of 1.4248 (2021 high) to 1.0351 at 1.2759. Sustained break there will add to the case of long term bullish trend reversal. Further break of 61.8% projection of 1.0351 to 1.2445 from 1.1801 at 1.3095 could prompt upside acceleration to 100% projection at 1.3895. For now, this will remain the favored case as long as 1.1801 support holds, even in case of deep pull back.

Sterling surges to a 10-month high against Dollar today, as comments from a lone dove on the Bank of England's Monetary Policy Committee seem to have little impact. Pound's strength against Euro and Swiss Franc suggests a one-sided movement. Meanwhile, Australian Dollar remains the weakest performer following RBA's decision to hold interest rates steady. With Yen and Kiwi also weak, risk sentiment appears directionless. Dollar's performance is mixed, with the market awaiting tomorrow's ISM services report and Friday's non-farm payroll employment data for further inspiration.

Technically, GBP/AUD appears poised to resume its uptrend from 1.5925, passing last week's high at 1.8532. However, the near-term upside momentum has not been too convincing, as evidenced by daily MACD readings. A significant obstacle lies at the 61.8% projection of 1.5925 to 1.8272 from 1.7218 at 1.8668. Rejection from this level, followed by a break of 1.8244 support, could signal a deeper pullback towards the 55 day EMA (now at 1.7984). On the other hand, a decisive break of 1.8668 might trigger sharper upside acceleration, targeting 1.9218 resistance and above. The market is likely to see a clearer picture on the cross within April.

In Europe, at the time of writing, FTSE is up 0.08%. DAX is up 0.85%. CAC is up 0.57%. Germany 10-year yield is up 0.078 at 2.332. Earlier in Asia, Nikkei rose 0.35%. Hong Kong HSI dropped -0.66%. China Shanghai SSE rose 0.49%. Singapore Strait Times rose 0.92%. Japan 10-year JGB yield rose 0.0453 to 0.416.

BoE's Tenreyro foresees need for looser monetary policy

BoE Monetary Policy Committee member Silvana Tenreyro, a known dove, remarked in a speech that the data sinve November has evolved most like her downside scenario, noting a sharp decline in high-frequency private-sector regular pay growth.

She explained that with the Bank Rate at 4.25%, the restrictive policy is likely to "drag demand well below its potential, loosening the labour market and pulling down on inflation." As a result, she believes that "inflation is likely to fall well below target."

Tenreyro voted for no change in the Bank Rate in recent months, instead of further tightening, as she believes a looser stance is necessary to achieve the inflation target in the medium term.

She expressed her expectation that the current high level of the Bank Rate "will require an earlier and faster reversal, to avoid a significant inflation undershoot."

ECB survey: Moderating inflation expectations, improved growth outlook

ECB has released its Consumer Expectations Survey results for February 2023, which demonstrate a continuing moderating inflation expectations and uptick in growth outlook. The results suggest that consumers may be regaining some confidence in the Eurozone's economic recovery prospects.

Median inflation expectations for the coming year dropped from 4.9% in January to 4.6%, compared to 5.0% in December. In addition, expectations for inflation three years ahead also saw a slight decrease, from 2.5% to 2.4%, in contrast to December's 3.0%.

On a positive note, mean economic growth expectations for the next 12 months experienced an improvement. The figure rose from January's 1.2% to -0.9%, a better outcome when compared to December's -1.5%.

Eurozone PPI at -0.5% mom, 13.2% yoy in Feb

Eurozone PPI came in at -0.5% mom, 13.2% yoy in February below expectation of -0.3% mom, 13.2% yoy. For the month, industrial producer prices decreased by -1.6% in the energy sector and by 0.1% for intermediate goods, while prices increased by 0.3% for capital goods, by 0.4% for durable consumer goods and by 0.6% for non-durable consumer goods. Prices in total industry excluding energy increased by 0.2%.

EU PPI stood at -0.6% mom, 14.5% yoy. The largest monthly decreases in industrial producer prices were recorded in Bulgaria (-7.9%), Greece (-3.3%) and Belgium (-3.2%), while the highest increases were observed in Slovakia (+11.5%), Slovenia (+2.7%) and Portugal (+2.5%).

RBA holds cash rate steady, maintains tightening bias

RBA has decided to keep the cash rate target unchanged at 3.60% amid ongoing uncertainty, but maintained its tightening bias. The central bank stated that some further tightening might be necessary, depending on developments in the global economy, household spending, inflation, and the labor market outlook.

In the official statement, RBA noted, "The Board expects that some further tightening of monetary policy may well be needed to ensure that inflation returns to target."

RBA's central forecast anticipates inflation to decline over the next couple of years, reaching around 3% by mid-2025. The statement highlighted that "medium-term inflation expectations remain well anchored, and it is important that this remains the case."

Despite the slowing growth in the Australian economy, labor market remains very tight. However, as economic growth slows, RBA expects unemployment to increase. The Board remains alert to the risk of a "price-wages spiral", given the limited spare capacity in the economy and the historically low rate of unemployment.

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.2320; (P) 1.2372; (R1) 1.2470; More...

Intraday bias in GBP/USD remains on the upside for the moment. Up trend from 1.0351 is resuming and further rise should be seen to 1.2759 fibonacci level. Firm break there will target 61.8% projection of 1.0351 to 1.2445 from 1.1801 at 1.3095. On the downside, below 1.2393 minor support will turn intraday bias neutral first. But retreat should be contained above 1.2203 resistance turned support to bring another rally.

In the bigger picture, the rise from 1.0351 medium term term bottom (2022 low) is in progress for 61.8% retracement of 1.4248 (2021 high) to 1.0351 at 1.2759. Sustained break there will add to the case of long term bullish trend reversal. Further break of 61.8% projection of 1.0351 to 1.2445 from 1.1801 at 1.3095 could prompt upside acceleration to 100% projection at 1.3895. For now, this will remain the favored case as long as 1.1801 support holds, even in case of deep pull back.

Economic Indicators Update

• GBPUSD under the bullish pressure
• Likely to rise to resistance level 1.2600

GBPUSD under the bullish pressure after the price broke the key resistance level 1.2440 (which has been reversing the price from the middle of 2022, as can be seen below).

The breakout of the resistance level 1.2440 accelerated the C-wave of the active ABC correction (2).

Given the strongly bullish sterling sentiment sent today, GBPUSD can then be expected to rise further toward the next resistance level 1.2600 (target for the completion of the active wave C).

• Nasdaq-100 broke resistance area
• Likely to rise to resistance level 13400.00

Nasdaq-100 index recently broke the resistance area located between the resistance levels 12885.00 (which has been reversing the price from the start of February) and 13160.00

The breakout of this resistance area accelerated the active impulse wave 3 of the intermediate impulse wave (C) from last month.

Given the clear daily uptrend, Nasdaq-100 index can then be expected to rise further toward the next resistance level 13400.00 (target price for the completion of the active impulse wave 3).

Market picture

Bitcoin has been experiencing intense ups and downs this week but remains close to $28K. This dynamic is looks like a quarterly portfolio shakeout, and predicting the next local move is difficult.

At the same time, we note the slight downward slope of local highs and lows. The Q1 successes have created a demand for profit-taking. In the coming days, it is worth keeping an eye on the trading range boundaries.

According to CryptoQuant, the number of BTCs in exchange wallets is rising. Since the end of March, traders have sent coins to exchanges to sell later.

An accelerated decline at $27.5K would raise the prospect of a deeper correction to $25K, where the price could go quickly. A consolidation above $28.5K would indicate that the sideways trend of the last two weeks is over and that the price is ready to move higher.

According to CoinShares, investments in crypto funds increased by a modest $2.5 million last week, following a $160 million increase the week before. Bitcoin investments rose by $9 million, while Ethereum fell by $3 million.

News background

BTC miners reported their best results since May last year. Bitcoin mining companies collectively generated $755 million in revenue in March.

Two law firms are suing Binance for $1 billion for promoting unregistered securities. This is the second lawsuit against the exchange, on top of one from the CFTC last week.

According to Kaiko, Binance’s spot market share has dropped significantly in the past week. The CFTC’s investigation could last for years, so the outflow of funds will continue.