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Market movers today

Today Bank of Canada is set to hike policy rates for the second time in the cycle and announce a passive roll-off of its balance sheet likely beginning in May. Consensus and markets are leaning towards a 50bp hike but we cannot rule out another 25bp hike even if recent inflation surprises and labour market data do suggest that Bank of Canada - like neighbouring Fed - has fallen behind the curve.

Today is a quiet day in terms of economic data releases. Note that there are no Danske Morning Mail tomorrow and Friday due to Easter. Tomorrow, the key event is the ECB meeting, where we expect Lagarde to put a September rate hike into play.

This morning, UK CPI inflation is due out. We expect another increase, which supports the case for more rate hikes.

In Sweden, the small Prospera inflation expectations survey is due out, which is an important input for the timing of Riksbank rate hikes.

The 60 second overview

US FI rally: It was a choppy trading session yesterday where notably the US treasuries dropped 10bp on the US CPI release as markets focused on the 0.3% mom increase 'only', rather than the 8.5% headline figure. The EGBs followed suit, but only by 4bp, accelerating the yield decline initiated by a further deterioration in the German ZEW figure released earlier on the day. By the end of the trading session we were left with a bullish steepening of the EGB curves. The long end of the curve has recorded some very volatile trading sessions. The 10s30s EUR swap started Monday morning close to -24bp, but now stands at 18.5bp.

RBNZ: In line with our expectation, the Reserve Bank of New Zealand (RBNZ) hiked its official cash rate by 50bp in its meeting overnight. RBNZ was worried that the ongoing global inflationary pressures would increasingly feed into higher long-term inflation expectations amid fast domestic inflation and tight labor market. While RBNZ did acknowledge the rising economic risks, it also noted that despite the earlier rate hikes, the current level of the cash rate is still considered stimulatory and thus it was willing to accelerate the process of moving towards neutral. This is in line with our general view that global financial conditions still need to be tightened further. While consensus was expecting only a 25bp hike, a 50bp move was largely priced in the markets ahead of the meeting, and the initial rally in NZD faded quickly.

Equities: Equities lower again yesterday but in a bit more rollercoaster session where both US and Europe were in green during the day. Better performance in cyclicals yesterday and also small cap holding up better as yields finally took a pause on back of the US CPI number. VIX a tad lower as well. Asian stocks are higher this morning with relative strong gains in both Japan and South Korea. US futures are higher while European once are lower this morning.

FI: It was a choppy trading session yesterday where notably the US treasuries dropped 10bp on the US CPI release.

FX: The US CPI induced setback to USD proved short-lived with the DXY index posting new highs and EUR/USD reaching new lows just north of 1.08 at close. Both EUR/NOK and EUR/SEK price action was dominated by EUR-weakness brought by another rise in energy prices. GBP/USD keeps testing the 1.30-mark.

Credit: Having trended wider over the past week, iTraxx Main held steady at 78bp yesterday. Meanwhile, iTraxx Xover was slightly tigher by 6bp to 370bp. Despite the Easter week, there was some activity in the primary market yesterday, with UK power company SSE printing a EUR1bn hybrid, though demand did not seem overwhelming indicating that the market is still challenging.

Daily Pivots: (S1) 1.0797; (P) 1.0850 (R1) 1.0880; More...

Intraday bias in EUR/USD stays neutral with focus on 1.0805 low. Decisive break there will resume larger down trend to 61.8% projection of 1.1494 to 1.0805 from 1.1184 at 1.0758, and then 100% projection at 1.0495. On the upside, however, break of 1.0937 minor resistances will extend the consolidation pattern from 1.0805 with another rising leg.

In the bigger picture, the decline from 1.2348 (2021 high) is expected to continue as long as 1.1494 resistance holds. Firm break of 1.0635 (2020 low) will raise the chance of long term down trend resumption and target a retest on 1.0339 (2017 low) next. Nevertheless, break of 1.1494 will maintain medium term neutral outlook, and extending term range trading first.

Daily Pivots: (S1) 1.2979; (P) 1.3017; (R1) 1.3039; More...

Intraday bias in GBP/USD remains neutral for some consolidations, but outlook stays bearish as long as 1.3165 resistance holds. Break of 1.2981 will resume larger down trend to 61.8% projection of 1.3641 to 1.2999 from 1.3297 at 1.2900.

In the bigger picture, rise from 1.1409 (2020 low) has completed at 1.4248. Decline from 1.4248 could still be a corrective move, or it could be the start of a long term down trend. In either case, deeper decline would be seen back to 61.8% retracement of 2.1161 to 1.1409 at 1.2493. In any case, break of 1.3748 resistance is needed confirm completion of the fall from 1.4248, or outlook will stay bearish.

Daily Pivots: (S1) 0.9295; (P) 0.9320; (R1) 0.9353; More....

Intraday bias in USD/CHF remains neutral at this point. On the upside, firm break of 0.9380 should confirm that fall from 0.9459 has completed with three wave down to 0.9193. Such development will revive near term bullishness and turn bias back to the upside for 0.9459 and then 0.9471 resistance. On the downside, below 0.9280 minor support will turn bias to the downside for 0.9193 support next.

In the bigger picture, medium term outlook will be neutral at best as long as 0.9471 resistance holds. Larger down trend could still extend through 0.8756 (2021 low). However, firm break of 0.9471 will argue that whole down trend form 1.0342 (2016 high), has completed with waves down to 0.8756. A medium term up trend should be set up to target 1.0237/0342 resistance zone.

Daily Pivots: (S1) 124.86; (P) 125.31; (R1) 125.85; More...

Intraday bias in USD/JPY remains neutral for the moment. On the downside, break of 124.66 minor support will bring deeper pull back to 4 hour 55 EMA (now at 123.97) and possibly below. But downside should be contained above 121.27 support to bring another rally. On the upside, sustained break of 125.85 will pave the way to 130.04 long term projection level next.

In the bigger picture, up trend from 98.97 (2016 low) is in progress for retesting 125.85 (2015 high). Sustained break there will confirm long term up trend resumption. Next target will be 61.8% projection of 75.56 (2011 low) to 125.85 (2015 high) from 98.97 at 130.04. This will now remain the favored case as long as 116.34 resistance turned support holds.

Daily Pivots: (S1) 0.7405; (P) 0.7449; (R1) 0.7499; More...

Intraday bias in AUD/USD is turned neutral with current recovery. On the downside, below 0.7398 will resume the fall from 0.7660. On the upside, above 0.7518 minor resistance will turn bias back to the upside for 0.7660. Firm break there will resume larger rise from 0.6991 to retest 0.8006 high.

In the bigger picture, correction from 0.8006 could have completed at 0.6966, after drawing support from 0.6991. That is, up trend from 0.5506 (2020 low) might be ready to resume. Firm break of 0.8006 will target 61.8% projection of 0.5506 to 0.8006 from 0.6966 at 0.8511 next. This will remain the favored case as long as 0.7164 support holds.

Daily Pivots: (S1) 1.2596; (P) 1.2629; (R1) 1.2676; More...

Intraday bias in USD/CAD remains mildly on the upside as rebound from 1.2401 is in progress. Sustained trading above 55 day EMA (now at 1.2629) will bring further rally to upper side of recent range at 1.2963. On the downside, though, below below 1.2561 minor support will turn bias back to the downside for 1.2401 support again.

In the bigger picture, focus stays on 38.2% retracement of 1.4667 (2020 high) to 1.2005 (2021 low) at 1.3022. Sustained break there should confirm that the down trend from 1.4667 has completed after defending 1.2061 long term cluster support. Further rise would then be seen towards 61.8% retracement at 1.3650. However, rejection by 1.3022 will maintain medium term bearishness. Break of 1.2005 will resume the down trend from 1.4667 and that carries larger bearish implications too.

Daily Pivots: (S1) 162.68; (P) 163.16; (R1) 163.51; More...

Intraday bias in GBP/JPY remains neutral as consolidation from 164.61 is still extending. Further rally is expected with 158.04 support intact. On the upside, break of 164.61 will resume larger up trend to long term fibonacci level at 167.93. However, firm break of 158.19 will turn bias to the downside and bring deeper pull back.

In the bigger picture, up trend from 123.94 (2020 low) is still in progress, and notable support from 55 week EMA affirms medium term bullishness. Next target is 61.8% retracement of 195.86 (2015 high) to 122.75 (2016 low) at 167.93. Sustained break there will be a long term bullish signal. This will now remain the favored case as long as 150.95 support holds.

Daily Pivots: (S1) 135.33; (P) 135.99; (R1) 136.44; More....

Intraday bias in EUR/JPY remains neutral as consolidation from 137.50 is still extending. Further rise is expected with 133.70 support intact. On the upside, sustained break of 137.49 resistance will resume larger up trend for 144.06 projection level next. However, firm break of 133.70 will turn bias back to the downside for deeper pull back.

In the bigger picture, up trend from 114.42 (2020 low) is in progress. Sustained break of 137.49 (2018 high) will resume larger pattern from 109.30 (2016 low). Next target will be 100% projection of 114.42 to 134.11 from 124.37 at 144.06. In any case, outlook will now remain bullish as long as 124.37 support holds, in case of deep pull back.

Daily Pivots: (S1) 0.8312; (P) 0.8336; (R1) 0.8353; More...

Intraday bias in EUR/GBP remains neutral and outlook is unchanged. On the downside, break of 0.8294 will argue that rebound from 0.8201 has completed at 0.8511, and revive near term bearishness. Intraday bias will be back on the downside for retesting 0.8201 low. On the upside, however, break of 0.8511 will reaffirm that 0.8201 is a medium term bottom, and target 0.8697 medium term fibonacci level next.

In the bigger picture, a medium term bottom should be in place at 0.8201, on bullish convergence condition in daily and weekly MACD. Rise from there could either be a correction to the down trend from 0.9499 (2020 high), or a medium term up trend itself. In either case, further rise should be seen to 38.2% retracement of 0.9499 to 0.8201 at 0.8697. Sustained break there will target 61.8% retracement at 0.9003. This will remain the favored case as long as 0.8294 support holds.