Daily Market Outlook, April 06, 2023

Markets Winding Down, Could Labour Data In The US Spoil The Holiday Spirit?

Asian equities are trading with a subdued tone heading into the holiday weekend with most money centres winding down for early closure tomorrow. The risk tone has softened in the past couple of sessions driven by concerns that weaker data prints out of the US whilst seemingly dovish from a rates pricing perspective, investors sense a growing fear that the data points to a slow down in growth that hints towards recession, however, overnight a glimmer of optimism came from a better than expected Caixin services data out of China, which pointed towards a significant uptick in services activity, giving the China re-opening narrative a much needed shot in the arm. The standout underperformer on the overnight session was the Nikkei225 which traded down over 1% after reports that the BoJ Director Momma suggested the recent retreat in global bond yields provided the BoJ with a window to exit its Yield Curve Control strategy, leaving investors increasingly uneasy about the termination of the accommodative monetary policy environment. 

For European investors with Easter widely celebrated across the continent the data docket is scant today. In the UK, investors will parse March PMI construction data providing a timely insight to the highly cyclical construction sector, especially given February’s blowout number for activity, the highest in nearly nine months, investors will be keen to see if a trend is emerging or the number was an anomaly. The February read also highlighted that input cost inflation was at its lowest since November 2020 and supply chain issues were also at pre-Covid lows, the only concern with the February data was seen in employment wage costs which remain stubbornly elevated leading to recruitment bottlenecks.

While European markets are closed for Easter tomorrow the US labour department will still deliver its monthly Non Farm Payrolls report, last month's release once again demonstrated continued tightness in the US employment landscape with another upside surprise in the headline number. Markets are braced for another robust reading of circa 250K jobs added, however, the unemployment rate is set to nudge down from 3.6% to 3.5%. The wage data output may provide some relief as recent readings have started to suggest a slowing in wage growth despite the tightness in the overall employment environment, investors would welcome another tick down in this part of the report.

FX Options Expiries For 10am New York Cut

(In bold represent larger expiries, more magnetic when trading within daily ATR)

  • EUR/USD: 1.0875 (EU1.02B), 1.0400 (EU848.5M), 1.0920 (EU732.5M)

  • USD/JPY: 142.00 ($885.4M), 131.00 ($881.7M), 127.00 ($756M)

  • USD/CAD: 1.3455 ($2.02B), 1.3750 ($1.73B), 1.3600 ($1.05B)

  • AUD/USD: 0.6725 (AUD647.8M), 0.6610 (AUD490M), 0.6800 (AUD482.4M)

  • GBP/USD: 1.1700 (GBP403.7M), 1.1400 (GBP403M)

  • USD/CNY: 7.2850 ($500M), 6.8820 ($303.4M)

  • USD/MXN: 18.10 ($461.7M), 18.20 ($334.6M)

  • NZD/USD: 0.6325 (NZD455.3M

Overnight News of Note

  • Asian Stocks Slide, Bond Yields Depressed As Recession Worries Weigh

  • China’s Services Activity Surges To More Than Two-Year High

  • China Asks WTO To Investigate US-Japan-Dutch Chip Curbs

  • RBA Says Banks Are Strong, Households Resilient To Higher Rates

  • McCarthy Stresses Need To Speed Up Arms Deliveries To Taiwan

  • North Korea: US-South Korea Drills Push Tension To 'Brink Of Nuclear War'

  • Dollar Edges Higher Ahead Of Non-Farm Payrolls Data On Friday

  • Oil Set For Third Weekly Gain On OPEC+ Cuts, Inventory Draws

  • Drugmaker AbbVie Trims Profit Forecasts On IPR&D Expenses

  • Costco Falls On Lowest US Sales Growth In Almost Three Years

(Sourced from Bloomberg, Reuters and other reliable financial news outlets)

Technical & Trade Views

SP500 Bias: Intraday Bullish Above Bearish Below 4080

  • Primary support is 4000

  • Primary objective is 4207

  • Below 3985 opens 3950

  • 20 Day VWAP bullish, 5 Day VWAP bullish

EURUSD Bias: Intraday Bullish Above Bearish below 1.0930

  • Primary support  is 1.07

  • Primary objective is 1.1128

  • Below 1.0700 opens 1.0660

  • 20 Day VWAP bullish, 5 Day VWAP bullish

GBPUSD Bias: Intraday Bullish Above Bearish below 1.24 - Target Hit, New Pattern

  • Primary support  is 1.2250

  • Primary objective 1.2659

  • Below 1.22 opens 1.2010

  • 20 Day VWAP bullish, 5 Day VWAP bullish

USDJPY Bias: Intraday Bullish above Bearish Below 133.00

  • Primary resistance  is 135.15

  • Primary objective is 129.15

  • Above 136 opens 137.90

  • 20 Day VWAP bearish, 5 Day VWAP bearish

AUDUSD Bias: Intraday Bullish Above Bearish below .6696

  • Primary resistance is .6740

  • Primary objective is .6950

  • Below .6560 opens .6450

  • 20 Day VWAP bearish, 5 Day VWAP bearish

BTCUSD Intraday Bias: Bullish Above Bearish below 26500

  • Primary support 23000

  • Primary objective is 30000

  • Below 23000 opens 22400

  • 20 Day VWAP bullish, 5 Day VWAP bearish