Daily Market Outlook - Friday, March 31

Image Source: Pixabay

Month & Quarter End Flows Retain A Bid Tone, Could PCE Data Be A Party Pooper?

Asian equity markets were mostly trading in the green as investors marked up month and quarter end, following the positive flows from Wall Street. Tech once again leads the bullish charge, with the Nasdaq teetering on the edge of the bull market territory. Markets are increasingly pricing rate cuts into the year's end leading investors to allocate to growth stocks. The Nikkei notched up 1%+ gains as the end of the fiscal year saw investors push the benchmark over the 28K level as Chinese PMI’s printed a 12-year high leading to outperformance in the Hang Seng, with JD.com planning to spin off and separately list its industrials and property units following Alibaba’s lead earlier in the week. 

Earlier this morning the UK GDP print added to risk appetite as it printed a 0.1% gain for GDP in Q4 of 2022 exceeding the 0% expected outdoing the widely expected stagnation.

Investors in the Eurozone will parse March annual CPI inflation data this morning to where many market watchers expect it to print its largest drop in 12 months with a 7.3% from 8.5% 12 months prior. France, Germany, and Spain have all hinted at a substantial retreat that is primarily driven by a sharp decline in wholesale energy prices. The European Central Bank will also be keen to see what core inflation has to say where many market watchers expect a rise to 5.9% from 5.6% prior, this will likely lead to another round of rate increases in the Eurozone as ECB officials will see this level of inflation warranting further restrictive monetary policy. Stateside February data for the Federal Reserve’s preferred inflation gauge, the consumer expenditure deflator is believed to demonstrate a modest retreat in overall inflation to 5.2% from 5.4% in January, the core metric may print a minor uptick to 4.8% from 4.7% prior, once again leaving Fed officials focused on the inflation fight. 

FX Options For 10am New York Cut 

  • EUR/USD: 1.0850 1.2B 1.0950 1.1B
  • USD/CAD: 1.3600 1.5B 1.3900 1.2B
  • CitiFX preliminary estimate of month-end FX hedge rebalancing flows points to moderate U.S. dollar selling against all major currencies except the euro. Although fixed income performed strongly across the board, our model suggests that both international equity and fixed income investors will likely be USD sellers this month-end,Japanese investors' needs to increase hedges on well-performing foreign fixed income strengthen the need to buy the yen and sell the dollar, although strong performance of European and UK fixed income weakens the buy signal for euro and sterling.

Overnight News of Note

  • Asian Shares Ride High In Q1 But Steel For Inflation Data
  • US Stock Futures Are Flat Thursday Evening, Awaiting US PCE
  • Fed Officials See More Work On Inflation Despite Bank Strains
  • Fed’s Emergency Loans To Banks Fall In Sign Of Easing Turmoil
  • Biden Calls On Regulators To Harden Rules For Regional Banks
  • White House Attempts To Keep China Calm Over Taiwan Visits
  • China Recovery Gains Traction As Spending, Construction Rises
  • BoJ Set To Lower Bond Buying As Yields Drop On Banking Woes
  • IMF Report BoJ Should Avoid Premature Exit From Policy Easing
  • Tokyo Inflation Slows Ahead Of BoJ Leadership Change To Ueda
  • RBA Pause Bet Bolstered By Strongest Bond Auction Since 2021
  • UK Set To Join Indo-Pacific Trade Bloc In Major Post-Brexit Pact
  • Finland Clears Last Obstacle To NATO Entry With Turkey’s Nod

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

Technical & Trade Views

SP500 Bias: Intraday Bullish Above Bearish Below 4030

  • Primary resistance is 4078
  • Primary objective is 3804
  • Above 4040 opens 4078
  • 20 Day VWAP bullish, 5 Day VWAP bullish

(Click on image to enlarge)

EURUSD Bias: Intraday Bullish Above Bearish below 1.0830

  • Primary support  is 1.07
  • Primary objective is 1.1128
  • Below 1.0700 opens 1.0660
  • 20 Day VWAP bullish, 5 Day VWAP bullish

(Click on image to enlarge)

GBPUSD Bias: Intraday Bullish Above Bearish below 1.2280

  • Primary support  is 1.2200
  • Primary objective 1.2411
  • Below 1.2170 opens 1.2100
  • 20 Day VWAP bullish, 5 Day VWAP bullish

(Click on image to enlarge)

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

(Click on image to enlarge)

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 bullish

(Click on image to enlarge)

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 bullish

(Click on image to enlarge)

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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to ...

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