Daily Market Outlook, March 28, 2023
Banking Stress Recedes, Relief Rally In Bank Shares Supports Sentiment
Following a mildly positive finish on Wall Street Asian equities have also posted modest gains overnight as risk sentiment remains buoyed by a belief that the banking stress of the past few weeks is starting to recede. The Fed added further support to First Republic Bank as First Citizens Banchsares stepped in agreeing to acquire Silicon Valley Bank assets and deposits, both of which have seen a stemming in the stress in regional banking franchises in the US, however, it is likely to early to call the all clear as some investors remain on the sidelines waiting for the inevitable ‘next shoe to drop’. The overall improvement in the risk tone seen since the weekend has also weighed on interest rate expectations, with some market participants actively betting on rate cuts to begin later this year, renowned bond investor Gundlach head of Doubleline Capital believes the Fed will have to wind back rates as we head into the back end of the year, markets are currently pricing rates to close out the year around 4.25% down from prior 4.75-5%.
With a lack of any tier one econ data on the docket today in the European session, investors focus will be on two key central bankers set to address political officials for quizzing on the causes of the recent banking turmoil. In the UK, Bank of England Governor will address a parliamentary committee to provide testimony on the failure of SBV UK. Stateside, US Federal Reserve Vice Chair of Supervision Barr is set to testify in front of the Senate Banking Committee to face questioning on the SBV collapse and the Feds plans to underpin financial stability in the light of the current crisis. The US data docket has little in the way of market moving data today, the only release of note is the conference board's consumer confidence survey which will likely be an early indication of the impact of banking concerns on consumer appetite which is expected to show a decline for March.
FX Options For 10am New York Cut
EUR/USD: 1.0950 (EU1.16b), 1.0500 (EU1.16b), 1.0880 (EU892.5m)
USD/JPY: 128.50 ($590.3m), 136.28 ($479.9m)
USD/CNY: 6.8500 ($354.4m)
AUD/USD: 0.6750 (AUD651.8m), 0.6500 (AUD575.4m), 0.6000 (AUD450m)
Overnight News of Note
Asia Markets Trade Higher As Investor Banking Turmoil Fears Ease
US Stock Futures Tick Higher After Third Positive Session
Fed's Jefferson: Still Learning Impact Of Tighter Monetary Policy
Treasury Official Set To Pledge Deposit Protections If Necessary
US Plan Ultimatum In Mexico Energy Dispute, Ups Tariffs Threat
Doubleline’s Gundlach Predicts Recession Starts In Few Months
Japan Finance Ministry Gives Nudge To BoJ Amid Bond Worries
NK’s Kim Jong Un Warns Nuclear Use Anytime As Carrier Arrives
Aussie Feb Retail Sales Level Off As Shoppers Rein In Spending
Australia’s Regulators To Meet After Yellen, Lagarde Discussions
BoE’s Bailey Suggests Won’t Lift Rates Back To Pre-Crisis High
Inflation In UK Shops Hits Record High With More Pain To Come
EU Delays Disbursement Of EUR19Bln Of Pandemic Aid To Italy
Schwab’s $7 Trillion Empire Built On Low Rates Showing Cracks
(Sourced from Bloomberg, Reuters and other reliable financial news outlets)
Technical & Trade Views
SP500 Bias: Intraday Bullish Above Bearish Below 4000
Primary resistance is 4078
Primary objective is 3804
Above 4040 opens 4078
20 Day VWAP bullish, 5 Day VWAP bullish
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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 bearish
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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
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USDJPY Bias: Intraday Bullish above Bearish Below 132.20
Primary resistance is 135.15
Primary objective is 129.15
Above 136 opens 137.90
20 Day VWAP bearish, 5 Day VWAP bearish
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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
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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
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!