Daily Market Outlook, March 30, 2023

Nasdaq On The Cusp Of A New Bull Market

Month and quarter end flows have seen Asian equity markets trade with a subdued tone, the upbeat finish on Wall Street failed to follow into the Asian session in any meaningful fashion as investors closed out positions, without any data catalyst to take advantage of Asian markets remained relatively range bound. Stateside, however, the Nasdaq is poised to close out the quarter with record returns pointing to the potential for a technical new bull market set to be confirmed, as the tech heavy index is set to post 20%+ returns from its December lows.

Another quiet European data session this morning with the only prints of interest coming from Eurozone March inflation indications delivered via German and Spanish numbers ahead of the Eurozone flash estimate on Friday. Investors will be alert to signs of a retreat in headline inflation due mainly to energy prices. Germany’s harmonised inflation is expected to drop to 7.5% from 9.3%. Core inflation, however, is expected to remain stubbornly high.

The latest print for US Q4 GDP is expected to remain at 2.7% year over year. US weekly jobless claims are expected to remain at record lows, suggesting little in the way of loosening in the US labour market. US investors will likely be sitting on the sidelines ahead of Friday’s PCE deflator, the much touted preferred inflation gauge for the Federal Reserve. Fed's Barkin (non-voter), Collins (non-voter) and Kashkari (voter) will speak, while US Treasury Secretary Yellen will also be making some comments these come after her recent ambiguity around deposit insurance and the governments inclination or lack thereof to support depositors at all costs.

FX Options For 10am New York Cut

EUR/USD: 1.0700 (EU2.84b), 1.1000 (EU1.89b), 1.1300 (EU1.63b)
USD/JPY: 131.00 ($1.55b), 132.00 ($1.39b), 131.50 ($1.29b)
USD/CNY: 6.8600 ($398m), 6.8785 ($373.3m), 6.9000 ($334.6m)
USD/CAD: 1.1300 ($600m), 1.2450 ($540m), 1.3513 ($500m)
USD/MXN: 18.00 ($650m), 18.70 ($499.8m), 18.90 ($483.9m)
GBP/USD: 1.1200 (GBP619.5m), 1.2000 (GBP513.7m), 1.2200 (GBP426.3m)
AUD/USD: 0.6650 (AUD850m), 0.6600 (AUD833.6m), 0.6745 (AUD589.7m)
USD/KRW: 1280.00 ($350m)
EUR/GBP: 0.8725 (EU384.6m)
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.