RBA kept the cash rate unchanged at a record low of 0.1% but the central bank changed its tune and dropped a pledge to be “patient” on tightening the monetary policy. This was the first step toward the first rate rise since 2010. The RBA said it would assess inflation and labour costs “over the coming months” to decide how to proceed. Analysts expect to see a move in August or September this year. Crude oil traded higher yesterday as western leaders called for war crimes prosecution against Putin. This has restrained relationships between the West and Putin’s Russia even further. Western nations are adopting more sanctions which could lead to Russia cutting off the energy supply to the west. In today’s report, I provide you with targets for AUDCAD, EURCHF, EURJPY and USDCHF. By reading further, you agree with our disclaimer at the end of this report and acknowledge that we do not provide investment advice.
The way I have structured my analysis is that I will post trade ideas when I see them but when now apparent trade ideas stand out at the time of writing the analysis I will provide you with analysis and key price levels on markets that are worth putting on a watchlist. As soon as something catches my eye I will update you on our Telegram channel.
I tend to include Target 1 (T1) and Target 2 (T2) levels (or ranges) so that you have an idea of how far the market would probably move if price action supports my trade ideas. The target one is a high probability target while the next target is further away and therefore there’s a greater risk that the market doesn’t reach the level. While I don’t provide investment advice my analysis helps you in your own market analysis and then you can decide how to trade the markets. If you need help more help with your trading join me at the next live analysis webinar here: www.TIOmarkets.com/webinars I will show you live how to analyse the markets and identify trading opportunities.
AUDCAD has broken above a resistance level at 0.9462. My T1 for AUDCAD is at 0.9557 and T2 at 0.9615. Alternative scenario: The pair moves back below 0.9462 and retraces to the 0.9407 – 0.9435 range.
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EURCHF broke below the 1.0194 support and could move now lower. My T1 for the pair is at 1.0067 and my T2 is at 0.9980. Alternative scenario: EURCHF rallies above the resistance and moves to 1.0280.
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EURJPY is weak after rallying strongly for four weeks. If the pair fails to stay above 134.70 my T1 for this market is at 133.12 and my T2 at 132.10. Alternative scenario: Price rallies above the 134.70 level and tests the recent high.
USDCHF could move higher from the current levels. Above 0.9260 I’m interested in long trades with T1 at 0.9298 and T2 at 0.9336. Alternative scenario: USDCHF fails to attract buyers and drops to 0.9194 or so.
Macro Drivers for the USD As the most followed, invested and traded markets for risky assets are priced in the USD it is helpful to understand what macroeconomic factors impact the other side of the equation, the USD. Whether we are trading EURUSD, XAUUSD or US equity CFDs the factors impacting the dollar, the nominator in the equation, have a significant role in the formation of all medium to long-term price action. The following table summarises the most important fundamentals.
|The Federal Reserve||The Fed is expected to continue rate hikes after a 0.25% hike in its March meeting. The current Dot Plot suggests as many as seven rate hikes this year and puts the median rate for 2022 at 1.9%. Dot Plot is the FOMC participants’ assessment of appropriate monetary policy.|
|Stimulus||The Fed is looking to scale down its bond-buying program (QE) but has signalled that it be careful with tightening due to the war in Europe.|
|Yields||The US 10-year treasury yield has risen to 2.187% as investors sell the bonds and adjust to the expected rate hikes.|
|Employment||The March non-farm payrolls increased by 431K while the analyst consensus had predicted 492K new jobs. The unemployment rate dropped to 3.6% and average hourly earnings were in line with expectations (0.4% vs. 0.4% expected).|
|Inflation||The annual headline inflation reading for January came in at 7.5% (7% prior). This was the highest CPI print in 40 years. The core CPI (all items less food and energy) was confirmed at 6.0% (5.5% previous).|
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The Next Main Risk Events
- USD ISM Services PMI
- USD FOMC Member Brainard Speaks
- CAD – Ivey PMI
- USD – Crude Oil Inventories
- USD – FOMC Meeting Minutes
For more information and details see the TIOmarkets economic calendar here.
Chief Market Analyst
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