Market Volatility to Pick Up With US CPI and BoC Decision Featured
| Action Insight Daily Report 4-12-23 |
Market Volatility to Pick Up With US CPI and BoC Decision Featured |
Market volatility could see a significant uptick today with three heavyweight events on the schedule. US consumer inflation data for March has the potential to shift market expectations regarding the Fed's rate path. While headline CPI is expected to drop for the ninth consecutive month to 5.2%, core inflation is forecast to break its five-month downward trend and rise to 5.6%. Currently, fed funds futures indicate a 67% chance of another 25bps hike in May. But more importantly, there is also near 57% chance a cut in July. Both probabilities could be influenced notably by today's data. As for central bank events, BoC is widely expected to continue its pause and keep interest rates at 15-year high of 4.50%. Given Governor Tiff Macklem's indication that an "accumulation of evidence" would be necessary before considering resuming tightening, the odds of a surprise move are slim. Nevertheless, the tone of the statement may provide hints regarding the possibility of an additional rate hike later this year. Meanwhile, the release of FOMC's March meeting minutes is unlikely to reveal anything substantial. In currency markets, Canadian Dollar is currently the strongest performer for the week, followed by Swiss Franc and Euro. Japanese Yen is the weakest, trailed the New Zealand Dollar and US Dollar. Technically, CAD/JPY's rebound from 94.04 low resumed this week by breaking through 99.16 resistance. Further rally is now anticipated to reach 100.85 resistance zone (38.2% retracement of 110.82 to 94.04 at 100.46). Strong resistance should emerge there to limit upside, at least on first attempt. However, sustained break of this level could trigger a more robust rally to 61.8% retracement at 104.44, even just as the second leg of the pattern from 110.87 high. In Asia, at the time of writing, Nikkei is up 0.62%. Hong Kong HSI is down -0.59%. China Shanghai SSE is up 0.47%. Singapore Strait Times is down -0.40%. Japan 10-year JGB yield is up 0.0129 at 0.467. Overnight, DOW rose 0.29%. S&P 500 closed flat. NASDAQ dropped -0.43%. 10-year yield rose 0.019 to 3.434. |
USD/CHF Daily Outlook Daily Pivots: (S1) 0.9006; (P) 0.9055; (R1) 0.9081; More... USD/CHF is staying in range above 0.9005 and intraday bias stays neutral first. With 0.9118 resistance intact, further decline is expected. On the downside, break of 0.9005 and sustained trading below 38.2% projection of 1.0146 to 0.9058 from 0.9439 at 0.9023 will extend the down trend from 1.0146 to 61.8% projection at 0.8767. However, firm break of 0.9118 will indicate short term bottoming, and turn bias to the upside for stronger rebound. | |
| GMT | Ccy | Events | Actual | Forecast | Previous | Revised |
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| 23:50 | JPY | Bank Lending Y/Y Mar | 3.00% | 3.60% | 3.30% | | 23:50 | JPY | PPI Y/Y Mar | 7.20% | 7.10% | 8.20% | | 23:50 | JPY | Machinery Orders M/M Feb | -4.50% | -7.80% | 9.50% | | 12:30 | USD | CPI M/M Mar | 0.30% | 0.40% | | 12:30 | USD | CPI Y/Y Mar | 5.20% | 6.00% | | 12:30 | USD | CPI Core M/M Mar | 0.40% | 0.50% | | 12:30 | USD | CPI Core Y/Y Mar | 5.60% | 5.50% | | 14:00 | CAD | BoC Interest Rate Decision | 4.50% | 4.50% | | 14:30 | USD | Crude Oil Inventories | -1.0M | -3.7M | | 15:00 | CAD | BoC Press Conference | | 18:00 | USD | FOMC Minutes |
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