North American News
US stocks close mixed. NASDAQ down modestly. S&P up
- Sharp declines from yesterday see a modest rebound in the S&P and Dow
A day after the Dow industrial average felt -800 points and the NASDAQ index fell -500 points, the major indices are closing relatively little changed ahead of Meta and others earnings.
The final numbers are showing:
- Dow industrial average up 61.73 points or 0.19% at 33301.92
- S&P index up 8.7 points or 0.21% at 4183.91
- NASDAQ index down one .8 points or -0.01% at 12488.94
- Russell 2000 down -6.43 points or -0.34% at 1884.03
U.S. Treasury auctions off $49 billion of 5 year notes at a high yield of 2.785%
- WI level at 2.776%
- High yield 2.785%
- WI level 2.776%
- Tail +0.9 basis points . The six month average is -0.6 basis points
- Bid to cover 2.41X. The six month average is 2.47X
- Directs 19.5%. The six month averages 17.1%
- Indirects 64.0% . The six month average is 64.0%
- Dealers 16.5%. The six month averages 18.9%
Details:
Although the five year auction at good domestic and international demand (both direct and indirect’s were higher than the six month average), the yield was also too low for their liking.
Hence the 0.9 basis point tail which is above the six month average -0.6 basis points.
The bid the cover was light in comparison to the six month average.
US March pending home sales -1.2% vs -1.6% expected
- March US pending home sales data
- Prior was -4.1% (revised to -4.0%)
- Index at 103.7 vs 104.9 prior
Commodities
Gold Price Forecast: XAUUSD pressured below $1890 as bears target the 100-DMA
- On Wednesday, Gold prices fell more than 1% amid a mixed market mood.
- China’s coronavirus woes, Russo-Ukraine tussles, and a buoyant US dollar weigh on the yellow metal.
- Gold Price Forecast (XAUUSD): A daily close below $1890 would pave the way towards the 200-DMA around $1830s.
Spot gold slides for the second day out of three in the week and breaks below March’s 25 lows near $1890 after failing to reclaim the $1900 figure amidst a mixed market mood as European, and US equities fluctuate. At the time of writing, XAUUUSD is trading at $1884.78 a troy ounce
China’s covid issues and Ukraine’s conflict keep sentiment mixed
Sentiment remains the main driver in the financial markets. Recently, China’s covid issues gained attention as a raft of contagions in Shanghai threatened to disrupt supply chains, causing slower economic growth and higher prices. The disease disseminated towards districts of Beijing, but authorities reacted fast and are already testing people. That, alongside the People’s Bank of China (PBoC) rate cut, and recent news wires that Shanghai is planning to relax restrictions, easied the burden of the worldwide second-largest economy.
In the meantime, the conflict between Ukraine and Russia appears to be extending longer. Additionally, the Russian gas producer Gazprom halted gas flows to Poland and Bulgaria on Tuesday, as both countries rejected to pay in roubles.
Elsewhere, the greenback remains in the driver’s seat, as shown by the US Dollar Index, rising above the 103.000 mark for the first time since January 4, 2017. As of writing, it sits at 103.202, up almost 0.90%. Meanwhile, the US 10-year Treasury yield, which correlates inversely with Gold Prices, is staging a comeback and is gaining seven basis points, sitting at 2.791%.
With all that said, the yellow metal would remain downward pressured, as the US dollar strengthens despite falling US Treasury yields. The greenback has shown some resilience on certain trading days in which US Treasury yields fell. Something that Gold traders need to be aware of.
On Thursday, the US economic docket would feature the Q1 Gross Domestic Product, expected to rise by 1%, lower than Q4 of 2021, at 6.9%. On Friday, the Fed’s favorite inflation indicator, the Core PCE, is expected to downtick to 5.3% from 5.4% y/y.
Gold Price Forecast (XAUUSD): Technical outlook
Gold remains upward biased, but a daily close below $1890 could lead to further downside pressure. Also, MACD is accelerating south as XAUUSD gets ready to test the 100-day moving average (DMA) at $1876.37. Once broken, Gold bears next target would be the 200-DMA at $1833.18.
Silver Price Analysis: XAG/USD hits fresh more than two-month lows in $23.20s as buck advance continues
- XAG/USD continues to trade with a downside bias and hit more than two-month lows in the $23.20s on Wednesday.
- The buck continues to advance, weighing on the pair, amid risk-off flows, geopolitical jitters and Fed tightening bets.
Continued buck buoyancy against the backdrop of still very jittery global market risk appetite (US stocks have pared earlier gains to trade flat again and remain near weekly lows) has kept spot silver (XAG/USD) prices trading with a negative bias. XAG/USD continues to struggle on rebounds back towards its 200-Day Moving Average at $23.83 per troy ounce, with the precious metal printing a fresh more than two-month lows on Wednesday in the $23.20s.
Upcoming US GDP and Core PCE inflation data on Thursday and Friday will likely underpin expectations for the Fed to hike interest rates by 50 bps next week and at its coming meetings, which should, alongside concerning geopolitical developments in Europe, keep USD well supported in the coming days. If stocks resume their recent drop, which seems more likely than not at this stage, falling US (and global) yields on safe-haven bond demand might slow the pace of any XAG/USD decline, but bears will nonetheless be eyeing a test of $23.00.
In the slightly longer-term, bears will target test of annual lows in the $22.00 area, with recent failures to get back above the 200DMA and resistance at $24.00 a bearish sign for XAG/USD, so technicians say. But technicians have also warned that the recent build-up of USD long positions is becoming overstretched. A period of likely means a break below $23.00 isn’t on the cards before the end of this month.
WTI crude oil futures settle at $102.02
- Yesterday settled at $101.70
The price of WTI crude oil futures are settling up $0.32 or 0.31% at $102.02. Yesterday’s price settled at $101.70.
The high price reached $102.91. The low price extended to $99.80. The EIA weekly crude oil inventory data showed a build of 0.692 million barrels versus 2.000M expected last week saw a drop -8.02M. That helped to push the price back above the $101 level, although price action has been up and down choppy.
Looking at the hourly chart, the high price yesterday and the two separate highs set today all stalled near the 200 hour moving average currently at $102.73. The inability to extend above that moving average level led to a move back to the downside prior to the the EIA release.
The move lower took the price back below the 100 hour moving average at $100.85 . The price decline was able to also get below the $100 level. However, selling could not be maintained, and the price has moved higher over the last few hours.
The current price trades back between the 100 hour moving average below at 100.85, and the 200 hour moving average above at 102.73. That was similar to yesterday’s settlement
.Although the break lower failed today, the same dynamics apply technically. Move below the 100 hour moving average and the bias tilts more to the downside. Conversely a move above the 200 hour moving average, and the bias tilts more in the favor of the buyers.
EU News
European equity close: A bounce, but not much of one
- Closing changes for the main European bourses
- German DAX flat
- UK FTSE 100 +0.5%
- French CAC +0.2%
- Italy MIB+0.2%
- Spain IBEX +0.4%
- Stoxx 600 +0.5%
Other News
Deutsche Bank Forecasting A Significant Recession In The US, Fed Hikes As High As 6%
Deutsche Bank
- Fed likely to pursue the most aggressive monetary tightening since the 1980s
- “We assume conservatively that a Fed funds rate moving well into the 5% to 6% range”
- “the monetary-tightening process will be bolstered by Fed balance-sheet reduction, which our U.S. economics team estimates will be equivalent to a couple additional 25 basis-point rate hikes.”
This
“will push the economy into a significant recession by late next year,”
Hard to bet against the USD but peak USD may not be far off – ANZ
- ANZ on the dollar trade
ANZ Research discusses the USD outlook and sees a scope for a top a turn over the coming weeks.
“It is hard to go against USD strength at present, given the continued re-pricing of the Fed. Yet, we caution against extrapolating current trends too far. The strong dollar cycle is looking long in the tooth. The Fed may have only started the hiking cycle, but a lot of rate hikes have already been priced in. We may not have reached peak Fed hawkishness, but we must be getting close. In addition, the DXY is overvalued based on our fair value estimate,” ANZ notes.
“A lot of negative news has been priced into the EUR. With French election risk now out of the way, it may not take much to turn sentiment around. We are revising our FX forecasts to incorporate a bit more near-term dollar strength, but we see the DXY starting to turn lower from mid-year onwards,” ANZ adds.
Cryptocurrency
Bitcoin’s last hope for $38K
- BTCUSD has abruptly fallen below a critical support line, a bearish signal.
Bitcoin has lost 5.3% in the past 24 hours, falling to $38.4K. Ethereum is down 5.4% to $2845 in the same time frame. In the top 10 altcoins, losses range from 3.6% (BNB) to 12.7% (Dogecoin). Total crypto market capitalisation, according to CoinMarketCap, fell 5.1% overnight to $1.77 trillion. Bitcoin’s dominance index fell to 41.2%.
By Wednesday, the Cryptocurrency Fear and Greed Index fell 6 points to 21 and moved back to “extreme fear”. Bitcoin collapsed with acceleration compared to the stock market on Tuesday, falling the most in 15 days. Near the $38K level, the first cryptocurrency fumbled for buyer demand. Around these levels in February and early March, buyers were already breaking the downtrend, but the upside momentum proved unsustainable.
On the balance sheet, we have contradictory short-term signals. The BTCUSD has abruptly fallen below a critical support line, a bearish signal. At the same time, the uptrend breakdown failed to be confirmed by buying near previous local lows. We can describe it as Bitcoin falling out of the window but latching onto the windowsill. Equally contradictory was the news backdrop.
According to CoinShares, institutional investors continue to withdraw capital from crypto funds from the downside. The net outflow of funds last week was $7.2 million, although it was down from the previous two weeks when investors withdrew more than $231 million.
Regulatory pressure continues unabated
ECB spokesman Fabio Panetta called the cryptocurrency industry the “Wild West” and called for stricter regulation.
Meanwhile, bitcoin steps up further in recognition of a long-term investment vehicle. Fidelity Investments, one of the largest asset management firms, will make it possible to add bitcoin to its retirement portfolios.
In addition, the sustainability of mining has improved. The Bitcoin Mining Council (BMC) stated that mining efficiency increased by 63% in the last quarter thanks to the widespread adoption of sustainable energy and modern techniques.
As a result of the controversial picture, investors refrain from active action. According to Kaiko, trading volume on cryptocurrency exchanges has fallen to its lowest level since the summer of 2021. Glassnode believes that bitcoin’s fundamental metrics have improved in recent months.