XtreamForex | Daily Technical Analysis

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Australia February Monthly CPI Indicator
The Monthly CPI indicator rose 6.8% in the year to February, compared with the Westpac forecast of 7.4% year-on-year and the market forecast of 7.2% year-on-year. This represents a significant downside risk to our March forecast CPI forecast of 1.5% per quarter.

Specifically, the index rose only 0.2% in February versus our forecast of 0.8%; we believe the market median would have been about 0.6% given the 7.2% annual forecast. Compared with the average monthly increase of 0.9%mth in the last three months of 2022, the first two prints of 2023 represent a significant slowdown in inflation: -0.4% in January and 0.2% in February.

The monthly CPI indicator can fluctuate widely from month to month, as it is not a true monthly index, but rather the publication of data from the quarterly CPI, as they become available. This volatility is due to the timing of the various price surveys. This could be the reason why ABS reports the annual growth rate and not the monthly change.

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Australia February Monthly CPI Indicator
The Monthly CPI indicator rose 6.8% in the year to February, compared with the Westpac forecast of 7.4% year-on-year and the market forecast of 7.2% year-on-year. This represents a significant downside risk to our March forecast CPI forecast of 1.5% per quarter.

Specifically, the index rose only 0.2% in February versus our forecast of 0.8%; we believe the market median would have been about 0.6% given the 7.2% annual forecast. Compared with the average monthly increase of 0.9%mth in the last three months of 2022, the first two prints of 2023 represent a significant slowdown in inflation: -0.4% in January and 0.2% in February.

The monthly CPI indicator can fluctuate widely from month to month, as it is not a true monthly index, but rather the publication of data from the quarterly CPI, as they become available. This volatility is due to the timing of the various price surveys. This could be the reason why ABS reports the annual growth rate and not the monthly change.

Read More : Daily & Weekly Analysis On Xtreamforex

 

[xtreamforex.com]

Australia February Monthly CPI Indicator
The Monthly CPI indicator rose 6.8% in the year to February, compared with the Westpac forecast of 7.4% year-on-year and the market forecast of 7.2% year-on-year. This represents a significant downside risk to our March forecast CPI forecast of 1.5% per quarter.

Specifically, the index rose only 0.2% in February versus our forecast of 0.8%; we believe the market median would have been about 0.6% given the 7.2% annual forecast. Compared with the average monthly increase of 0.9%mth in the last three months of 2022, the first two prints of 2023 represent a significant slowdown in inflation: -0.4% in January and 0.2% in February.

The monthly CPI indicator can fluctuate widely from month to month, as it is not a true monthly index, but rather the publication of data from the quarterly CPI, as they become available. This volatility is due to the timing of the various price surveys. This could be the reason why ABS reports the annual growth rate and not the monthly change.

Read More : Daily & Weekly Analysis On Xtreamforex

 

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German and Spanish Inflation Prints in Focus
The main focus today will be on the German and Spanish flash inflation data, which will provide the first sense of what to expect from the euro area HICP figures tomorrow. Generally, we forecast gradually easing headline inflation, but see core inflation pressures still remaining at elevated levels. Euro area Economic Sentiment Indicators will also be released for March today.

The 60 second overview

Market sentiment: Asian equities are in red, while stock market futures are mixed in Europe and the US. In the absence of any news triggers, markets are tuning in for the Spanish and German inflation prints due this morning.

US banks: The US Federal Deposit Insurance Corp. (FDIC) is facing almost USD 23bn in costs from the failures of Signature and Silicon Valley Banks. Now, according to Bloomberg, the FDIC is contemplating to propose a so-called special assessment to speed up the process of refilling the fund, and the plan entails an outsize contribution by the largest lenders.

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Gold Price Vulnerable to Persistent US Inflation
The cost of gold might organize further endeavors to test the 2022 high ($2071) as it moves to a new week-after-week high ($1984), however new information print emerging from the US might prompt a pullback in bullion as the Individual Utilization Use (PCE) cost file is supposed to show tenacious expansion.

Late improvements in the cost of gold raise the extension for a move towards the month-to-month high ($2010) as it cleans the reach bound cost activity off of recently, and the valuable metal might follow the positive slant in the 50-Day SMA ($1892) as the Central bank gives off an impression of being on target to change gears.

Notwithstanding, the update to the US PCE, the Federal Reserve’s favored measure for expansion, may create headwinds for bullion as the center rate is supposed to hold consistent at 4.7% per annum in February. Indications of tacky value development might push the Government Open Market Panel (FOMC) to seek after a more prohibitive strategy as expansion stays well over the national bank’s 2% objective, and Executive Jerome Powell and Co. may convey another 25bp rate climb at the following loan fee choice on May 3 particularly as ‘financial pointers have commonly come in more grounded than anticipated.’

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US Takes Center Stage in this Holiday-Shorted Week
The steep decline in strength costs over the previous few months prompted March headline inflation in Europe to decline considerably year-over-year (from 8.5% to 6.9%). Rising core inflation and excessive m/m readings on the other hand confirmed that this is solely the effortless phase in the lengthy experience again in the direction of the 2% target. But with US (core) PCE inflation for February later on Friday additionally cooling barely greater than expected, the market center of attention lied elsewhere. The downleg in core bond yields accelerated, main to losses in the US between 8.1 and 11.4 bps throughout the curve. German yields slid 6.6 to 9.6 bps.

Equities ended the quarter on a fine note. The Euro Stoxx 50 rallied 0.69%. It even set a new YtD excessive intraday at 4325. US bourses rose between 1.26% (DJI) and 1.74% (Nasdaq). The euro on forex markets hit the March excessive at 1.0926 earlier than technical resistance (and possibly some euro fatigue) kicked in. EUR/USD sooner or later completed at 1.0839, down from 1.0905 at the open. The US greenback in well-known traded strong, gaining in opposition to most peers.

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Australian Dollar Dips After RBA Leave Rates Unchanged
The Australian Dollar slipped slightly in the aftermath of the RBA standing still on rates for the first time since May 2022.

The RBA maintained some flexibility and didn’t rule out future hikes. In the accompanying statement on monetary policy, they said, “The Board expects that some further tightening of monetary policy may well be needed to ensure that inflation returns to target.”

Interest rate markets are currently pricing no more hikes and a better-than-even chance of a 25 basis point cut by the end of the year.

Today’s price action comes after a massive rally for the Aussie yesterday. Markets were rattled by the huge surge in crude oil prices after OPEC+ cut its crude oil production target by 1.1 million barrels per day. The move compounded existing tightening supply issues.

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First Impressions: RBNZ Monetary Policy Review
The RBNZ raised the policy rate by an unexpectedly large 50 basis points, and another 25 basis point hike appears to be scheduled for the May Monetary Policy Statement.

RBNZ Monetary Policy Report, April 2023
The Reserve Bank surprisingly raised the OCR by 50 basis points to 5.25% at today’s review, rather than 25 basis points as most expected.

Overall, the RBNZ sees the overall profile for inflation pressures as relatively unchanged since February, when its projections showed that the OCR should rise to 5.5% in the first half of 2023.

The RBNZ acknowledged the weaker starting point for GDP. However, the downward impact on its projections was offset by upward shocks to prices from the recent floods and Cyclone Gabrielle. The RBNZ remains concerned about the potential for inflation expectations to be unanchored by the current high levels of core and headline inflation.

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Asia Shows its Strength as US Growth Prospects Dwindle
In Australia, the RBA was the focus of market participants’ attention. Outside the country, the RBNZ reaffirmed its hawkish resolve, while U.S. data weakened noticeably.

The RBA decided to leave the key interest rate unchanged at 3.60% in April, a decision that was in line with Westpac’s forecast. In line with the decision, the Governor’s statement included a subtle change to the guidance, indicating that further tightening “may be required” in March, rather than “will be required.” While this certainly still qualifies as a tightening bias, after 350 rate hikes in the past decade, the central bank board is increasingly concerned about the need to assess the full spectrum of risk.

In our view, the evolution of underlying inflationary pressures is critical to the near-term stance of monetary policy. Westpac projects that inflation will average 6.6% for the year in the first quarter, an outcome that the RBA is likely to find uncomfortably high against the backdrop of a historically tight labour market, thus warranting a policy response. As a result, we continue to expect a final 25 basis point rate hike in May, taking the policy rate to a peak of 3.85%, where we believe it will remain until the end of 2023. If economic momentum continues to slow and inflation risks subside, a series of rate cuts may be implemented in 2024 and 2025 to bring policy back toward neutrality and facilitate a recovery in economic growth.

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EUR/USD struggles to reach yearly high ahead of NFP report

EUR/USD is struggling to test the yearly high (1.1033) as it fails to continue the series of higher highs and lows from the beginning of the week, and the U.S. labour market data (NFP) report may weigh on the exchange rate as employment is expected to rise further.

The short-term recovery of EUR/USD seems to have stalled as it consolidates below the weekly high (1.0973), and developments in the US could affect the exchange rate as the Federal Reserve officials continue to take a restrictive stance.

In a speech at New York University, Cleveland Fed President Loretta Mester acknowledged that ‘wages are still growing at an annual rate of about 4-1/2 to 5 percent,’ and the official went on to say that ‘inflation remains too high and too persistent,’ as price growth remains well above the central bank’s 2 percent target.

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