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Daily market analysis

US stock futures remain stable ahead of economic data and earnings season

April 11, 2023

US stock futures showed little change on Monday night as investors await the release of economic data later in the week. Dow Jones Industrial Average futures increased by 35 points, or 0.1%, while S&P 500 and Nasdaq 100 futures climbed 0.13% and 0.11%, respectively. The market is anticipating the March readings of the consumer price index on Wednesday and the producer price index on Thursday, which could provide further insight into how the Federal Reserve will proceed on its rate-hiking campaign.

In addition to the economic data releases, the US stock market is preparing for another earnings season. Several major US banks, which have not reported earnings since the bank crises in March, are scheduled to release their reports. Investors are particularly interested in the financial institutions’ perspectives on current threats and whether they will make any adjustments in an environment that seems less optimistic than three months ago. Before the market opens, the National Federation of Independent Business will also release the latest results of its small business index, and a few regional Federal Reserve presidents will be speaking on Tuesday.

by Bloomberg

On Monday, most sectors in the market saw a positive price change, with the All Sectors index increasing by 0.10%. Industrials had the highest gain of 0.90%, followed by Energy and Materials with gains of 0.65% and 0.49%, respectively. Real Estate and Consumer Discretionary also had positive gains of 0.49% and 0.43%, respectively.

On the other hand, some sectors saw a decline in prices, with Communication Services having the largest decrease of 0.69%. Information Technology and Utilities also saw a decrease in prices with declines of 0.15% and 0.20%, respectively. Health Care and Consumer Staples had the smallest price changes with a decline of only 0.04% and a decrease of 0.01%, respectively.

Major Pair Movement

Data taken from MT4 VT Markets

The US dollar saw gains on Monday as there was a renewed expectation of a Fed hike following Friday’s solid US jobs report, leading to a flight to safety. Meanwhile, the Japanese yen saw a decline as new BoJ governor Ueda dimmed near-term normalization hopes. Treasury yields and the dollar were supported by Friday’s Fed data showing bank deposits rising for the first time in roughly a month and a New York Fed survey on Monday showing higher inflation expectations and harder credit access.

The market is closely watching the upcoming CPI data on Wednesday and retail sales on Friday as they will be important for the Fed’s May 3 policy announcements. Additionally, the quarterly Senior Loan Officer Opinion Survey, presented to the Fed at that meeting but not publicly released until the following week, will be crucial in understanding the tightening of credit conditions and the impact of monetary tightening. Sterling fell 0.3% while the EUR/USD saw a recovery from Monday’s low but remained down 0.37%. The USD/JPY surged 1.1% as haven dollar gains were augmented by widespread yen selling on dimmed BoJ normalization expectations.

Technical Analysis

EUR/USD (4 Hours)

EUR/USD fell on Monday due to a stronger US dollar following Friday’s NFP report, hitting a week low of 1.0830 before rebounding to 1.0850. Investors are now focusing on Wednesday’s US Consumer Price Index data. US yields climbed, with the 2-year yield back above 4% and the 10-year yield above 3.40%, after the upbeat March jobs report. The European bond market will reopen on Tuesday, and on the same day, the Eurozone will report Retail Sales, which are predicted to decline by 0.8% in March. Market participants are still looking for the ECB to raise interest rates at their next meeting.

From a technical standpoint, the price of EUR/USD has rebounded after reaching the support level at 1.0835 and is now targeting the middle band of the Bollinger bands. The key support level to watch is at 1.0791, as a break below this level could indicate a potential reversal. As long as this level holds, the trend for EUR/USD remains in an uptrend. The RSI has risen to 45 from a lower level, indicating the potential for further upward movement.

Resistance levels: 1.0891, 1.0935

Support levels: 1.0835, 1.0791

XAU/USD (4 Hours)

Gold prices started the week lower, falling to around $1,990 per troy ounce, amid concerns over economic growth and a potential recession in the US after the Nonfarm Payrolls report on Friday. The US dollar benefited from a sour mood and thin market conditions due to the Easter Monday holiday in Europe, while investors await the release of the US Consumer Price Index (CPI) on Wednesday, which is expected to show a YoY inflation rate of 5.2% for March.

From a technical standpoint, the price of XAU/USD has rebounded from Monday’s low of $1,988 and is currently trading at $1,992. This indicates a strong attempt to reach the middle bands of the Bollinger bands from a technical perspective. It is important to keep an eye on the key support level at $1,988, as a break below this level could signal a potential reversal. However, as long as this level holds, the uptrend for XAU/USD remains intact. The RSI has risen to 45 from a lower level, suggesting a potential for further upward movement.

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