As the
Federal Reserve (Fed) will hold its meeting next week, meaning that markets
cannot expect watchdog officials to deliver any comments before it.
Meanwhile, a true burst of data and market related information is expected to
hit the market this week. It may rock the market’s fragile equilibrium in
either direction towards another rally of risky assets or to a major sell-off
of these assets.
The corporate sector
will deliver Big Tech Q1 2023 earnings reports for Google, Meta, and Amazon,
accompanied by the reporting of troubled regional banks, like First Republic
Bank and First Citizens Bank, that were practically saved by the Fed and U.S.
Finance Ministry. Investors are expecting positive surprises from Big Techs,
while regional banks will deliver their reports beforehand. . So, some
nervousness may emerge at the beginning of the week.
European banks will
deliver their quarterly reports too, but they are unlikely to hit the market in
any direction since they have mostly avoided banking quake issues in March.
Investors will also
focus on the incoming macroeconomic data, including Q1 2023 U.S. The first
estimate of the Gross Domestic Product (GDP) will be released on Thursday and
March Core Personal Consumption Expenditure (PCE) Price Index will be published
on the following day. Consensus suggests U.S. GDP could slow down to 2.0%
quarter-on-quarter compared to the 2.6% in the previous quarter. This could be
another indication of a nearing recession. Negative corporate reporting may
amplify the indication.
Technically,
the S&P 500 index has an upside formation with targets at 4150-4250 points
that have already been met, but without a clear reversal. The index may
continue to move to the next ambitious upside targets at 4500-4600 points. Readings
above 4180-4200 points will confirm this move. However, fundamentally it is
unlikely to happen.
Brent crude
prices rebounded from the resistance of $86 per barrel, lowering chances for an
upside move to $94-96 per barrel. The recession scenario may become a leading
one if prices continue to fall below $80.70 per barrel, towards $40-60 per
barrel of the Brent crude benchmark. But now it is too early to put all bets on
the downside scenario as a drop in crude prices may become a simple technical
correction if they move above $78.00 per barrel.
Gold prices
are moving inside the mid-term upside formation with targets at $2000-2100 per
troy ounce that have already been met. However, the tension is mounting as
prices may continue to go down to $1900 per ounce if they pass the $1980
threshold. If the support survives, prices may lift to $2080-2100 per ounce.
So, it is better to wait until the battle over $1980 ends and prices move above
$2000 per ounce.
The U.S.
Dollar is expected to be supported by the emerging upside signals in April.
Short trades for EURUSD opened at 1.06700-1.07200 with a downside target at
5000 points below the opening level and the same 5000 points for a stop-loss
order are intact. The decline of the EURUSD to 1.05000-1.05500 was used to
close half of the trade. The other half should be continued until the targets
of 1.03000-1.03500 are met.
Besides,
short positions for AUDUSD from 0.66900-0.67400 with the target of 3500 points
and the same stop-loss order could be considered interesting. Short positions
for GBPUSD from 1.23300-1.23800 with a target of 5000 points and the same 5000
points for a stop-loss order could be considered. Rising risks and market
volatility could prompt trade volumes to be reduced.