BoC policy meeting in focus

Midday Update

The markets have a mixed outlook as investors digest a series of key important data from US bank earnings reports, UK inflation data, and Bank of Canada interest rates.

The BoC is set to hike rates by 50bps in a bit to slow down rising inflation, while investors analyse the impact of a 50bps hike by the Reserve Bank of New Zealand earlier this morning. UK inflation beat expectations to 7% as the figure jumps to a 30-year high.

NZDUSD made an epic fall by -1.14% post-RBNZ hiked rates by 50bps, the highest in 22 years. Bulls flickered to the upside but failed to keep momentum as 0.6900 psychological resistance challenged upside gains. The bears may target 0.6733 and lower as Chinese trade balance data shows slower demand from New Zealand as Covid 19 lockdowns underpin New Zealand and Australian markets.

CADJPY extended gains early European session by +0.52% as investors price in a 50bps by BoC. The pair is currently trading at 99.65 just a few points below June 2015 high at 101.400. The CADJPY extended gains as BoJ governor Kuroda reiterated the BoJ’s neutral stance on interest rate policy widening the divergence gap as BoC hikes for the second time in 2022. Critical areas to watch out for are the 100.00 and 101.400 immediate barriers capping upside gains.

USDJPY steadies +0.45% at 126.00 making a fresh 20-year high ahead of US hot March PPI data. The Fed continues to battle inflation pressure which has soared to a 40-year high, and the dollar remains resilient as Fed members continue to boost gains in the near term. The policy divergence between the Fed and BoJ continues to weigh down the JPY currency in the near term.

European stocks declined as investors digest earnings reports. The DAX was down -0.86% and critical areas to watch out for are the 14200 resistance and 13700 near-term support.

The CAC40 trimmed earlier gains to +0.04 % as bulls find near-term resistance at 6570 and bears may seek the 6400 psychological support. FTSE was up +0.40% as bulls attempt to cover the price action gap between 7606.7 and 7583.00.

The US stock futures were gains on Wednesday paired with Tuesday losses ahead of US bank earnings reports. The S&P500 futures were up +0.61% as 4400.00 support holds in the near-term, while the Nasdaq futures were up +0.63% pre-trading session and downside pressure continues as inflation worries continue to cap upside gains. The Dow Jones Index edged +0.25% as bulls struggle to hold 34150 near-term support.

In commodity markets, Crude oil extended gains with USWTI soaring +0.71% while bulls face a near-term resistance at $104. Brent was up +1.09% while gains face a barrier at 110.00 and a break above that area may push bulls for higher targets. Investors look forward to US Crude oil inventories later in the New York Session.