The markets opened with a bit of optimism ahead of the BoE policy meeting. The UK inflation is currently at a 40-year high, and the BoE weighs a historic rate rise to curb the soaring inflation. The BoE governor Bailey, ECB’s Elderson and FOMC Member Mester will be speaking later in the day. The dollar was downbeat ahead of the US initial Jobless claims and Trade balance.
GBPJPY rallied by +0.46% from 161.700 support extending 3-day gains ahead of the BoE policy meeting. Investors are pricing in a 50bps from BoE to 1.75% from a previous 1.25% marking the biggest rate hike cycle in the history of the bank. The policy divergence between the hawkish BoE and the Ultra-loose policy of the BoJ favours bids in the near term. Bulls are capped by the 166.00 level and a break above that resistance could cause bulls to target the 168.5 level.
EURCAD soared by +0.22% as investors eye the Canadian Trade balance data. The Canadian trade balance is expected to drop to 4.80B from a previous reading of 5.32B backed up by slowing demand for crude oil. The pair is slightly higher trading above the 1.30000, 9-year support. Upside gains are capped by the 1.3100 psychological resistance and a break above that level could open the possibility of a 1.32000 level.
AUDUSD rose by +0.52% boosted by a jump in Australia’s Trade balance. Australia’s Trade balance exceeded expectations rising to 17.670B from 14.0B surveyed. The 50bps hike by the RBA on Tuesday is also helping lift the bullish sentiment on the pair. Upside gains are capped by the 0.7000 psychological level and a break above that level will be key for bulls to target the 0.7050 level, an 8-week high.
European stocks edged higher as investors assess earnings. DAX rallied by 1.32% to the 13750 level, and upside gains are capped by the 14000 psychological level. CAC40 was up by +1.08% as bulls aim for the 6600 level, a 4-months high. A critical support level is at 6500, a previous resistance-turned-support. FTSE100 lagged by +0.11% as investors eye the BoE rate hike. Critical levels to watch out for are the 7550 resistance and 7400 support. A break below the 7400 support could invalidate the bullish outlook in the near term.
US stock futures were slightly higher ahead of major earnings day. S&P500 futures were up +0.52% and upside gains are capped by the 4200 level, a 4-months high. The next critical resistance is the 4300 psychological level. Nasdaq100 futures surged by +0.71% after breaking above the 13000 psychological level. Bulls are capped by the 13600 resistance and a break above that could trigger buying pressure towards the 14000 psychological level.
DJIA index futures rose by +0.26% extending Wednesday’s gains from the 32500 near-term support. Upside gains are capped by the 33000 psychological resistance and a break above that level could open further upside possibilities towards the 33500 level.
In commodities, crude oil took a breather as tighter supply outweighed slowing demand. USWTI crude oil futures rose by +0.64% finding near-term support at the 90.00 level while upside gains are capped by the 92.50 level. Brent edged higher by +0.10% trading above 96.00 support and bulls are challenged by the 98.80 level. However, a break below that near-term 6-months support could send signals of recession fears.