Midday Brief- Markets took a breath as the Dollar retreated from a 3-year high

Markets experienced a risk-on mood early Friday as investors digested the corporate earnings and looming growth concerns. Apple warns of an $8 billion hit due to the Chinese lockdowns. The US economy posted a surprise contraction as US Q1 GDP data missed expectations on Thursday.

It leaves room for surprises at the next Fed policy meeting where investors have been pricing a 50bps rate hike. Investors focus on the US economic data and Personal Consumer Expenditure for March.

USDCAD dropped -0.50% in the early European session as the Canadian Dollar got boosted by rising commodity prices. There was a general weakness in the US Dollar as bulls lost steam ahead of the 1.29000 near-term psychological barrier.

However, a break above the 1.29000 area may reinforce the bullish outlook of the pair in the near term as traders focus on the Fed policy meeting next Wednesday. There will be a release of Big oil earnings and Canadian GDP data and Budget Balance.

AUDUSD rallied by +0.90% as optimism of a hawkish RBA strengthens after positive PPI data for Q1 early Friday morning. Investors are pricing in a 15bps as close as the next meeting on May 3, building a hawkish RBA outlook.

A break above the 0.72000 barrier may renew bullish interest in the near term. However, failure to challenge the near-term barrier may cause selling pressure underpinning the bearish outlook towards the 0.7000, 2022 lows. Traders focus on US consumer spending and PMI data.

The EURCHF rose by +0.40% early European session as the Euro-area inflation rate rose to 7.5% matching estimates. The Euro got boosted by the positive German GDP data and positive CPI data reinforcing a hawkish ECB outlook.

The bulls defended the 1.0260 near-term support and upside gains are capped by the 1.03500 resistance. A break above that area may see a higher target on March 17 high at 1.04000.

European stocks were mixed in the early European session as investors digest Beijing’s news of relenting from the tech companies’ crackdown. CAC40 was up +0.39% although bulls remained capped by a near-term resistance at 6600.00.

The DAX extended gains by +0.98% towards a 14136.94 near-term high. A breach of that area will open the potential for further upside to 14600.00, the April high. FTSE was down -0.25% as 7575 near-term resistance held.

US equities futures opened lower as corporate earnings sent uncertainty signals. S&P futures were down -0.48% as the rally stalled at 4300 near-term resistance. Nasdaq futures trimmed gains by -0.37% pre-market as upside gains remain capped by 13500 near-term resistance. Dow Jones Industrial Index dropped -0.36% from 34000 psychological resistance.

USWTI crude oil rallied by +1.07% early Friday to $106/ barrel. Brent was up +1.85% to 108.60 as demand for oil resumed.