2023 Market Forecast by Solid ECN

Gold

• OPEC+'s surprising decision to cut production has lifted oil prices. OIL.WTI quotations jumped above the $81 level.
• Germany's DAX tested Friday's highs, but ultimately closed the day 0.3% lower. In turn, we saw slight increases in France, where the CAC40 added 0.32%, or the UK, the FTSE100 gained 0.54%.
• Gold is doing quite well on Monday, with the precious metal's quotations rising less than 1% and approaching once again the $2,000 barrier, which should be seen as short-term resistance.
• Treasury bonds are gaining on a wave of manufacturing ISM data, which eased concerns about lingering inflationary pressures in the U.S. and overshadowed the potential impact of OPEC+ oil production cuts on another jump in the economy's goods and services prices. U.S. TNOTE's and German BUND's are both gaining more than 0.3% in today's session.
• US industrial activity indicators published today came in below expectations. Both the PMI and ISM readings showed that actuality in the sector is declining.
• Looking at the forex market, we can observe weakness in the US currency. The EURUSD pair even managed to go above 1.0900, but we are seeing a slight pullback in the evening hours. Nevertheless, the main sentiment on the pair remains upward in the medium term.
• The crypto market did not show any decisive direction today. The major digital currencies are trading mixed. In the evening hours, bitcoin remains in the regions of the reference level.

GOLD quotes are currently testing resistance stemming from the line drawn after the recent tops. If pierced above, resistance at the $2,000 level may be tested. In turn, its crossing may lead to the generation of another upward wave.

USDCHF rebounds to the 38.2% retracement of the week's trading range

The USDCHF fell sharply in the early NY session and in the process moved below the swing low going back to early August 2021 at 0.90178 (see red numbered circles on the daily chart above). The low price today reached to the nice round number of 0.9000 where some traders put a toe in the bearish water. Those buyers are breathing a sigh of relief as the price has indeed rebounded. The price has rebounded to a high of 0.90756.



That has taken the price above the February 2 low at 0.9058, and tested the swing low from March at 0.90706. The high correct price has extended to 0.90756 just above the March low.

Looking at the hourly chart, the move up off the low tested the 38.2% retracement of the week's trading range at 0.9075. Getting above the 38.2% retracement is the minimum retracement target of a trend like move i.e. the move down from Monday's high.



A move above the 38.2% retracement would next target the 50% retracement at 0.9098. Move above that and focus will turn toward the falling 100 hour moving average and swing area near 0.9120. Getting above all those levels would ultimately be needed if the buyers are to be taken more seriously.

Nevertheless, they could still get short-term satisfaction on a move above the 38.2% retracement.

USCAD drops after Candian jobs data beat

The Canadian jobs report for March was released today at 1:30 pm BST. Report release was brought a day forward as Canada will be observing Good Friday tomorrow. Data turned out to be a huge positive surprise. Employment change turned out ot be much higher-than-expected with both full-time and part-time jobs showing decent increases. As a result, the unemployment rate avoided an expected uptick to 5.1% and stayed unchanged at 5.0% instead.

Canada, jobs report for March

• Employment change: +34.7k vs +12.9k expected (+21.8k previously)
• Unemployment rate: 5.0% vs 5.1% expected (5.0% previously)
• Full-time employment: +18.8k vs +31.1k previously
• Part-time employment: +15.9k vs -9.3k previously

USDCAD climbed to the short-term resistance zone near 1.3490 prior to the release. However, the pair pulled back following better-than-expected data. A support zone near 1.3460 handle, marked with previous price reactions as well as the lower limit of the upward channel. However, bulls managed to defend the area and erased the majority of the drop in the first minutes following the release.

DOGECOIN

• Wall Street finished yesterday's trading higher as market odds for Fed rate hike in May dropped following another streak of disappointing data from US jobs market
• Market now sees around 50% chance of 25 bp rate hike in May and around 50% chance of Fed leaving rate unchanged and pausing rate hike cycle
• S&P 500 gained 0.36%, Dow Jones traded flat, Nasdaq rallied 0.76% and Russell 2000 moved 0.13% higher
• Indices from Asia-Pacific traded higher today - Nikkei gained 0.1%, Kospi added 1.3% and indices from China traded up to 0.8% higher
• Liquidity during today's European trading session is expected to be very thin as majority of stock exchanges from the Old Continent will be shut in observance of Good Friday
• Japanese household spending increased 1.6% YoY in February (exp. 4.2% YoY)
• Major cryptocurrencies trade mixed - Bitcoin drops 0.1%, Litecoin gains 0.1%, Ethereum trades 0.3% higher and Dogecoin slumps 2.8%
• AUD and NZD are the best performing major currencies while JPY and CAD lag the most

DOGECOIN is one of the worst performing cryptocurrencies today. The coin has almost fully erased the price jump triggered by Elon Musk changing Twitter logo to Shiba Inu.

Ethereum

Sentiment in the cryptocurrency market remains mixed, with major projects moving in a sideways trend. Investors are concerned that Ethereum's correction after the Shapella upgrade will result in more sell-offs.


What after the Shapella Upgrade?

• Since December 2020, investors have been able to deposit their ETH on the Ethereum Beacon chain and receive blockchain rewards and profits. However, they couldn't withdraw those funds until the recent upgrade. So far, the declines after the Shapella are relatively small;
• Before the update, all staked ETH was worth nearly $32 billion (about 15% of supply). According to K33 Research, even with small withdrawals, about $2.4 billion in ETH could hit the market as investors will want to withdraw some funds from the Beacon chain. With crypto market liquidity drying up, this could trigger a deeper correction;
• On the other hand, Bernstein Fund analysts pointed out that of the 18 million ETH staked, nearly 70% were locked into liquidity protocols, allowing investors to de facto trade funds through decentralized Lido-type protocols, which will take off much of the downward pressure.
• According to analysts, the 30% of investors who deposited ETH in the Beacon chain without using liquidity protocols are likely to have the highest level of conviction and will not be willing to sell. It is also worth noting that the seamless ability to deposit and withdraw ETH may encourage more investors to staking and drive capital flowing into the chain;
• Passive ETH returns of 5 or 6% per year are no longer as attractive compared to the 0 interest rate period, when investors could not count on comparable yields from regulated fixed income assets. In addition, staking is to some extent subject to risks associated with crypto market regulation. Rewards for ETH staking will decline as the number of stakers increases.

News

• According to the Block 'open interest' report, the ETH options market (call options vs. put options) before the update showed the highest level since May signaling possible downward pressure
• The U.S. Treasury Department has indicated that the decentralized asset market poses a threat to national security.
• Divly revealed a report according to which only 1.62% of US cryptocurrency holders paid tax on their investments. The report is disputed by tax law specialists;
• According to Bloomberg, Singaupur's central bank is working to unify cryptocurrency-friendly regulations
• According to a survey by CoinGecko and Blockchain Research, 75% of cryptocurrency investors hold NFTs

Ethereum chart, H4 interval. Looking at the chart, we can see that the price reached before the Shapell update was roughly similar to the peak of the price rally before the Ethereum Merge. If the declines accelerate the key for the price could be the demand reaction around $1700 zone, where we can see SMA200 (red line), 23.6 Fibonacci retracement of the upward wave started last June and previous important price reactions.

3 Markets to Watch

Investors that will be returning to the markets after Easter holidays and will face a number of top-tier market events in the week ahead. Rate decision from the Bank of Canada, Q1 earnings from major US banks as well as FOMC minutes and US inflation data are highlights in this week's calendar. Be sure to watch GOLD, US500 and USDCAD in the week ahead.

 
GOLD

A number of top-tier data releases from the United States will be offered to investors this week, including CPI for March (Wednesday, 1:30 pm BST), FOMC minutes (Wednesday, 7:00 pm BST) as well as retail sales for March (Friday, 1:30 pm BST). All of those may shed light on what Fed does next - is a 25 bp rate hike in May still in play or will the Fed pause the rate hike cycle? Higher CPI reading and poor retail sales data may see dovish bets in the markets increase. This, in turn, may help gold look towards highs in the $2,060 per ounce area.

 
US500

Wall Street earnings season for Q1 2023 will begin this Friday with the release of reports from major US banks. JPMorgan, Wells Fargo and Citigroup are set to report their financials before the opening of the Wall Street session on Friday. Beats and misses in results will be company-specific but investors are also likely to be offered hints on an issue with more broad-based implications - impact of recent banking turmoil on the economy, businesses and credit action. Recent data from the Dallas Fed showed signs of a crunch in consumer loans. Confirmation that deterioration in credit action is indeed taking place may deteriorate market moods.

 
USDCAD

USDCAD will be one of the FX to watch on Wednesday. Not only because US CPI data for March and FOMC minutes will be released but also because the Bank of Canada is set to announce the rate decision at 3:00 pm BST. No cut is expected as the Bank of Canada strongly hinted that the rate hike cycle is over. However, wage growth in Canada remains elevated, which should exert upward pressure on inflation. Having said that, some hawkish remarks may be offered by BoC.

Oil

Oil prices are stabilizing after the big price jump last week in response to OPEC+ decided to further cut production. The volatility decreased significantly as demand uncertainty in China and US offsets OPEC+ production cut. Of course, we could notice a further inventory draw last week but perspective of future demand is cloudy as the chance for the next interest rate hike is increasing.



As we can see the price range from the Monday a week ago is less than 3 dollars. The most important support is at 79.00 USD per barrel that is also a higher limit of bullish gap. On the other hand the nearest resistance lies at 82 USD per barrel that is also a higher limit of consolidation that starter on 1st December. In case of breaking the mentioned support, the price may decrease even to vicinity of 75 USD per barrel which is also a lower limit of the bullish gap.