2023 Market Forecast by Solid ECN

Bitcoin Jumps above $30,000

Sentiment towards cryptocurrencies following Easter holidays is positive with major coins as well as smaller altcoins trading higher. Bitcoin is drawing a lot of attention today as the coin is testing a psychological $30,000 area and is trading at the highest level since early-June 2022. Bitcoin has already gained more than 90% off the early-November 2022 low. A near-term level to watch is the resistance zone ranging below $31,500, which marked the upper limit of a short-term trading range in May-June 2022.



BITCOIN trades above $30,000 for the first time since June 2022.

DE30

European stock market indices launched the first cash trading session after Easter break higher. Blue chips indices from Western Europe trade 0.5-1.0% higher, following an upbeat Asian session earlier today. However, part of gains has been erased already with DAX dropping back below 15,700 pts. Taking a look at DAX futures at H1 interval (DE30) we can see that bulls failed to break above 15,900 pts area and a double top has been painted. Today's bullish price gap has been filled already and should ongoing pullback deepen further, the 15,650 pts support zone will be the first potential target for sellers. This zone is not only marked with previous price reactions but also with the neckline of the aforementioned double top. Textbook range of the downside breakout from this pattern shows a possibility of a drop to as low as 15,360 pts.

US500

Today, investors' attention turns primarily to the US CPI inflation report, which, along with the labor market data we have learned, will be a major factor in determining what the Fed will do at the next FOMC meeting in May.

Analyst consensus assumes that the headline reading for CPI inflation will drop significantly, coming in at 5.2% y/y versus the last reading of 6% y/y. The opposite is true for core inflation, which is expected to rise to 5.6% y/y vs. the last reading of 5.5%. While the headline reading is highly likely to show a decline (due in part to the high base effect), the core reading remains less certain.



The standard deviation of the consensus compiled by Bloomberg is close to 0.1%, and the analysts themselves mathematically lean more in favor of the scenario of keeping inflation unchanged/increasing to 5.6%.

How will the market react? A lower inflation reading may support market bulls, who will react positively to the resulting lower reading lowering expectations for a continuation of the interest rate hike cycle. On the other hand, however, if inflation remains high and the underlying reading manages to surprise the consensus with a reading significantly above the expected value, markets on Wall Street may react with declines, in the face of condensed uncertainty stemming from weak macro data, the prospect of further tightening and the deepening specter of recession.



From a technical point of view, the US500 index remains in the zone outlined by medium-term trend patterns, which in the past have been important zones of support and resistance. The reaction to today's data and the Fed's Minutes reading scheduled for this evening may determine the future direction of this market.

USDCAD

The Bank of Canada did not change interest rates as widely expected. Current interest rate remains at 4.50%. This is the second meeting during which interest rates have not been raised. According to analysts, a series of aggressive hikes has yet to be fully reflected within the economy therefore, there is no need to continue raising interest rates at the moment.

The Latest inflation data fell sharply to 5.2% in February compared to the 5.9% in January. And according to forecasts, the next inflation data in April is expected to be even lower, between 4.1 and 4.4%. On the other hand labor market remains tight fueling the economic growth, which in the first quarter seems to be stronger that it was projected in January.



BoC stated that it continues to assess whether monetary policy is sufficiently restrictive to reliece price pressures and remains prepare to raise interest rates further if needed. Governing Council stressed that bringing back inflation target to the 2% has the highest priority.

CAD firms after Bank of Canda Policy decision. USDCAD is down 0.2% at 1.34379 versus 1.34670 ahead of the decision.

NATGAS

US natural gas prices took a hit yesterday as analysts mounted their calls that the end of the heating season in the United States is near. While recent weather forecasts pointed to a period of below-average temperatures, average temperatures in this period of the year are usually high enough for demand for heating to drop significantly. Expectations for today's EIA natural gas storage report (3:30 pm BST) also strongly hint that the heating season in the US is drawing to close - median estimate is for a 25 billion cubic feet increase in stockpiles. If confirmed, this would be the second inventory build of 2023 and the first one since mid-January.



Taking a look at NATGAS chart at H4 interval, we can see that price has halted recent upward correction at the resistance zone marked with $2.24 handle and the 23.6% retracement of the downward move launched at the beginning of March 2023. Price launched a pullback and move back to the $2.08 per MMBTu. After a few hours of struggle in the area, sellers managed to push the price below the $2.08 mark this morning. Volatility on the NATGAS market is likely to be elevated around 3:30 pm BST when the EIA report is released. Should analysts be mistaken with their forecasts and US natural gas inventories actually drop, NATGAS could see a price spike.

NZDUSD

The New Zealand dollar is the best performing currency in the G10 today. This is mainly due to the weakness of the USD, which discounted following the release of PPI inflation data from the US, which showed a decline in the headline reading from 4.6% to 2.7% y/y. Thus, the NZDUSD pair took advantage of the favorable technical situation and filled the inverted head-and-shoulders, bearish pattern that appeared on the H1 interval.



This type of price formation usually heralds a trend reversal - in this case to an upward one. After crossing the level of 0.6455, the upward movement accelerated, and the stock is currently struggling with the 61.8% measurement set on the last downward wave. In the case of a breakout above, the bulls can direct their attention towards the next resistance zone at 0.6335. On the other hand, in the event of a pullback and selling pressure, support remains at the level of 0.6245.

German index breaks above 16 000 pts for the first time in 15 months

New week on the global financial markets began in upbeat moods with indices from Asia-Pacific, especially China, trading higher today. European futures also traded higher throughout the Asian session but have caught an additional bid after opening of the European cash session. German DAX (DE30) is trading 0.5% higher and trades above the 16,000 pts mark for the first time in 15-months! The next resistance zone in-line is marked with all-time highs in the area ranging below 16,300 pts mark - less than 2% above current market price.

CHNCOMP

Indices from Asia-Pacific gained during the first trading session of a new week. Chinese indices were top-performers with CHNComp gaining over 3% and CH50cash adding 2.4%. Hong Kong shares also performed well with HKComp adding over 2%. There were no specific news behind the jump. However, there was data from China on new home prices for March released over the weekend. While on an annual basis prices were 0.8% YoY lower, month-over-month data showed a 0.5% MoM increase, This was the third monthly increase in a row and the fastest pace of price growth in 21 months. It could be a hint that demand and overall situation in the Chinese property market may be improving.



Indices from China may also see some moves during the next Asian session as some top-tier economic reports from the country are scheduled for release. Monthly activity data for March (industrial production, retail sales and urban investments) as well as Q1 GDP report will be released at 3:00 am BST. Economists expect improvement in monthly readings for March, especially in retail sales and industrial production. Also, Q1 GDP growth is seen reaching 2.2% QoQ, after a lack of growth (0.0% QoQ) in Q4 2022. On an annual basis, Chinese GDP is expected to have grown by 4% YoY in Q1 2023.

Taking a look at CHNComp chart at D1 interval, we can see that the index is making another attempt at breaking above the resistance zone marked with 23.6% retracement in the 7,120 pts area. From a technical point of view, a break above could trigger an upward move towards the 7,850 pts area - above a year-to-date high from late January.