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Summary In our view, the Reserve Bank of India's (RBI) April meeting signaled in a stark shift in the central bank's stance on monetary policy. Policymaker actions and commentary, along with the official statement and forecast revisions, indicate to us the time has arrived for the RBI to initiate its tightening cycle. The April meeting reinforced our view that RBI policymakers will lift interest rates starting in June; however, tighter monetary policy is likely not enough to prevent rupee weakness and we continue to forecast modest rupee depreciation through the end of 2022. Download the full report  

Daily market outlook on major Update Time: 08 Apr 2022 09:30GMT. USD/JPY – 124.06 Dollar's rally from last Thur's bottom at 121.29 to as high as 124.23 in Australia today on continued USD's strength due to rally in U.S. yields suggests early correction from Mar's near 7-year peak at 125.10 has possibly ended and as 123.68 (Asia) has contained subsequent retreat, consolidation with upside bias remains for 124.30/40 but 124.70 should hold. On the downside, only a daily close below 123.47 would signal a temporary top is in place and risk stronger retracement towards 123.03. Data to be released on Friday Japan current account, trade balance, consumer confidence, Eco watchers current, Eco watchers outlook. Italy retail sales. Canada unemployment rate, employment change, U.S. wholesale sales and wholesale inventories.

Summary The U.S. consumer faces a wave of challenges in 2022. Persistent inflation combined with a less supportive policy environment will take much of the wind out of the sails for consumer spending this year. But, it's not all doom and gloom for the consumer. Job growth remains strong and household balance sheets are in relatively good shape. An underappreciated near-term tailwind for the consumer, in our view, is robust federal tax refunds. The average tax refund is up more than 12% compared to last year and is about 13% higher than the average refund over the past five years. Refunds are higher on average due to some federal fiscal policy stimulus that is still flowing. In short, tax season affords households an opportunity to take advantage of any COVID relief benefits they may not have received in 2021. The tax filing season is far from over, and as we get closer to the April 18 filing deadline, these data could change. That said, filers who are owed a refund tend to file earlier than individuals who owe the government money. The average refund size might drift lower in the coming weeks, but we doubt it will be a major… Read More »Everything is bigger in taxes: Tax refunds and consumer spending

“The dollar is in strong form this afternoon, and European indices have recovered from Thursday’s decline.” FTSE 100 springs back from Thursday’s losses “The FTSE 100’s resilience is a welcome relief for UK investors. The index has bounced back from Thursday’s ex-dividend driven fall, and with mining stocks leading the way it is back on course for the recent highs. European markets generally are doing well, recouping some losses, but with the outlook so uncertain thanks to inflation and the Ukraine war this mood of optimism is unlikely to last. Next week’s ECB meeting will give investors more of a clue on how the central bank is looking at policy, even if no rate hikes are expected.” Dollar index touches new two-year peak “It’s all go for the greenback once again. After some hesitation in March the dollar appears to have rediscovered its forward momentum. Further Fed tightening seems to be the only sure thing around at the moment, and with CPI next week likely to deliver another surge in prices there is plenty of rationale to stick with long dollar trades it seems.”

In this technical blog we’re going to take a quick look at the Elliott Wave charts of GBPUSD.  The pair has given us nice trading opportunity recently.  We have been selling the rallies at 1.3298-1.3348  area as explained in previous article on GBPUSD . Reasons for calling further weakness in pair are bearish sequences in the cycle from the June 1st 2021 peak.  We recommended members to avoid buying and keep selling rallies in 3,7,11 swings when get a chance. In further text we are going to explain the Elliott Wave Forecast GBP/USD H1 Elliott Wave analysis 03.25.2022 GBP/USD has given us nice reaction lower from our selling zone. Recovery is counted completed  at 1.3299. While below that high, next leg down can be in progress. However we need to see further separation from the peak to confirm. Current view suggests as far as the price holds below 1.3222 peak – (ii) blue, next technical area to the downside ideally comes at 1.3079-.3045 . At that zone we should ideally complete 5 waves down from the 1.3299 peak. Once 5 waves down are completed and we can expect to see 3 waves bounce against the 1.3299 high. GBP/USD H1 Elliott Wave analysis 03.29.2022 We… Read More »GBP/USD Elliott Wave: Forecasting the short term path

GBPJPY has overstepped the 161.40 level, which is the 23.6% Fibonacci retracement of the up leg from 150.96 until the more than six-year high of 164.63, with a weakened upward drive. Though, on a positive note, the bullish bearing of the simple moving averages (SMAs) is promoting the broader positive structure.   However, the pair’s positive momentum generated around the 159.02 low and the 38.2% Fibo of 159.40 appears to be fading ahead of the crucial 162.64-164.09 barricade, something also being reflected in the dipping slope of the red Tenkan-sen line. Nevertheless, the flattened blue Kijun-sen line has yet to confirm that negative pressures have gained any convincing advantage. Meanwhile, the short-term oscillators are also reflecting this minor waning in upward drive. The MACD, far north of the zero mark, has marginally slid underneath its red signal line, while the RSI has deflected off the 70 overbought barrier. Moreover, the dive in the stochastic %K line in the overbought territory, is hinting that upside forces are feeble for now. In the negative scenario, initial support could emanate from the 23.6% Fibo of 161.40 and the nearby red Tenkan-sen line at 160.86. Retreating under the red Tenkan-sen line, the pair may… Read More »Technical analysis: GBP/JPY improvements curbed by March-May 2016 highs [Video]

Financials: June Bonds are currently 23 lower at 143’17,down about 6’00 for the last week. 10 Year Notes 16 lower at 120’01.5, down 2’12 for the week. The 5 Year note is 13 lower at 113’03.25, down 0’30 for the week. The FOMC minutes showed a consensus at the Fed to take a more hawkish stance against inflation by selling off the Fed’s balance sheet (inventory of notes and Bonds) at a quicker than previously thought pace. The figure of $1.1 trillion per year is the figure I have heard. The figure for rate hikes for the year is now 3.0-3.5%. Yields rose quickly this past week accelerating the flattening of the yield curve. Yields are now as follows: 2 Year 2.57%, 5 Year 2.74%, 10 year2.68% and 30 Year2.69%. A 0.5% rate hike is now priced into market for the May FOMC meeting. Grains: May Corn is 2’6 higher at 760’4, UP 20”0 for the week. May Beans are 13’6 higher at 1659’2, down 8’0 for the week. This morning we have Crop Production and supply/demand reports. Trends remain up and supplies should remain tight because of sanctions for the global market place. Next week I will begin focusing… Read More »S&P 500: Volatility remains high and price action headline dependant

There are three major central bank meetings next week: the Reserve Bank of New Zealand (RBNZ) and Bank of Canada on Wednesday and the European Central Bank (ECB) on Thursday. The ECB is likely to be on hold as usual at this meeting, so let’s go straight to the other two. The market is expecting 50 bps hikes from both, the first time in this hiking cycle that we’ve seen such aggressive moves from the central banks that we cover (other central banks have been even more aggressive; the Central Bank of Poland hiked by 100 bps this week!).  We shouldn’t be surprised at a 50 bps hike. The minutes of the March meeting of the rate-setting Federal Open Market Committee (FOMC) showed that “many participants” would have preferred a 50 bps hike but thought 25 bps was more appropriate due to the uncertainty caused by the fighting in Ukraine. “Many participants” also thought that “one or more 50 basis point increases…could be appropriate at future meetings, particularly if inflation pressures remained elevated or intensified.” Bank of Canada: +50 The Bank of Canada is widely expected to hike 50 bps. Deputy Gov. Sharon Kozicki said in a recent speech (March 25th)… Read More »Take a hike

USD/JPY  The USDJPY continues to trend higher and extend uninterrupted recovery from a higher base at 121.27 (Mar 30/31) into sixth straight day, on track for the fifth consecutive strong weekly gains. Today’s acceleration cracked pivotal Fibo resistance at 124.19 (76.4% of 125.09/121.27 pullback) close above which would confirm that corrective phase is over. Bulls pressure the last obstacle at 124.30 (Mar 29 high), to open way for test of 125.09 (2022 peak), the highest in nearly 7 years and key longer term barrier at 125.84 (2015 high). Technical studies are firmly bullish on daily and weekly chart, pointing to underlying bullish structure, however, overbought conditions on both timeframes, warn that bulls may pause for a consolidation under key barriers before resuming. Dips should offer better buying levels, with solid supports at 123.10/122.70 expected to ideally contain, although deeper dips cannot be ruled out. Near-term bias will remain with bulls while the action holds above key support at 121.27, but caution if the price approaches this level, as break lower would sideline bulls on completion of daily failure swing pattern. Res: 124.50; 125.09; 125.84; 126.50. Sup: 123.60; 123.10; 122.70; 122.20. Interested in USD/JPY technicals? Check out the key levels

Looming stagflation in the eurozone has complicated the European Central Bank’s life. Higher inflation for longer and a very uncertain outlook for growth not only in the short but also longer term will worsen the ongoing controversy between ECB hawks and doves. We hope for somewhat more clarity on how the ECB sees its own options at next week’s meeting. The economic implications of the war in Ukraine are only slowly starting to show in official statistics and forward-looking indicators. While the eurozone might still have avoided a contraction of economic activity in the first quarter, the near-term outlook is anything but rosy. Ongoing supply chain frictions in China, new supply chain frictions as a result of the war, trade disruptions, uncertainty, and above all high energy and commodity prices, will significantly weigh on economic activity in the coming months. The risk is high that not only consumption will suffer under high energy and commodity prices but also companies will have increasing problems dealing with rising costs. And this scenario is not even taking into consideration that additional sanctions could lead to serious energy supply disruptions. To use ECB language: the economic outlook for the eurozone has clearly worsened and… Read More »How the ECB will spell optionality next week