GBP/JPY => The pair rises to a 2-week high
Oil => The commodity falls to $95
CAC => The index falls to 6500
GBP/JPY rises ahead of UK GDP data
GBP/JPY is heading higher at the start of the week after booking gains across the previous week.
The pound gained last week following hawkish comments from BoE’s Jon Cunliffe, who suggested that interest rates may need to be hiked further to control surging inflation. The comments highlighted central bank divergence from the BoJ, continuing its dovish stance.
Today the pair is rising ahead of the UK GDP data. Expectations are for economic growth to decelerate in February after a strong start to the year. Strong economic growth could soothe fears over whether the UK economy is able to handle another rate hike or two.
Japanese wholesale inflation is also due to be released.
|UK GDP MoM Feb
Japan PPI YoY Mar
|Expected: 0.4% (0.4%)
Expected: 9.3% (0%)
Where next for the GBP/JPY?
GBPJPY has extended its rebound from the March 7 low of 150.98, recapturing the 50 & 100 sma.
The price ran into resistance at 164.64 on March 28, taking the RSI into overbought territory. The price eased back from this high and is consolidated, capped by 162.30 on the upper band and 161.45 on the lower band. The RSI supports further gains while it remains out of the overbought territory.
Buyers are attempting a move over 162.30 to test 162.70, with a break above here bringing 164.64, 2022 high, into the target.
Meanwhile, sellers will look for a break below 161.40 to expose the 50 SMA at 161.10; a break below here is exposing the 100 SMA at 160.30.
Oil extends decline on reserves release, China on lockdown
Oil prices fell 1% last week, its second straight week of decline, and are trading 2.5% lower at the start of the new week after announcing a record release from strategic reserves \nd amid the ongoing Chinese lockdown.
Shanghai remains in lockdown amid China, the world’s largest oil importer’s, zero COVID policy. The International Energy Agency will release 60 million barrels over the coming 6 months, while the US 180 million barrel release was announced in March.
The move aims at plugging some of the Russian supply absent from the market. WTI trades at $95.80 at the time of writing.
CAC falls after first-round French elections
The French CAC fell 2% across last week, underperforming its European peers, as the markets started to price in the risks associated with the French Presidential elections.
Far-right nationalist candidate Marine Le Pen quickly closed the gap in the polls last week, so much so that Macron and Le Penn have qualified for the runoff on Sunday, April 24, with a 54% to 46% according to Ipsos poll, a much smaller than the 66% 34% difference from the final vote in 2017.
The markets will continue to monitor the polls this week closely. Inflation fears are also back to haunt risk sentiment keeping global indices under pressure.
Support can be found at 6440 (October low) and 6400 (round number).
Resistance for the pair can be seen at 6580 (last week’s high) and 6630 (50 sma).
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