US inflation could cement the next move by the Fed
Nasdaq => The index falls below 14000
Bitcoin => The cryptocurrency trades back below 40K
EUR/GBP => The pair rises to 0.8350
Nasdaq plummets ahead of US CPI
The selloff in the Nasdaq shows no signs of slowing; the tech-heavy index tumbled 2.2% on Monday, extending losses of 3.8% across last week, and the futures are falling again on in early trade on Tuesday.
High growth tech stocks are out of favour as expectations build that the Fed will tighten monetary policy at a faster pace. High-growth tech stocks are particularly sensitive to a higher interest rate environment.
Today, US inflation, as measured by the consumer price index, is in focus and is expected to rise to a new 40 year high. High inflation could cement the likelihood of a 0.5% interest rate hike by the Fed in the May meeting.
| U.S. CPI YoY March | Expected: 8.3% (0.4%) | Previous: 7.9% |
Where next for the Nasdaq?
After rising to 15275 at the end of last month, the Nasdaq rebounded lower, breaking below its 50 SMA and the key psychological level of 14000.
The bearish crossover on the MACD points to further downside, which could accelerate should the zero line be crossed. Immediate support can be seen at 13870, which offered support and resistance on several occasions across the past few months.
A break below here could open the door to 12950 and the 2022 low. Any recovery would need to retake 14330 the 50 SMA ahead of horizontal resistance at 14650 and 15275.
Bitcoin falls below $40K
Bitcoin has fallen below $40K for the first time in 3 weeks as investors weigh up rising inflation following Russia’s invasion and the likelihood of rising interest rates as a result.
In short, the macro environment has spooked the cryptocurrency market, and traders are reducing their exposure to speculative assets. Bitcoin has become noticeable correlated with US stocks in recent sessions since the Fed announced that it would start trimming its balance sheet by around $95 billion per month and a possible 50 basis point rate hike.
Bitcoin trades 40% down from its November peak, with support seen at $37,500. Most altcoins have underperformed bitcoin. All eyes are on US CPPI data later.
EUR/GBP looks to UK jobs & German economic sentiment data
After falling across last week, EUR/GBP edged 0.15% higher on Monday. The euro found support from the French Presidential elections as Macron won the first round. Macron and Marine Le Pen will be in the runoffs on Sunday, 24th April. Meanwhile, the pound fell after weaker than forecast UK economic growth, which almost stalled in February.
Today is another busy day data-wise, with UK jobs data expected to show that the labour market continued tightening in February with unemployment falling and wages rising.
The euro will be looking towards the release of German inflation figures and ZEW German economic sentiment, which is expected to plunge further in April.
| UK GDP MoM Feb
UK unemployment Ger.ZEW economic confidence |
Actual: 0.1% (0.7%)
Expected: 3.8% (0.1%) Expected: -48 (8.1) |
Previous: 0.8%
Previous: 3.9% Previous: -39.9 |
Support can be found at 0.83 (April low) and 0.8285 (February low).
Resistance for the pair can be seen at 0.8370 (50 SMA) and 0.84 (100 SMA).
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