European Open: RBNZ down, BOC (and UK inflation) up next

Asian Indices:

• Australia's ASX 200 index rose by 26.2 points (0.35%) and currently trades at 7,480.20
• Japan's Nikkei 225 index has risen by 431.06 points (1.64%) and currently trades at 26,766.04
• Hong Kong's Hang Seng index has risen by 58.5 points (0.27%) and currently trades at 21,377.63
• China's A50 Index has risen by 31.7 points (0.23%) and currently trades at 13,904.01

UK and Europe:

• UK's FTSE 100 futures are currently down -11.5 points (-0.15%), the cash market is currently estimated to open at 7,565.16
• Euro STOXX 50 futures are currently down -8 points (-0.21%), the cash market is currently estimated to open at 3,823.47
• Germany's DAX futures are currently down -37 points (-0.26%), the cash market is currently estimated to open at 14,087.95

US Futures:

• DJI futures are currently up 146 points (0.43%)
• S&P 500 futures are currently up 93.75 points (0.67%)
• Nasdaq 100 futures are currently up 22 points (0.5%)

Asian markets were mostly higher overnight despite the weak lead from Wall Street, fuelled by a 40-year high inflation print. Rising commodity currencies boosted miners on the ASX although it was the Nikkei 225 which led the general rebound higher. US futures are also pointing to a firmer open although European futures have opened lower as they play catchup with Wall Street’s weak finish.

FTSE: Market Internals

The FTSE 100 has declined for two consecutive days after it failed to hold onto gains above 7600 made on Friday. Given its rally stalled just beneath the February high it seems like an obvious place for a pullback. So the question for today is whether bulls can keep prices above 7500. Given yesterday’s low failed to test 7536.2 support then something for traders to consider is range trading strategies between 7530 – 7600 over the near-term.

FTSE 350: 4241.35 (-0.55%) 12 April 2022

• 131 (37.32%) stocks advanced and 211 (60.11%) declined
• 9 stocks rose to a new 52-week high, 4 fell to new lows
• 33.62% of stocks closed above their 200-day average
• 47.58% of stocks closed above their 50-day average
• 8.55% of stocks closed above their 20-day average

Outperformers:

• + 11.4% - Diploma PLC (DPLM.L)
• + 8.72% - Ferrexpo PLC (FXPO.L)
• + 7.30% - Tullow Oil PLC (TLW.L)

Underperformers:

• -7.60% - Investec PLC (INVP.L)
• -6.09% - Safestore Holdings PLC (SAFE.L)
• -6.02% - Greencore Group PLC (GNC.L)

NZD hands back all of its RBNZ gains (and more)

NZD went from hero to zero despite RBNZ hiking interest rates by 50-bps. It has since handed back all gains and is now the weakest major currency as traders question whether they have simply brought forward a hike (over hiking more aggressively), or if they’ll hike so aggressively that they’ll tipping the economy into a recession.

Next up we have the Bank of Canada, although in this instance they are expected to hike by 50-bps with the potential for them to announce QT quantitative tightening. With such a move priced in then the bigger surprise would be for them to not hike the full 50 and disappoint with a 25-bps hike.

EUR/CAD coils at its lows ahead of BOC

Back in March we highlighted a bearish triangle on EUR/CAD which projected a target at 1.3550. Whilst the initial target around 1.3800 was met the triangle target is yet to be achieved. It remains in a strong downtrend and is now coiling at support ahead of today’s BOC meeting, and we’re seeking a break lower should BOC deliver a hawkish hike alongside QT. Clearly, a threat to this outcome is if the BOC do not deliver, which could send EUR/CAD rallying from key support. At which case we’ll remove our bearish bias over the near-term and step aside.

Up Next (Times in BST)

But first we have UK inflation data at 07:00. Yesterday’s employment data showed whilst the jobless rate fell to its lowest point since 2019, workers pay is struggling to keep up with inflation. Today we get to see if that gap widens further. And that could further pile on the pressure for BOE to hike in May despite their growing concerns they will inadvertently slow growth.

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