Markets Analysis

Fear Index falls, exchange rates and stocks risk-on; OPEC Plus announces coordinated production cuts【April 3, 2023】

April 03, 2023

Markets Analysis

Fundamental Analysis

  • U.S. Stock Indices Sharply Higher, VIX Index Falls to 18
  • Risk-on market shifts, expectations grow for a halt in U.S. interest rate hikes
  • Indictment of former President Trump, caution for unforeseen events
  • ISM Business Confidence Index in focus; U.S. economic outlook to influence market prices
  • OPEC Plus announces oil production cut, coordinated production cut surprises market
  • Crude oil supply is significantly reduced, which could put significant buying pressure on the crude oil market
  • Watch for movement in the Canadian dollar, which is correlated with crude oil
  • Bitcoin is range-bound at higher prices

Technical Analysis

U.S. Stock indexes rose sharply and the VIX index fell to 18. Although financial concerns remained, the market was mostly resolved and shifted to a risk-on market. Over the weekend, OPEC Plus announced a coordinated cut in crude oil production. This will have a major impact on the crude oil market. We also expect that the Canadian dollar is likely to appreciate further.

If the U.S. ISM business sentiment index, which will be released today, comes in below expectations, it is expected to create further expectations for a halt in interest rate hikes, which will lead to higher stock prices and a weaker dollar.

Crude Oil (USOUSD).

Crude oil rallied through a large window on the back of reports over the weekend of a coordinated production cut and the prospect of a significant reduction in crude oil supply. Prices flew to the upper end of the range, from $75 to $80. The impact will depend on today’s U.S. Business sentiment index, but the impact will be very significant. The moving averages are closing in on the upside, and the USD 80 to USD 83 range is expected to be the next resistance zone.

[USOUSD / D1]
Estimated rangeUSD 78 – USD 83.84
Resistance lineUSD 82.37
Support lineUSD 79.4

Canadian Dollar (USDCAD).

We expect the Canadian dollar to remain on a downtrend as its bidability is expected to strengthen; a break below CAD 1.3515 could lead to a significant decline. On the other hand, crude oil has opened a large upper window and may move to fill the window. If so, the Canadian dollar may also see profit-taking and sell off to some extent.

[USDCAD / H4]
Estimated rangeCAD 1.3410 – CAD 1.3577
Resistance lineCAD 1.3535
Support lineCAD 1.3452

NASDAQ

The NASDAQ entered a rising market. The moving average is a clear support band and has rallied significantly. The 61.8% drawn by the Fibonacci Expansion is well above the 61.8% I expect the stage to be set at USD 13,000 in April; the 100% is in the 13900 level, and I believe the upward trend will strengthen through April.

[NASDAQ / D1]
Estimated rangeUSD 12830 – USD 13380
Resistance lineUSD 13250
Support lineUSD 13010

Today’s Important Economic Indicators

Economic Indicators and EventsJST (Japan Standard Time)
Bank of Japan Short-term Economic Survey of Japan8:50
Australian Retail Sales10:30
China and Taiwan Holidays

*Trading advice in this article is not provided by Milton Markets, but by Shu Fujiyasu Jr., a certified technical analyst.

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