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Phew!
The US-Iran ceasefire plan, agreed for the next 2 weeks, is allowing markets to breathe a massive sigh of relief.
The dramatic 11th-hour ceasefire deal was announced about 90 minutes before President Trump's self-imposed (and delayed) deadline of 8:00 PM EST on Tuesday, April 7th.
Major assets are reversing some of the big moves seen since the Iran war broke out on February 28th.
US Crude Oil set for biggest one-day drop in nearly 6 years
It's only apt that we first check in on oil prices - which has been in the driver's seat for other major assets amid the Middle East conflict (i.e. stocks, bonds, etc. have tumbled on oil's surge on rising inflation fears).
Following news of the ceasefire, Bybit's USOUSD (which tracks the US benchmark for oil prices - WTI crude) careened towards the $90/bbl psychological level before paring some of its gains.
Still, at these sub-$100 prices at the time of writing ...
WTI Crude is now down by more than 14%, set for its biggest one-day drop since April 2020 during the Covid-19 pandemic.
Our chosen "3 Assets to Watch", published this past Monday, April 6th, have also delivered some spectacular results:
1) SP500 soars to 4-week high!
Following news of the US-Iran ceasefire, the Bybit's SP500 - which tracks the benchmark S&P 500 index - has reclaimed the 6,800 price level for the first time since March 11th - exactly 4 Wednesdays ago.
NOTE: The S&P 500 index is arguably the most popular way to measure the overall performance of the US stock market.
Blasting through the 200-day simple moving average (SMA) upside target we'd set on Monday (April 6), the SP500 is now testing resistance around that psychological 6,800 round number. The 100-day SMA currently lies slightly northwards to perhaps exert additional resistance.
Perhaps most pertinently, it answers the question we posed in our week ahead preview article:
SP500 to sustain upside breakout? Yes it has (so far this week).
2) New Zealand Dollar = G10's biggest gainer vs. the US dollar today!
NZDUSD+ has skyrocketed past our upside target of 0.5800 - a target drawn since Monday, April 6th.
At the time of writing, this FX pair also appears headed to re-test its 200-day simple moving average (SMA) - a widely followed technical indicator - for immediate resistance.
NZDUSD+ is getting a twin boost mid-week:
Weakening US Dollar: markets are moving out of their preferred safe haven during the Iran war on this major sign of de-escalating geopolitical tensions
RBNZ hawkish hold: the Reserve Bank of New Zealand kept its Official Cash Rate at 2.25% today, but also signalled potential rate hikes incoming on expectations of accelerating inflation.
This fulfills the conditions in our upside scenario published earlier this week:
(1) Iran war developments allow risk-on sentiment to recover across global markets
(2) RBNZ hawkishly signals a willingness to hike rates
PS: We'd also given you a heads up on this key central bank rate decision since Monday.
Perhaps most importantly, our decision to include NZDUSD+ among our "3 Assets to watch" this week has been vindicated by the fact that, at least at the time of writing ...
The New Zealand Dollar is G10's biggest-gainer against the US dollar today!
3) Cardano (ADA) = biggest gainer today among top-10 digital assets
Our asset selection has been further vindicated by the decision to include Cardano among our "3 Assets to Watch" for this week.
Over the past 24 hours, of the 10 biggest digital assets by market cap (excluding stablecoins) ...
Cardano (ADA) is posting the biggest climb following the US-Iran ceasefire news!
1) Cardano: +8.1% (market cap: US$ 9.66 billion)
2) Ethereum: +7.1% (market cap: US$ 270 billion)
3) Solana: +6.4% (market cap: US$ 48.3 billion)
4) Ripple: +5.7% (market cap: US$ 84.9 billion)
5) Bitcoin: +4.8% (market cap: US$ 1.43 trillion)
6) Dogecoin: +4.6% (market cap: US$ 14.6 billion)
7) WhiteBIT Coin: +3.9% (market cap: US$ 11.4 billion)
8) Binance Coin: +2.8% (market cap: US$ 84 billion)
9) Figure Heloc: +1.3% (market cap: US$ 17.08 billion)
10) TRON: -0.2% (market cap: US$ 30 billion)
(ranked by % gains so far Wed, April 8)
SOURCE: Coingecko.com
At the time of writing, ADAUSDT is testing its 50-day simple moving average (SMA) - a "stubborn resistance" level we had written about prior at the start of this week.
So, the question remains ...
"Can Cardano break above its 50-day SMA?
That may require more risk-taking activities across global financial markets.
But the week isn't over yet!
Of course, in this ever-fluid geopolitical landscape, the existing ceasefire plan is not guaranteed to last.
Direct negotiations still need to be held between the US and Iran to reach a longer (and permanent?) deal that may finally bring an end to this Middle East conflict.
Also, as we had previewed on Monday's report, there are other major macro events left this week:
Wednesday, April 8th @ 6:00 PM UTC: FOMC meeting minutes
Thursday, April 9th @ 12:30 PM UTC: US February PCE (personal consumption expenditure - Fed's preferred way of measuring inflation)
Friday, April 10th @ 12:30 PM UTC: US March CPI (consumer price index - measures headline inflation)
Friday, April 10th: US-Iran talks to begin in Islamabad
Overall, even though some key price targets have already been hit for the week, the above-listed events may yet inject further volatility into our 3 highlighted assets, and surely beyond, for the rest of the week.
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