. Fundamental Analysis Report With Charting Trends - 14 August 2023

Fundamental Analysis Report With Charting Trends – 14 August 2023

Fundamental Analysis Report With Charting Trends – 14 August 2023

14 Aug 2023

Fed’s Battle Royale: Internal Clash Over Interest Rates Revealed.

Introduction

In a whirlwind of market activity, the Nasdaq and S&P 500 faced significant losses as U.S. Treasury yields surged, leaving investors grappling with the impact of unexpected producer pricing data. This article delves into the key events that unfolded, the implications for different trading sessions, and what experts are predicting for the future.

Nasdaq and S&P’s Struggles Amid Yield Uptick

As U.S. producer pricing data took an unexpected turn, Treasury rates experienced an upward jolt, sending shockwaves through the market. This abrupt shift led to a decline in rate-sensitive mega-cap growth companies, resulting in both the S&P 500 and the Nasdaq Composite suffering losses in a consecutive second week. The Dow Jones Industrial Average managed to buck the trend, ending the week on a positive note with a 0.6% gain.

Nasdaq’s First Double-Week Decline in 2023

For the first time this year, the Nasdaq faced a double-week decline, raising concerns among investors. The index plunged by 1.9%, reflecting the impact of the Treasury yield surge. Meanwhile, the S&P 500 also experienced a dip, finishing the week down by 0.3%.

PPI Surge and Its Ramifications

The Producer Price Index (PPI), a crucial metric that measures the cost of goods and services, saw a notable increase of 0.8% year-over-year in July. This jump, as reported by the U.S. government, marked a significant acceleration from June’s modest 0.2% growth. Economists’ predictions, gathered in a Refinitiv poll, had anticipated a 0.7% increase.

Federal Reserve’s Diverging Views on Interest Rates

Amid the PPI surge, the Federal Reserve’s officials found themselves divided over the course of action. The impending September meeting holds the decision to either further increase interest rates to curb economic acceleration or maintain the status quo. Disagreements prevail on whether the current benchmark lending rate adjustments are adequate to apply the brakes effectively.

  • Will Rates Remain Unchanged? Despite the Fed’s internal divisions, the market is buzzing with speculation. According to the CME Fed Watch program, there is an overwhelming likelihood exceeding 90% that the central bank will opt to halt its series of interest rate hikes next month.

Asia Session Unveils Dollar Index and Asian Stock Woes

In the bustling Asia trading session, the Dollar Index (DXY) surged to hit the 103 level before retreating slightly, hinting at possible fluctuations ahead. However, the session also witnessed a decline in most Asian stocks, with Chinese indices leading the downward spiral.

Implications for Europe & US Sessions

The Asia session’s impact reverberates across the subsequent Europe and US sessions. Traders are growing increasingly apprehensive about the looming FOMC meeting in September, apprehension stemming from the surge in U.S. inflation readings observed in July. The bullish momentum of the DXY, attributed to these inflation concerns, persists as it briefly soared above 103.

The Dollar Index’s Influence and Predictions

D XY’s Unwavering Momentum

The Dollar Index (DXY) continues to demonstrate a strong upward trend, with its bullish momentum taking it beyond the 103 mark in recent times.

  • Will DXY’s Strength Persist? The demand for the US dollar shows no sign of abating, potentially keeping the DXY elevated even in the absence of significant scheduled events. This robust demand is primarily fueled by ongoing anxieties over a potential resurgence in U.S. inflation.

Central Banks’ Notes and Insights

As the financial landscape evolves, central banks play a pivotal role in shaping market sentiment and stability.

Federal Reserve’s Key Points

  • The federal funds rate target range stands at 5.25% to 5.50%.
  • The Committee maintains a strong commitment to restoring inflation to the 2.0% target.
  • Monetary policy adjustments will be made if risks arise that could impede goal attainment.
  • Decision-making considers factors like labor market conditions, inflation pressures, and global economic developments.
  • Next meeting is scheduled from September 19 to 20, 2023.

European Central Bank’s Considerations

  • The ECB enacted a 25 basis point increase in the three key interest rates.
  • Slight downward adjustments were made to economic growth projections.
  • The Governing Council ensures interest rates remain sufficiently restrictive to achieve the inflation target.
  • Rate decisions hinge on data-driven assessments of inflation, economic data, and monetary policy transmission strength.
  • The forthcoming meeting is set for September 14, 2023.

Reserve Bank of Australia’s Outlook

  • The RBA kept the cash rate target unchanged at 4.10%, maintaining consistency for a second consecutive meeting.
  • While Australian inflation has declined from its peak, returning to the target range remains imperative.
  • Future monetary policy tightening may be warranted.
  • The next meeting is scheduled for September 5, 2023.

Global Market Snapshot

In the global context, diverse markets have witnessed varying shifts in recent sessions.

Asian Stock Market Movements

  • Nikkei experienced a 1.27% decline.
  • Shanghai Composite slid by 0.41%.
  • Hang Seng’s losses were substantial, down by 2.13%.
  • ASX registered an 0.86% dip.

European Equities and US Stock Market

  • DAX futures declined by 1.03%.
  • CAC 40 suffered a 1.26% drop.
  • FTSE faced a 1.24% decrease.
  • Dow Jones Industrial Average demonstrated a 0.30% gain.
  • S&P 500 experienced a 0.11% decline.
  • Nasdaq 100 saw a 0.68% dip.

Commodity Market Trends

  • Gold stood at $1910.98, reflecting a marginal decrease of 0.12%.
  • Silver recorded a decline, with its value reaching $22.59 (-0.35%).
  • Brent Oil saw a reduction to $84.64 (-1.11%).
  • WTI Oil followed suit, registering a drop to $82.19 (-1.20%).

Notable News & Data

  • Japanese GDP (Q2) is forecasted at 0.8%, slightly exceeding the previous quarter’s 0.7%.
  • Japanese GDP (YoY) (Q2) is projected to grow by 3.1%, up from the previous 2.7%.
  • Australian Wage Price Index (Q2) is anticipated to rise by 1.0%, a modest uptick from the previous 0.8%.
  • RBA Meeting Minutes will provide valuable insights into the Reserve Bank of Australia’s deliberations.
  • Chinese Industrial Production (YoY) for July is predicted to rise by 4.5%, building upon the previous 4.4% growth.

Trading Insights: Expert Analysis of Key Forex and Commodity Markets

GBP/USD: Analyzing the Sterling-Dollar Pair

Exponential Moving Average (EMA)

  • EMA 5: The 5-day EMA stands at 1.2688, indicating a Sell sentiment.
  • EMA 20: The 20-day EMA displays 1.2720, reinforcing a Sell indication.
  • EMA 50: With a value of 1.2768, the 50-day EMA aligns with a Sell recommendation.

Simple Moving Average (SMA)

  • SMA 5: The 5-day SMA shows 1.2684, suggesting a Sell sentiment.
  • SMA 20: The 20-day SMA records 1.2724, supporting a Sell stance.
  • SMA 50: The 50-day SMA stands at 1.2783, signifying a Sell indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, displays a reading of 43.54, suggesting a Negative signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Negative condition.

Resistance And Support Levels

  • Resistance: The resistance level is identified at 1.2736.
  • Support: The support level is observed at 1.2656.

Summary And Trade Suggestions

Based on the technical analysis, GBP/USD presents a Sell outlook. Traders may consider entering a short position, considering the indicators, moving averages, and oscillators.

Trade Suggestion:

  • Entry Point: 1.2618
  • Take Profit: 1.2528
  • Stop Loss: 1.2690

EUR/USD: Decoding the Euro-Dollar Dynamics

Exponential Moving Average (EMA)

  • EMA 5: The 5-day EMA stands at 1.0953, indicating a Sell signal.
  • EMA 20: The 20-day EMA is at 1.0973, signaling a Sell sentiment.
  • EMA 50: The 50-day EMA currently sits at 1.0997, suggesting a Sell indication.

Simple Moving Average (SMA)

  • SMA 5: The 5-day SMA shows a value of 1.0955, reinforcing the Sell recommendation.
  • SMA 20: With a value of 1.0976, the 20-day SMA also supports a Sell sentiment.
  • SMA 50: The 50-day SMA registers at 1.1006, affirming a Sell indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 43.08, signifying a Neutral signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Negative stance.

Resistance And Support Levels

  • Resistance: The resistance level is observed at 1.0969.
  • Support: The support level is identified at 1.0917.

Summary And Trade Suggestions

In summary, the technical analysis of EUR/USD points towards a Sell sentiment. Considering the indicators, moving averages, and oscillators, it seems favorable for traders to enter a short position.

Trade Suggestion:

  • Entry Point: 1.0888
  • Take Profit: 1.0829
  • Stop Loss: 1.0936

AUD/USD: Navigating the Australian Dollar-US Dollar Pair

Exponential Moving Average (EMA)

  • EMA 5: The 5-day EMA stands at 0.6494, indicating a Sell signal.
  • EMA 20: The 20-day EMA is at 0.6537, signaling a Sell sentiment.
  • EMA 50: The 50-day EMA currently sits at 0.6601, suggesting a Sell indication.

Simple Moving Average (SMA)

  • SMA 5: The 5-day SMA shows a value of 0.6494, reinforcing the Sell recommendation.
  • SMA 20: With a value of 0.6537, the 20-day SMA also supports a Sell sentiment.
  • SMA 50: The 50-day SMA registers at 0.6626, affirming a Sell indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 38.16, signifying a negative signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Neutral stance.

Resistance And Support Levels

  • Resistance: The resistance level is observed at 0.6512.
  • Support: The support level is identified at 0.6476.

Summary And Trade Suggestions

In summary, the technical analysis of AUD/USD points towards a Sell sentiment. Considering the indicators, moving averages, and oscillators, it seems favorable for traders to enter a short position.

Trade Suggestion:

  • Entry Point: 0.6451
  • Take Profit: 0.6381
  • Stop Loss: 0.6506

USD/JPY: Unveiling the Dollar-Yen Dynamics

Exponential Moving Average (EMA)

  • EMA 5: The 5-day EMA stands at 144.70, indicating a Buy signal.
  • EMA 20: The 20-day EMA is at 143.75, signaling a Buy sentiment.
  • EMA 50: The 50-day EMA currently sits at 142.68, suggesting a Buy indication.

Simple Moving Average (SMA)

  • SMA 5: The 5-day SMA shows a value of 144.79, reinforcing the Buy recommendation.
  • SMA 20: With a value of 143.47, the 20-day SMA also supports a Buy sentiment.
  • SMA 50: The 50-day SMA registers at 142.30, affirming a Buy indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 67.93, signifying a Buy signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Negative stance.

Resistance And Support Levels

  • Resistance: The resistance level is observed at 145.05.
  • Support: The support level is identified at 144.36.

Summary And Trade Suggestions

In summary, the technical analysis of USD/JPY points towards a Buy sentiment. Considering the indicators, moving averages, and oscillators, it seems favorable for traders to enter a long position.

Trade Suggestion:

  • Entry Point: 145.39
  • Take Profit: 146.72
  • Stop Loss: 144.31

S&P 500: Deciphering the Stock Market Index

Exponential Moving Average (EMA)

  • EMA 5: The 5-day EMA stands at 4485.19, indicating a Buy signal.
  • EMA 20: The 20-day EMA is at 4507.41, signaling a Sell sentiment.
  • EMA 50: The 50-day EMA currently sits at 4526.41, suggesting a Sell indication.

Simple Moving Average (SMA)

  • SMA 5: The 5-day SMA shows a value of 4479.82, reinforcing the Sell recommendation.
  • SMA 20: With a value of 4502.86, the 20-day SMA also supports a Sell sentiment.
  • SMA 50: The 50-day SMA registers at 4552.14, affirming a Sell indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 44.64, signifying a Neutral signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Positive stance.

Resistance And Support Levels

  • Resistance: The resistance level is observed at 4497.06.
  • Support: The support level is identified at 4464.44.

Summary And Trade Suggestions

In summary, the technical analysis of the S&P 500 points towards a Buy sentiment. Considering the indicators, moving averages, and oscillators, it seems favorable for traders to enter a long position.

Trade Suggestion:

  • Entry Point: 4521.17
  • Take Profit: 4563.71
  • Stop Loss: 4491.38

Brent Crude Oil: Navigating the Energy Markets

Exponential Moving Average (EMA)

  • EMA 5: The 5-day EMA stands at 86.10, indicating a Buy signal.
  • EMA 20: The 20-day EMA is at 85.78, signaling a Buy sentiment.
  • EMA 50: The 50-day EMA currently sits at 84.19, suggesting a Buy indication.

Simple Moving Average (SMA)

  • SMA 5: The 5-day SMA shows a value of 86.11, reinforcing the Sell recommendation.
  • SMA 20: With a value of 85.91 the 20-day SMA also supports a Buy sentiment.
  • SMA 50: The 50-day SMA registers at 84.34, affirming a Buy indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 55.47, signifying a Buy signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Negative stance.

Resistance And Support Levels

  • Resistance: The resistance level is observed at 86.39.
  • Support: The support level is identified at 85.55.

Summary And Trade Suggestions

In summary, the technical analysis of Brent Crude Oil points towards a Buy sentiment. Considering the indicators, moving averages, and oscillators, it seems favorable for traders to enter a long position.

Trade Suggestion:

  • Entry Point: 87.17
  • Take Profit: 88.91
  • Stop Loss: 85.91

Gold: Unraveling Precious Metal Trends

Exponential Moving Average (EMA)

  • EMA 5: The 5-day EMA stands at 1913.74, indicating a Buy signal.
  • EMA 20: The 20-day EMA is at 1921.84, signaling a Sell sentiment.
  • EMA 50: The 50-day EMA currently sits at 1933.68, suggesting a Sell indication.

Simple Moving Average (SMA)

  • SMA 5: The 5-day SMA shows a value of 1913.00, reinforcing the Buy recommendation.
  • SMA 20: With a value of 1922.81 the 20-day SMA also supports a Sell sentiment.
  • SMA 50: The 50-day SMA registers at 1940.49 affirming a Sell indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 39.17, signifying a negative signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Neutral stance.

Resistance And Support Levels

  • Resistance: The resistance level is observed at 1921.66.
  • Support: The support level is identified at 1909.37.

Summary And Trade Suggestions

In summary, the technical analysis of gold points towards a Sell sentiment. Considering the indicators, moving averages, and oscillators, it seems favorable for traders to enter a short position.

Trade Suggestion:

  • Entry Point: 1906.56
  • Take Profit: 1892.51
  • Stop Loss: 1916.04

Ethereum: Navigating the Cryptocurrency Realm

Exponential Moving Average (EMA)

  • EMA 5: The 5-day EMA stands at 1846.84, indicating a Buy signal.
  • EMA 20: The 20-day EMA is at 1846.33, signaling a Buy sentiment.
  • EMA 50: The 50-day EMA currently sits at 1854.06, suggesting a Sell indication.

Simple Moving Average (SMA)

  • SMA 5: The 5-day SMA shows a value of 1847.22, reinforcing the Buy recommendation.
  • SMA 20: With a value of 1847.88, the 20-day SMA also supports a Buy sentiment.
  • SMA 50: The 50-day SMA registers at 1852.45, affirming a Sell indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 49.97, signifying a Buying signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Positive stance.

Resistance And Support Levels

  • Resistance: The resistance level is observed at 1858.06.
  • Support: The support level is identified at 1837.39.

Summary And Trade Suggestions

In summary, the technical analysis of Ethereum points towards a Buy sentiment. Considering the indicators, moving averages, and oscillators, it seems favorable for traders to enter a long position.

Trade Suggestion:

  • Entry Point: 1867.78
  • Take Profit: 1897.77
  • Stop Loss: 1844.28

Conclusion: Navigating Market Volatility

As global markets experience seismic shifts driven by economic indicators and central bank decisions, investors find themselves at a pivotal juncture. The intersection of rising Treasury yields, inflation concerns, and central banks’ actions paints a complex picture. Navigating this landscape requires a keen understanding of macroeconomic factors and a cautious approach to investment decisions. In the upcoming weeks, all eyes will remain fixed on pivotal meetings and economic data releases that will continue to shape the trajectory of the financial world.