FUNDAMENTAL NEWS AND TECHNICAL ANALYSIS REPORT – 10 FEBRUARY 2023

10 Feb 2023

Dollar on the rise as cautious investors pay attention to inflation data

Asian stock market closes in red on Thursday. The Shanghai Composite is in green 1.18% at 3270.38. Overall, the Singapore MSCI is down 0.94% at 304.60. Over in Hong Kong, the Hang Seng Index is up 1.60% at 21624.36. In Japan, the Nikkei 225 is down 0.86 at 27584.35. While the Topix index is up 0.05% at 1985.00, South Korea’s Kospi is down 0.09% at 2481.52. Australia S&P/ASX 200 down 0.53% at 7490.30.

Top News of the Day: –

The dollar was broadly higher on Friday as investors remained risk-averse ahead of U.S. inflation data next week, with worries of an economic slowdown and the pace of the Federal Reserve’s rate increases denting sentiment.

The dollar index, which measures the safe-haven U.S. currency against six major peers, rose 0.155% at 103.34, having dropped 0.24% in the previous session. The index is set to eke out a weekly gain, its second straight positive week and a run it has not had since October.

The euro was down 0.15% to $1.072 and was set for a second straight week of losses, while the sterling was last trading at $1.2093, down 0.24% on the day ahead of GDP data for the fourth quarter.

“The broad picture is the Fed doing policy calibration … but for the near term there is caution, given recent Fed speakers and how the disinflation trend may be bumpy.”

Meanwhile, the yen weakened 0.12% to 131.74 per dollar. Japan’s government is planning to present the new Bank of Japan governor nominee and two deputy governor nominees to parliament on Feb. 14, Reuters reported on Thursday.

Market Summary as per 09/02/2023:

European equities Thursday closing. The DAX futures contract in Germany traded up 0.72% at 15523.42, CAC 40 futures up 0.96% at 7188.36. UK 100 futures contract in the U.K. up 0.33 at 7911.15.

In the U.S. on Wall Street, the Dow Jones Industrial Average closed down 0.73% at 33699.98. The S&P 500 down 0.88% at 4081.50 and the Nasdaq 100 down 1.02% at 11789.58, NYSE 0.67% closes down at 15828.60.

Top Market News Today:

In the Forex market, GBPUSD up 0.06% at 1.2128. The USDJPY down 1.17% at 129.92, The USDCHF down 0.14 at 0.9207. EURUSD up 0.05% at 1.0741. EUR/GBP up 0.05% at 0.8860. The USD/CNY up 0.29% at 6.7974 at the time of writing.

In the Commodity market U.S. Gold futures up at 0.52% $1,870.76. Elsewhere, Silver futures up 1.14% at $22.19 per ounce, Platinum up 0.35% at $956.33 per ounce, and Palladium down 0.80% at $1619.00.

Brent Crude Oil down 0.12% at $84.40 per barrel.

In the Cryptocurrency Markets, Bitcoin at 21898.10 up at 0.45%, Ethereum up 0.48% at 1552.1, Litecoin at 92.90 up 0.60%, at the time of writing.

Top Market Segment to Watch Out Today:

GOLD– Gold prices hovered around a one-month low on Friday amid pressure from rising short-term yields, and were headed for a second consecutive weekly loss as markets reassessed their expectations of more interest rate hikes from the Federal Reserve

The yellow metal struggled to recover from sharp losses logged last week – its worst week so far this year. A string of hawkish signals from Fed officials also kept the yellow metal under pressure, as Fed Chair Jerome Powell and several other speakers warned that interest rates will likely rise further.

Economic News:

US: – The number of Americans filing new claims for unemployment benefits increased more than expected last week, but remained at levels consistent with a tight labour market.

Initial claims for state unemployment benefits rose 13,000 to a seasonally adjusted 196,000 for the week ended Feb. 4, the Labor Department said on Thursday. Economists polled by Reuters had forecast 190,000 claims for the latest week.

Claims have remained low despite high-profile layoffs in the technology industry as well as the interest rate-sensitive finance and housing sectors. There is anecdotal evidence that companies are generally reluctant to lay off workers after experiencing difficulties recruiting during the pandemic.

Workers remain scarce in some industries. There were 1.9 job openings for every unemployed person in December, government data showed last week. According to an Institute for Supply Management survey last Friday, some services businesses in January reported they were “unable to hire qualified labour,” saying that “supply is thin.”

Economists speculate that severance packages were delaying the filing of unemployment benefits claims while the abundance of job openings made it easier for laid off workers to find new jobs. They also believed that seasonal factors, the model the government uses to strip out seasonal fluctuations from the data, were keeping claims lower.

The claims report also showed the number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 38,000 to 1.688 million during the week ending Jan. 28.

Euro Zone: – -Britain’s economy showed zero growth in the final three months of 2022 – enough for it to avoid entering a recession for now – but faces tough prospects in 2023 as households continue to wrestle with double-digit inflation.

Monthly gross domestic product data for December – a month marked by widespread rail strikes and bad weather – showed a 0.5% contraction, the Office for National Statistics said, larger than the 0.3% forecast.

“The economy contracted sharply in December meaning, overall, there was no growth in the economy over the last three months of 2022,” said ONS statistician Darren Morgan said.

Output fell 0.2% in the three months to the end of September – when many businesses shut briefly to mark Queen Elizabeth’s funeral – and a second consecutive quarter of falling output would have met Europe’s usual definition of recession.

However, the respite is only likely to be temporary.

The Bank of England forecast last week that Britain would enter a shallow but lengthy recession, starting in the first quarter of this year and lasting five quarters.

British living standards have been hammered by a surge in inflation, which hit a 41-year high of 11.1% in October, and firms and households will also feel an increasing impact from the BoE’s rapid increase in interest rates since December 2021.

Output in the fourth quarter was still 0.8% below its pre-pandemic level, in sharp contrast to other major advanced economies which are now above their pre-pandemic size.

ING economist James Smith said he expected Britain’s economy to contract by 0.3-0.4% in the first quarter of this year, and by a smaller amount in the second quarter.

“Recession, or at least a technical one, remains the base case. But this looks like it is going to be very mild by historical standards, helped of course by the collapse in wholesale gas prices,” he said.

Across 2022 as a whole, Britain’s economy grew by 4.0% after 7.6% growth in 2021, as it recovered from a historic blow from the COVID-19 pandemic.

Finance minister Jeremy Hunt said the data showed the British economy was more resilient than expected, but still not clear of danger.