FUNDAMENTAL NEWS AND TECHNICAL ANALYSIS REPORT – 13 FEBRUARY 2023

13 Feb 2023

In advance of a crucial CPI release, the dollar increases

Asian stock market closes in red on Friday. The Shanghai Composite is in green 0.30% at 3260.67. Overall, the Singapore MSCI is down 1.36% at 303.38. Over in Hong Kong, the Hang Seng Index is down 2.01% at 21190.42. In Japan, the Nikkei 225 is up 0.31 at 27670.98. While the Topix index is up 0.99% at 1986.96, South Korea’s Kospi is down 0.48% at 2469.73. Australia S&P/ASX 200 down 0.76% at 7433.70.

Top News of the Day: –

The U.S. dollar edged higher in early European trade Monday, trading close to a five-week high ahead of the week’s keenly-awaited U.S. inflation data, which could provide more clarity about the Federal Reserve’s rate hike path.

the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher at 103.640, not far removed from last Tuesday’s high of 103.96, the strongest level since Jan. 6.

Tuesday sees the release of the latest U.S. consumer price index, which is expected to show that monthly rates ticked up in January, but the annual measures declined.

A strong inflation print could force markets to rethink whether the Fed will actually cut rates this year, particularly after the strong jobs report earlier in the month.

The dollar has also benefited from its safe haven status as the U.S. shot down a fourth object over North America over the weekend, raising fears of further geopolitical tensions after a Chinese spy balloon was shot down last week.

Market Summary as per 10/02/2023:

European equities Friday closing. The DAX futures contract in Germany traded down 1.39% at 15307.98, CAC 40 futures down 0.82% at 7129.73. UK 100 futures contract in the U.K. down 0.36 at 7882.45.

In the U.S. on Wall Street, the Dow Jones Industrial Average Closed up 0.50% at 33869.27. The S&P 500 up 0.22% at 4090.46 and the Nasdaq 100 down 0.61% at 11718.12, NYSE 0.52% closes up at 15910.7.

Top Market News Today:

In the Forex market, GBPUSD up 0.09% at 1.2058. The USDJPY up 0.59% at 132.18, The USDCHF down 0.07 at 0.9227. EURUSD up 0.04% at 1.0681. EUR/GBP up 0.11% at 0.8855. The USD/CNY up 0.26% at 6.8240 at the time of writing.

In the Commodity market U.S. Gold futures down at 0.11% $1,863.11. Elsewhere, Silver futures up 0.01% at $21.97 per ounce, Platinum down 0.03% at $944.68 per ounce, and Palladium down 0.01% at $1538.47.

Brent Crude Oil down 0.74% at $85.72 per barrel.

In the Cryptocurrency Markets, Bitcoin at 21830.90 up at 0.19%, Ethereum up 0.08% at 1516.53, Litecoin at 92.73 up 0.29%, at the time of writing.

Top Market Segment to Watch Out Today:

OIL– Oil prices eased around 1% on Monday after rising in the previous session, as investors focused on short-term demand concerns stemming from crucial upcoming U.S. inflation data and refinery maintenance in Asia and the United States.

“Crude prices are softening as energy traders anticipate a potentially weakening crude demand outlook as a pivotal inflation report could force the Fed to tighten policy much more aggressively,” said Edward Moya, senior analyst at OANDA, referring to U.S. consumer price data due on Feb. 14.

“This week could deliver a make-or-break moment in how bad of a recession Wall Street prices in.”

Economic News:

US: – The U.S. Treasury Department will focus in coming months on cracking down on facilitators and third-country providers helping Russia evade Western sanctions, Treasury said on Friday.

Deputy Treasury Secretary Wally Adeyemo told a meeting of academics and other experts on sanctions and U.S. foreign policy that Treasury will increase its focus on countering sanctions evasion, including by those who may “wittingly or unwittingly” help Russia replenish supplies needed for its military fighting in Ukraine.

Treasury said the meeting, ahead of the one-year anniversary of Russia’s invasion of Ukraine on Feb. 24, was aimed at taking stock of progress in disrupting Russia’s military supply chains and denying Moscow revenues it needs to fund the war.

“Deputy Secretary Adeyemo shared the progress seen on these fronts, including ballooning deficits and long-term economic damage, as well as the difficulty the Kremlin faces in replacing its major losses of military equipment and supplies,” Treasury said in a statement.

It said the strain on Russia’s military was evident in what it called “the Kremlin’s increasingly desperate attempts to backfill through third parties in permissive jurisdictions, or even turning to international pariahs like Iran and North Korea for (unmanned aerial vehicles) and other weapons.”

Treasury provided no immediate details on which “facilitators and third-party providers” would be targeted.

The U.S. Treasury Department’s top sanctions official, Brian Nelson, travelled to Turkey and the United Arab Emirates the week of Jan. 30 to warn countries and businesses that they could lose access to G7 markets if they do business with entities subject to U.S. curbs.

Euro Zone: – British employers expect to raise wages for their staff by the most in at least 11 years but the 5% pay deals for workers would still fall well below expected inflation, a survey published on Monday showed.

With the Bank of England fearing the surge in inflation could be harder to tame if pay deals keep rising, the Chartered Institute of Personnel Development (CIPD) said 55% of recruiters planned to lift base or variable pay this year as they struggle to hire and retain staff in Britain’s tight labour market.

Expected median annual pay awards in 2023 rose to 5% – the highest since CIPD records began in 2012 – from 4% in the previous three months.

More than half of respondents reported having problems filling vacancies, and nearly one in three expected similar issues in the next six months.

“Skills and labour remain scarce in the face of a labour market which continues to be surprisingly buoyant given the economic backdrop of rising inflation and the associated cost-of-living crisis,” Jon Boys, senior labour market economist at the CIPD, said.

The survey also showed the gap between public and private employers’ wage expectations widened. Planned pay settlements in the public sector fell to 2% from 3% in the quarter before, compared to 5% in the private sector, the CIPD said.

The results highlighted the squeeze on living standards as key workers including nurses, teachers and public transport staff stage a series of strikes over pay and work conditions.

BoE Governor Andrew Bailey last week expressed concerns about wage-setting, despite signs that the surge in inflation has turned a corner.

Annual inflation fell to 10.5% in December after hitting a 41-year high of 11.1% in October. Bailey signalled inflationary pressures were still a worry despite the BoE raising interest rates to the highest since 2008 this month.

The quarterly survey showed recruiters were more willing to hire people returning to the workforce, including older workers and those with health conditions.