FUNDAMENTAL NEWS AND TECHNICAL ANALYSIS REPORT – 17 FEBRUARY 2023

17 Feb 2023

With hawkish Fed remarks, the dollar jumps to a six-week high

Asian stock market closes in green on Thursday. The Shanghai Composite is in red 0.96% at 3249.03. Overall, the Singapore MSCI is up 1.41% at 301.45. Over in Hong Kong, the Hang Seng Index is up 0.84% at 20987.67. In Japan, the Nikkei 225 is up 0.71 at 27696.44. While the Topix index is up 0.67% at 2001.09, South Korea’s Kospi is up 1.96% at 2475.48. Australia S&P/ASX 200 up 0.79% at 7410.30.

Top News of the Day: –

The U.S. dollar surged to a six-week high in early European trade Friday, after strong U.S. economic data and hawkish comments from Federal Reserve policymakers pointed to more interest rate hikes.

At 02:00 ET (07:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.5% higher at 104.345, on track for a third consecutive week of gains.

Data released Thursday pointed to a resilient U.S. economy, as the number of Americans filing for unemployment benefits declined unexpectedly last week, while producer prices accelerated in January.

This was followed on from retail sales rebounding sharply in January after two straight monthly declines and consumer inflation coming in stronger than expected earlier in the week.

“The data provides ammunition for the Fed to remain in hawkish mode and for the market to continue to price two to three more 25bp Fed rate hikes by the summer,” said analysts at ING, in a note.

Market Summary as per 16/02/2023:

European equities Thursday closing. The DAX futures contract in Germany traded up 0.18% at 15533.64, and CAC 40 futures up 0.89% at 7366.16. UK 100 futures contract in the U.K. is up 0.18 at 8012.53.

In the U.S. on Wall Street, the Dow Jones Industrial Average closed down 1.26% at 33696.85. The S&P 500 was down 1.38% at 4090.41 and the Nasdaq 100 was down 1.78% at 11855.83, NYSE 0.89% closes at 15873.78.

Top Market News Today:

In the Forex market, GBPUSD is down 0.58% at 1.1921. The USDJPY is up 0.75% at 134.94, and The USDCHF is up 0.53 at 0.9300. EURUSD down 0.33% at 1.0638. EUR/GBP is up 0.30% at 0.8922. The USD/CNY is up 0.29% at 6.8787 at the time of writing.

In the Commodity market, U.S. Gold futures are down at 0.84% by $1,820.90. Elsewhere, Silver futures were down 1.30% at $21.28 per ounce, Platinum down 0.38% at $914.00 per ounce, and Palladium down 3.48% at $1458.09.

Brent Crude Oil is down 1.53% at $83.85 per barrel.

In the Cryptocurrency Markets, Bitcoin is at 23648.40 up 0.56%, Ethereum is up 1.08% at 1655.32, and Litecoin at 99.49 up 0.92%, at the time of writing.

Top Market Segment to Watch Out for Today:

GOLD– Gold prices fell on Friday as stronger-than-expected U.S. inflation data and hawkish comments from Federal Reserve officials brewed concerns over more interest rate hikes, while optimism over China saw copper prices outpace metal markets this week.

Economic News:

US: – The United States is concerned about the debt owed to China by Pakistan and other countries, U.S. State Department Counsellor Derek Chollet said on Thursday during a visit to Islamabad as the country dealt with an economic crisis.

Pakistan, historically a close ally of Washington, has become increasingly close to China, which has provided billions in loans and is Islamabad’s largest single creditor. Pakistan faces a crippling economic crisis, with decades-high inflation and critically low foreign exchange reserves depleted by continued debt repayment obligations.

“We have been very clear about our concerns not just here in Pakistan, but elsewhere all around the world about Chinese debt or debt owed to China,” Chollet told journalists at the U.S. Embassy in Islamabad after he met with Pakistani officials.

China and Chinese commercial banks held about 30% of Pakistan’s total external debt of about $100 billion, according to a report by the International Monetary Fund released in September last year.

Much of that debt has come under the China-Pakistan Economic Corridor, part of Beijing’s Belt and Road Initiative.

Chollett said Washington was talking to Islamabad about the “perils” of a closer relationship with Beijing but would not ask Pakistan to choose between the United States and China.

Officials from China and the United States will be part of a multi-country meeting of a new sovereign debt roundtable on Friday.

U.S. Treasury Secretary Janet Yellen and other G7 officials see China, now the world’s largest sovereign creditor, as a key stumbling block in debt-relief efforts.

UK: – The European Central Bank’s sharp increase in borrowing costs has yet to be fully felt by the economy, two top European Central Bank policymakers said on Thursday, saying future moves should depend on how the data evolves.

Locked in a fight against inflation, the ECB has embarked on its steepest-ever streak of interest rate hikes, which is set to continue next month and likely even after.

Yet the euro zone’s economy is holding up better than the ECB and many others had expected, and measures of underlying inflation are refusing to budge.

The ECB’s Chief Economist Philip Lane and fellow board member Fabio Panetta said the central bank’s actions had yet to work their way through the economy and respectively called for “an open mind” and a “measured approach” to future moves.

“Most of the effects of our tightening are still ahead of us,” Panetta told an event in London. “This means, for example, that the current adjustment in the credit market…will likely compress consumption and investment in the coming months.”

He estimated that headline inflation in the eurozone may fall below 3% by the end of the year if the drop in energy prices is sustained — all the way down from 8.5% last month.

Lane later said ECB tightening has lowered inflation by around 1.2 percentage points this year 2023 and by 1.8 percentage points in 2024, but “much of the effect was “still in the pipeline”.

The ECB raised rates by a historically large 50 basis points earlier this month and pre-announced another increase of the same size for March 16.

Panetta, Italy’s appointee on the ECB’s board, called for smaller steps after March.

Top Economic Releases Today:

USD: FOMC Member Bullard Speaks at 00:00
USD: FOMC Member Bowman Speaks at 19:15
GBP: Retail Sales (MoM) (Jan) Actual 0.5%, Forecast –0.3%, Previous –1.0% at 12:30
GBP: Core Retail Sales (MoM) (Jan) Actual 0.4%, Forecast 0.0%, Previous –1.1% at 12:30
EUR: ECB`s De Guindos Speaks at 01:15