Fundamental News And Technical Analysis Report – 19 January 2023

19 Jan 2023

The dollar rises on safe-haven buys, while the yen regains ground as traders take control

Asian stock market closes in green on Wednesday. The Shanghai Composite is up 0.01% at 3224.41. Overall, the Singapore MSCI is up 0.77% at 298.68. Over in Hong Kong, the Hang Seng Index is up 0.47% at 21678.00. In Japan, the Nikkei 225 is up 2.50 at 26791.12. While the Topix index is up 1.68% at 1934.93 South Korea’s Kospi is down 0.47% at 2368.32. Australia S&P/ASX 200 is up 0.96% at 7393.40.

Top News of the Day:

The dollar rose broadly on Thursday as growing concerns about the U.S. economy drove demand for the safe-haven greenback, while the yen rebounded as speculators doubled down on bets that the Bank of Japan would shift away from its yield curve control policy.

Weak U.S. data released on Wednesday showed that retail sales fell by the most in a year in December and manufacturing output recorded its most significant drop in nearly two years, stoking fears that the world’s largest economy is headed for a recession.

“Those weak data really reinforced market concerns about an imminent U.S. recession … (which) really supported the dollar, and I think that will become a growing narrative in the coming months,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia (CBA).

New Zealand Prime Minister Jacinda Ardern on Thursday made a shock announcement that she would step down no later than early February and not seek re-election.

Meanwhile, the greenback failed to eke out a gain against the Japanese yen. It was last 0.82% lower at 127.87 yen, unwinding its previous day’s rally in the immediate aftermath of the BOJ’s decision to stand pat on its ultra-loose monetary policy.

Market Summary as of 18/01/2023:

European equities Wednesday closing. The DAX futures contract in Germany traded down 0.03%% at 15181.80, and CAC 40 futures up 0.09% at 7083.39. UK 100 futures contract in the U.K. is down 0.26 at 7830.70

In the U.S. on Wall Street, the Dow Jones Industrial Average closed down 1.81% at 33296.96. The S&P 500 is down 1.56% at 3928.86 and the Nasdaq 100 is down 1.24% at 10957.01, NYSE closes 1.48% down at 15649.01.

Top Market News Today:

In the Forex market, GBPUSD is down 0.06% at 1.2334. The USDJPY is down 0.58% at 128.09, and The USDCHF is up 0.02 at 0.9161. EURUSD up 0.14% at 1.0808. EUR/GBP is up 0.24% at 0.8762. The USD/CNY is up 0.49% at 6.7775 at the time of writing.

In the Commodity market, U.S. Gold futures are up at 0.42% $1,911.86. Elsewhere, Silver futures are up 0.10% at $23.46 per ounce, Platinum up 0.34% at $1039.50 per ounce, and Palladium down 0.07% at $1720.94.

Brent Crude Oil is down 0.71% at $84.39 per barrel.

In the Cryptocurrency Markets, Bitcoin is at 20819.50 up by 0.70%, Ethereum is up 1.21% at 1529.14, and Litecoin is at 83.26 up by 0.75%, at the time of writing.

Top Market Segment to Watch Out for Today:

GOLD- The gold price has rebounded firmly and has surpassed the immediate resistance of $1,910.00 in the early European session. The precious metal is gaining strength amid falling returns on US government bonds.

Higher inflation and uncertain global growth prospects support Gold.

Economic News:

US: – U.S. Treasuries held by foreigners rose in November for the first time in three months, data from the U.S. Treasury department showed on Wednesday, as the decline in yields enhanced the allure of government debt for investors.

Foreign holdings advanced to $7.273 trillion in November, from a revised $7.131 trillion the previous month. The increase in holdings came after dropping in October to their lowest level since May 2021.

The benchmark 10-year Treasury yield started in November at 4.061% and ended at 3.701%.

Signs of ebbing inflation prompted the Federal Reserve to adopt a more dovish tone in November. Fed Chair Jerome Powell said on Nov. 30 that the U.S. central bank could ease the pace of interest rate hikes “as soon as December” but warned that the fight against inflation was far from over.

The increase in foreign buying was led by Japan, whose holdings expanded to $1.082 trillion in November from $1.064 trillion in October. Japan, the largest non-U.S. holder of U.S. government debt, reduced its load of Treasuries in the previous four months to defend the struggling yen.

Data also showed foreign inflows in U.S. stocks in November for the first time since December 2021. Foreigners bought $42.907 billion in November but sold $24.37 billion in October.

Euro Zone: –

British house prices registered the most widespread falls in 13 years last month as buyer demand and sales activity weakened more sharply than expected in the face of higher borrowing costs and the risk of a recession, a survey showed on Thursday.

The Royal Institution of Chartered Surveyors (RICS) house price balance, which measures the difference between the percentage of surveyors seeing rises and falls in house prices, slumped to -42 in December from -26 the previous month.

December’s figure was the lowest since October 2010 and below the -30 that economists had forecast in a Reuters poll.

Looking at the year ahead, the balance for price expectations edged down further from November.

Simon Rubinson, the chief economist at RICS, said the survey “highlights challenges in the housing market as new buyers grapple with more costly finance terms and uncertainty over the outlook of the economy.”

Prices fell across all English regions with East Anglia and the South East reporting the sharpest net balance declines.

Overall, in Britain, agreed sales continued to weaken, RICS said, falling to -41. New buyer inquiries dipped marginally while the number of people putting their houses up for sale was the weakest since September 2021.

The survey results echoed other signs of house price weakness. Mortgage lenders Halifax and Nationwide have both shown prices falling in monthly terms as inflation and rising interest rates squeeze home-buyers.

In contrast to property price falls, rents are expected to push up, RICS said. Demand in the rental market was set to slow further after sinking to its weakest in nearly two years last month, but fewer landlords were offering properties.

RICS also said sellers were putting a price premium on energy-efficient homes with more than half of respondents stating this was due to better market value retention.

Energy bills in Britain and other countries have soared in recent months, hitting disposable incomes for many households.

Top Economic Releases Today:

USD: Initial Jobless Claims Forecast 214K, Previous 205K at 19:00
USD: Building Permits (Dec) Forecast 1.370M, Previous 1.351M at 19:00
USD: Crude Oil Inventories Forecast –0.593M, Previous 18.962M at 21:30
EUR: ECB President Lagarde Speaks at 16:00
AUD: Employment Change (Dec) Actual –14.6K, Forecast 22.5K, Previous 58.3K at 06:00