FUNDAMENTAL NEWS AND TECHNICAL ANALYSIS REPORT – 21 FEBRUARY 2023

21 Feb 2023

The dollar remains strong before the PMI data and the FOMC minutes

Asian stock market closes in green on Monday. The Shanghai Composite is in green at 2.06% at 3290.34. Overall, the Singapore MSCI is red by 0.96% at 300.45. Over in Hong Kong, the Hang Seng Index is up 0.81% at 20886.96. In Japan, the Nikkei 225 is up 0.07 at 27531.94. While the Topix index is up 0.39% at 1999.71, South Korea’s Kospi is up 0.16% at 2455.12. Australia S&P/ASX 200 up 0.64% at 7351.50.

Top News of the Day:

The U.S. dollar edged higher in early European trade Tuesday, retaining its recent strength as traders await more economic clues as to the resilience of the U.S. economy and the likely policy response from the Federal Reserve.

At 03:10 ET (08:10 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% higher at 104.002, not far removed from the six-week high of 104.67 hit on Friday.

Traders are likely to be out in force again Tuesday, after Monday’s U.S. holiday to celebrate Presidents’ Day, and will be looking to the release of more economic data to support the recent move higher in the dollar.

Tuesday’s key release will be PMI data for February, which are expected to show a small improvement from the previous month, but most eyes will be on the minutes of the last Fed meeting, earlier this month, due on Wednesday.

“The focus will be on how close the Fed was to hiking 50bp at that meeting,” said analysts at ING, in a note. “Watching Fed Chair Jerome Powell’s press conference at that meeting, he came across as relaxed and announced that the disinflation process had started. However, the market could be sensitive to suggestions that a 50bp hike had been a close call.”

Dollar bulls will also be keeping an eye on a press conference by Russian President Vladimir Putin as his invasion of Ukraine enters its second year. This follows U.S. President Joe Biden’s surprise trip to Kyiv on Monday, where he pledged his country’s support for as long as it is needed.

Market Summary as of 20/02/2023:

European equities Monday closing. The DAX futures contract in Germany traded down 0.03% at 15477.55, CAC 40 futures down 0.16% at 7335.61. UK 100 futures contract in the U.K. up 0.12 at 8014.31.

In the U.S. on Wall Street, the Dow Jones Industrial Average closed up 0.39% at 33826.69. The S&P 500 down 0.28% at 4079.09 and the Nasdaq 100 down 0.58% at 11787.27, NYSE 0.21% closes at 15840.16.

Top Market News Today:

In the Forex market, GBPUSD is down 0.07% at 1.2026. The USDJPY up 0.45% at 134.77, The USDCHF up 0.25 at 0.9252. EURUSD down 0.03% at 1.0682. EUR/GBP up 0.11% at 0.8880. The USD/CNY up 0.28% at 6.8725 at the time of writing.

In the Commodity market, U.S. Gold futures are down at 0.40% $1,832.40. Elsewhere, Silver futures down 0.50% at $21.68 per ounce, Platinum down 0.05% at $923.00 per ounce, and Palladium down 1.48% at $1493.00.

Brent Crude Oil is down 0.43% at $83.67 per barrel.

In the Cryptocurrency Markets, Bitcoin at 25060.80 up by 1.01%, Ethereum was up 0.15% at 1704.18, and Litecoin at 96.08 up 0.27%, at the time of writing.

Top Market Segment to Watch Out for Today:

BITCOIN- Bitcoin price is attempting an upside break above the $25,000 resistance. BTC could gain pace and rally if it settles above the $25,000 resistance zone. Bitcoin is struggling to clear the key $25,000 resistance zone. The price is trading below $24,500 and the 100 hourly simples moving average. There is a key bullish trend line forming with support near $24,580 on the hourly chart of the BTC/USD pair (data feed from Kraken). The pair could rally if there is a close above the $25,000 resistance zone. Bitcoin Price Eyes Upside Break Bitcoin price remained well supported above the $24,500 pivot zone.

Economic News:

US: – U.S. President makes use of the Presidents’ Day holiday to make a surprise visit to Ukraine, four days before the anniversary of Russia’s invasion. U.S. stock markets are closed, leaving most of the rest of the world without a clear lead. Facebook parent Meta is trailing a subscription service (and making sure that you know how much Apple and Alphabet will charge you for using it). Hedge fund Galois Capital has become the latest casualty of the FTX collapse, and oil prices drift higher as UN inspectors deal a blow to hopes of Iranian oil returning to world markets. Here’s what you need to know in financial markets on Monday, 20th February.

U.S. President Joe Biden made a surprise visit to the Ukrainian capital of Kyiv, at the start of a week that will mark the anniversary of Russia’s invasion.

Biden said his visit was to “reaffirm our unwavering and unflagging commitment to Ukraine’s democracy, sovereignty, and territorial integrity.”

Both sides in the conflict are currently engaged in a scramble to replace depleted stockpiles of ammunition. U.S. Secretary of State Anthony Blinken said at the weekend that China is considering supplying Russia with military aid and warned that any move to do so “would cause a serious problem for us and in our relationship.”

Russian President Vladimir Putin is due to make a keynote speech that is expected to focus on the war on Tuesday.

UK: – Britain’s government is unlikely to be able to tempt back to work people who retired early during the COVID-19 pandemic, as most are better-off and few people return to work after lengthy periods out of the labour force, a think-tank said on Tuesday.

The Resolution Foundation, which focuses on issues affecting low and middle earners, said the government would be better tackling issues such as the high cost of childcare and job support for current workers with poor physical or mental health.

Britain has seen a surge in the number of working-age people who are no longer in the labour market since the 2020 onset of the COVID-19 pandemic, prompting concern from both the government and the Bank of England.

Conservative finance minister Jeremy Hunt – who last month told The Times newspaper that over-50s should aspire to more than playing golf – is considering measures to boost labour force participation ahead of his March 15 budget.

“We need to reboot progress on getting people into work, but we’re not going to achieve it by persuading the recent COVID cohort of older workers to ‘unretire’,” Resolution Foundation economist Louise Murphy said.

“Instead, we need to do more to encourage mothers in low-income families into work and help people who need to take periods of time-off for ill-health stay attached to their jobs,” she added.

Only one-in-10 people aged 55 to 59 who left the workforce since the pandemic were claiming welfare benefits, so changes to eligibility rules were unlikely to bring many backs as workers, the think-tank said.

People who had been out of the labour force for two-and-a-half years – as is the case for those who retired in mid-2020 – historically had only a 2% chance of returning to work in the next three months, it added.

If the government wanted to make early retirement less attractive in future, the Resolution Foundation said it should consider increasing further the minimum age at which people can access funds they have paid into private pension plans. This stands at 55 and is due to rise to 57 in 2028.

Top Economic Releases Today:

USD: Existing Home Sales (Jan) Forecast 4.10M, Previous 4.02M at 20:30
CAD: Core CPI (MoM) (Jan) Forecast 0.2%, Previous –0.3% at 19:00
EUR: German Manufacturing PMI (Feb) Actual 46.5, Forecast 47.8, Previous 47.3 at 14:00
GBP: Service PMI Forecast 49.2, Previous 48.7 at 14:00
CAD: Core Retail Sales (MoM) (Dec) Forecast –0.3%, Previous –0.6% at 19:00