Fundamental News And Technical Analysis Report

24 Jan

Fundamental News And Technical Analysis Report – 24 January 2023

/ CSFX Analytics

The dollar struggles as the euro approach a nine-month high and the yen rise.

Asian stock market closes in green on Monday. The Shanghai Composite is up 0.76% at 3264.81. Overall, the Singapore MSCI is up 0.69% at 303.88. Over in Hong Kong, the Hang Seng Index is up 1.82% at 22044.65. In Japan, the Nikkei 225 is up 1.33 at 26906.04. While the Topix index is up 0.96% at 1945.38 South Korea’s Kospi is up 0.63% at 2395.26. Australia S&P/ASX 200 is up 0.68% at 7457.30.

Top News of the Day:

The dollar hovered near a nine-month low to the euro and gave back recent gains against the yen on Tuesday, as traders weighed the risks of a U.S. recession and the path for Federal Reserve policy.

The U.S. dollar index – which measures the greenback against a basket of six peers, including the euro and yen – slipped 0.12% to 101.89, heading back towards the 7-1/2-month low of 101.51 reached last week.

The euro added 0.08% to $1.0880, taking it closer to Monday’s peak of $1.0927, the strongest since April.

“The U.S. is no longer the cleanest shirt in the global economic laundry,” said Ray Attrill, head of the foreign-exchange strategy at National Australia Bank (OTC: NABZY), who expects the dollar index to fall to 100 by end-March and the euro to rise to $1.10.

“That’s integral to our bearish U.S. dollar view, that the U.S. is not going to be the global growth leader.”

Money market traders see only two more quarter-point rate hikes by the Fed to a peak of around 5% by June, with two quarter-point cuts following before year-end. The Fed has insisted 75 basis points of more tightening is likely on the way.

By contrast, Europe’s single currency has been buoyed by comments from European Central Bank officials pointing to further aggressive policy tightening.

The latest was ECB President Christine Lagarde, who on Monday reiterated that the central bank will keep raising interest rates quickly to slow inflation, which remains far too high.

Market Summary as of 23/01/2023:

European equities Monday closing. The DAX futures contract in Germany traded up 0.46% at 15102.95, CAC 40 futures up 0.52% at 7032.02. UK 100 futures contract in the U.K. is up 0.18 at 7784.67

In the U.S. on Wall Street, the Dow Jones Industrial Average closed up 0.76% at 33629.56. The S&P 500 up 1.19% at 4019.81, the Nasdaq 100 was up 2.01% at 11364.41, and the NYSE 0.65% close at 15880.09.

Top Market News Today:

In the Forex market, GBPUSD up 0.23% at 1.2401. The USDJPY is down 0.63% at 129.81, The USDCHF down 0.16 at 0.9201. EURUSD up 0.16% at 1.0886. EUR/GBP up 0.00% at 0.8778. The USD/CNY up 0.01% at 6.7820 at the time of writing.

In the Commodity market U.S. Gold futures up at 0.49% $1,940.26. Elsewhere, Silver futures up 0.94% at $23.67 per ounce, Platinum up 0.60% at $1053.50 per ounce, and Palladium up 0.44% at $1713.00.

Brent Crude Oil down 0.19% at $88.00 per barrel.

In the Cryptocurrency Markets, Bitcoin at 23057.70 up at 0.60%, Ethereum up 0.53% at 1635.23, Litecoin at 90.76 up 0.91%, at the time of writing.

Top Market Segment to Watch Out for Today:

BITCOIN– The cryptocurrency market was trading higher on Tuesday. Bitcoin (BTC) rose 1.48% and held above the $23,000 mark. BTC volume in the last 24 hours stood at approximately $26.82 billion, rising 12.78% over the previous 24 hours. The global cryptocurrency market cap was trading higher around $1.06 trillion, rising 1.27% during the previous 24 hours.

Economic News:

US: – President Joe Biden will veto a bill by U.S. House of Representatives Republicans on the Strategic Petroleum Reserve (SPR) if it passes Congress, Energy Secretary Jennifer Granholm said on Monday.

In a letter last week, Granholm warned Republicans that limiting the Democratic president’s authority to tap the nation’s oil reserves would undermine national security, cause crude oil shortages, and raise gasoline prices.

“He will not allow the American people to suffer because of the backward agenda that House Republicans are advancing” Granholm, speaking to reporters at a White House briefing, said of Biden.

The bill, called HR21, would prohibit the energy secretary from tapping the SPR without producing a plan to increase oil and gas leasing on federal lands – unless the release is for a severe oil supply emergency.

The House, which Republicans control by a narrow margin, is expected to vote on the bill as soon as this week. The legislation would face an uphill battle in the Senate, controlled by Democrats.

Republican lawmakers say they are concerned that last year’s releases from the SPR, the biggest amount of crude oil from any president, have deteriorated the ability to store, pipe, and pump oil at the SPR, which holds crude across a series of underground natural caverns on the Texas and Louisiana coasts.

“We would like to curtail the use of the SPR for only those situations where there’s a severe supply interruption,” a Republican aide to the House Committee on Energy and Commerce told reporters.

Biden tapped the SPR repeatedly last year in response to oil prices that jumped due to Russia’s invasion of Ukraine and as travel increased while the COVID-19 pandemic eased.

Biden announced last March a record 180-million-barrel sale over six months that drove the reserve’s level to its lowest since late 1983.

The Energy Department this month rejected the first batch of bids from oil companies to resupply a small amount of crude to the SPR.

Euro Zone: – European Central Bank policymakers laid out diverging views on future interest rate hikes on Monday, suggesting that moves beyond next week’s half-a percentage point increase remain contentious.

The ECB promised in December a steady pace of 50 basis point increases spanning multiple meetings to combat sky high inflation but markets have been doubting its resolve and pricing for March has been oscillating between 25 and 50 basis point increases as policymakers speak.

The Dutch and Slovak central bank governors gave explicit support for a bigger move in March while ECB President Christine Lagarde also appeared to back such an increase.

But their Italian and Greek colleagues made the case for a more cautious stance in a flurry of comments just days before the bank’s quiet period starts ahead of the Feb. 2 meeting.

Lagarde aimed to put to bed this debate last week when she told investors to “revise their positions” as her guidance was unchanged and market pricing moved up, even if some doubts still lingered.

Slovak central bank chief Peter Kazimir, an outspoken hawk, said back-to-back 50 basis points moves are still needed and policy tightening could be done by the summer.

“An inflation drop in two consecutive months is good news. But it is not a reason to slow the tempo of raising interest rates,” Kazimir said in a statement on Monday. “I am convinced that we need to deliver two more hikes by 50 basis points.”

Klaas Knot, his Dutch counterpart, made a similarly explicit statement over the weekend, promising more hikes beyond March.

“Expect us to raise rates by 0.5% in February and March and expect us to not be done by then and that more steps will follow in May and June,” Knot said.

Speaking again on Monday, Lagarde said rates will have to “rise significantly at a steady pace,” as she said earlier, but made no explicit reference to March, even if her earlier comments suggest back-to-back moves.

“We will stay the course to ensure the timely return of inflation to our target.”

Inflation, now around 9%, is seen jumping again in January before a gradual drop in the coming years that could still see price growth above the ECB’s target until 2025.