FUNDAMENTAL NEWS AND TECHNICAL ANALYSIS REPORT – 31 JANUARY 2023

31 Jan 2023

As a Fed meeting approaches, the dollar is expected to decline for a fourth consecutive month

Asian stock market closes in red on Monday. The Shanghai Composite is up 0.14% at 3269.32. Overall, the Singapore MSCI is down 0.65% at 306.55. Over in Hong Kong, the Hang Seng Index is down 2.73% at 22069.73. In Japan, the Nikkei 225 is up 0.19 at 27433.40. While the Topix index is down 0.13% at 1982.40, South Korea’s Kospi is down 1.35% at 2450.47. Australia S&P/ASX 200 down 0.16% at 7481.70.

Top News of the Day: –

The dollar was eyeing a fourth monthly loss on Tuesday as investors reckon a peak in U.S. interest rates could swing into view as soon as this week’s Federal Reserve meeting.

Currency trade was subdued in the lead up to Wednesday’s Fed rate decision, and ahead of Bank of England and European Central Bank rate decisions on Thursday, though cautiousness across financial markets gave the greenback a bit of support.

The euro wandered as far as $1.0913 on Monday after data showed Spanish inflation running surprisingly hot in January, though the broader mood has reeled it back to $1.0845.

The common currency is up 1.3% this month and is loitering near a nine-month peak. The U.S. dollar index is down 1.3% for January so far and held at 102.28 on Tuesday.

Market Summary as per 30/01/2023:

European equities Monday closing. The DAX futures contract in Germany traded down 0.16% at 15126.08, CAC 40 futures down 0.21% at 7082.01. UK 100 futures contract in the U.K. up 0.25 at 7784.87.

In the U.S. on Wall Street, the Dow Jones Industrial Average Closed down 0.77% at 33717.09. The S&P 500 down 1.30% at 4017.77 and the Nasdaq 100 down 1.96% at 11393.81, NYSE 0.90% closes at 15818.90.

Top Market News Today:

In the Forex market, GBPUSD down 0.02% at 1.2349. The USDJPY down 0.167% at 130.07, The USDCHF up 0.13 at 0.9255. EURUSD down 0.06% at 1.0841. EUR/GBP down 0.10% at 0.8775. The USD/CNY up 0.13% at 6.7565 at the time of writing.

In the Commodity market U.S. Gold futures down at 0.46% $1,914.83. Elsewhere, Silver futures down 1.36% at $23.26 per ounce, Platinum down 1.34% at $995.50 per ounce, and Palladium down 1.24% at $1621.35.

Brent Crude Oil down 0.73% at $83.86 per barrel.

In the Cryptocurrency Markets, Bitcoin at 22963.20 up at 0.57%, Ethereum up 0.84% at 1579.46, Litecoin at 94.40 up 3.30%, at the time of writing.

Top Market Segment to Watch Out Today:

GOLD- Gold prices retreated on Tuesday, coming under pressure from a stronger dollar as caution kicked in ahead of a Federal Reserve meeting this week, while broader metal markets also ticked lower.

The yellow metal marked a slow start to the week ahead of the conclusion of a two-day Fed meeting on Wednesday, where the bank is widely expected to raise interest rates by 25 basis points.

But its outlook on monetary policy will be a key point of focus, as recent economic data from the U.S. suggested that the central bank may have enough headroom to raise interest rates further.

Economic News:

US: – The U.S. government likely awarded about $5.4 billion in COVID-19 aid to people with questionable Social Security numbers, a federal watchdog said in a report released on Monday.

The watchdog, the Pandemic Response Accountability Committee (PRAC), said it “identified 69,323 questionable Social Security Numbers (SSNs) used to obtain $5.4 billion from the Small Business Administration’s (SBA) COVID-19 Economic Injury Disaster Loan (COVID-19 EIDL) program and Pay check Protection Program (PPP).”

The loans were disbursed between April 2020 and October 2022, the watchdog said in its report, which comes ahead of a scheduled Wednesday hearing by the Republican-led House of Representatives Oversight Committee on fraud in pandemic spending.

About 57,500 Pay check Protection Program forgivable loans worth $3.6 billion were disbursed by August 2020, the report added.

The United States is probing many fraud cases pegged to U.S. government assistance programs, such as the Pay check Protection Program, unemployment insurance and Medicare. In May 2021, Attorney General Merrick Garland launched a COVID-19 Fraud Enforcement Task Force.

Last year, the U.S. Justice Department tapped federal prosecutor Kevin Chambers to lead its efforts to investigate fraudsters who used the pandemic as an excuse to bilk government assistance programs.

The report demonstrates “the significant fraud and identity theft that occurred under the prior administration due to the lack of basic anti-fraud controls, as well as how consequential were the Biden administration’s quick actions to reinstate strong anti-abuse measures in these emergency small business programs,” Gene Sperling, a senior adviser to President Joe Biden said in an emailed statement.

The watchdog report mentioned that in 2021 the U.S. Small Business Administration made improvements to its assistance program controls. Biden took office in January that year.

In September, the inspector general for the U.S. Labor Department said fraudsters likely stole $45.6 billion from the United States’ unemployment insurance program during the coronavirus outbreak by applying tactics like using Social Security numbers of deceased individuals.

Also in September, federal prosecutors charged dozens of defendants, who were accused of stealing $250 million from a government aid program that was supposed to feed children in need during the pandemic.

Euro Zone: –
British grocery inflation hit a record 16.7% in the four weeks to Jan. 22, dealing another blow to consumers battling an escalating cost-of-living crisis, industry data showed on Tuesday.

Market researcher Kantar said grocery inflation was at its highest since it started tracking the figure in 2008, with prices rising fastest in markets such as milk, eggs and dog food.

It said UK households now face an additional 788 pounds ($974) on their annual shopping bills if they don’t change their behaviour to cut costs.

“Late last year, we saw the rate of grocery price inflation dip slightly, but that small sign of relief for consumers has been short-lived,” Fraser Mckevitt, Kantar’s head of retail and consumer insight said, noting the figure jumped a “staggering” 2.3 percentage points from December’s reading.

After a tough 2022, British consumers are facing an even tighter squeeze on their finances this year, as government support on household energy bills is scaled back and mortgage rates rise.

The Bank of England is expected to raise its main interest rate by half a percentage point to 4% on Thursday.

Kantar said sales of supermarkets’ own-label lines grew 9.3% in January, while sales of branded products, which are generally more expensive, were up by just 1.0%.

Market leader Tesco (LON: TSCO), Sainsbury’s and Morrisons have all said inflation for their customers is less than Kantar’s headline number as they dial-out some of the hit through trading down to cheaper items.

With supermarkets focusing on price matching schemes and leveraging their loyalty programmes, the proportion of spending on promotions dropped to its lowest level since at least 2008, Kantar noted.

It said that over the 12 weeks to Jan. 22, UK grocery sales rose 7.6% year-on-year, masking a drop in volumes when accounting for inflation.

Top Economic Releases Today:

USD: CB Consumer Confidence (Jan) Forecast 109.0, Previous 108.3 at 20:30
AUD: Retail Sales (MoM) (Dec) Actual –3.9%, Forecast –0.3%, Previous 1.4% at 06:00
CNY: Manufacturing PMI (Jan) Actual 50.1, Forecast 49.8, Previous 47.0 at 07:00
EUR: German CPI (YoY) (Jan) Forecast 9.2%, Previous 8.6% at 18:30
CAD: GDP (MoM) (Nov) Forecast 0.1%, Previous 0.1% at 19:00