Weekly Technical Analysis & Price Market Strategy

05 Feb

Weekly Technical Analysis & Price Market Strategy – 05 February 2023

/ CSFX Analytics

WEEKLY SNAPSHOT

CPI (YoY) (Jan), U.K.

WHEN: WHAT IT HAD INFLUENCED:

1 FEBRUARY 2023 GBP and its subsequent pairs

WHAT HAPPENED: The Consumer Price Index (CPI) measures the change in the prices of goods and services contained in a basket of consumer items. The Central bank pays very close attention to this figure in its role of maintaining price stability.

A reading that is stronger than forecast is generally supportive (bullish) for the EUR, while a weaker than forecast reading is generally negative (bearish) for the EUR.

GBPTRY is trading in an upward channel. Further upside can be seen in the coming week.

Fed Interest Rate Decision, U.S.

WHEN: WHAT IT HAD INFLUENCED:

02 FEBRUARY 2023 USD and its subsequent pairs

WHAT HAPPENED: Federal Open Market Committee (FOMC) members vote on where to set the target interest rate. Traders watch interest rate changes closely as relative short term interest rates are a primary factor in currency valuation.

A reading that is stronger than forecast is generally supportive (bullish) for the USD, while a weaker than forecast reading is generally negative (bearish) for the USD.

USDZAR is currently in the upward channel. Further upside can be seen in the coming week.

GDP (MoM) (Nov), CAD

WHEN: WHAT IT HAD INFLUENCED:

31 JANUARY 2023 CAD and its subsequent pairs

WHAT HAPPENED: Gross Domestic Product (GDP) reports the annualised change in the inflation-adjusted value of all goods and services produced by the Canadian economy. It is the broadest measure of economic activity and the primary indicator of the economy’s health. Canada releases fresh GDP data on a monthly basis.
A reading that is stronger than forecast is generally supportive (bullish) for the CAD, while a weaker than forecast reading is generally negative (bearish) for the CAD.

CADUSD is trading in downward channel. Further downside can be seen in coming week.

Gold down 3%, way off $2,000 target after blockbuster U.S. jobs report

WHAT IT HAD INFLUENCED:

GOLD

WHAT HAPPENED: Gold tumbled almost 3% on Friday after a blockbuster U.S. jobs report for January triggered profit-taking on the precious metal’s long-running rally, putting it way off the $2,000-an-ounce target eyed by bulls in the space.

Gold for April delivery on New York’s Comex settled at $1,868.30 an ounce, down $53.90, or 2.8%. It hit a four-week low of $1,874.55 during the session.

Gold’s plunge came after the U.S. Labor Department reported an NFP, or non-farm payrolls, growth for January that was almost three times above forecast, throwing a fresh challenge to the Federal Reserve’s hopes of seeing a cooling of the labour market and wages to get inflation to its target. Some 517,000 jobs were added last month versus a forecast 188,000 and against December’s 223,000.

“Gold bears now are confident of taking control of the market and will try to push deeper into $1,866-$1,862 as their next station,” said Dixit. “On the flip side, any bounce towards $1,900-$1,920 will be relief for some of longs.”

While policymakers the world over typically celebrate seeing good jobs numbers, the Fed is in a different predicament. The central bank wishes to see an easing of conditions that are a little “too good” now for the economy’s own good — in this case, unemployment at more than 50-year lows and average monthly wages that have grown without stop since March 2021.

Such job security and earnings have cushioned many Americans from the worst price pressures since the 1980s and encouraged them to continue spending, further feeding inflation.

Inflation, as measured by the CPI, or Consumer Price Index, hit four-decade highs in June when it expanded at 9.1% yearly. In December, the CPI grew at 6.5% per annum, its slowest since October 2021. Yet, that was more than three times the Fed’s target.

GOLD is trading in up channel; a upside will be seen in the coming days.

Oil falls about 3% as strong U.S. jobs data prompt interest rate concerns

WHAT IT HAD INFLUENCED:

CRUDE OIL

WHAT HAPPENED: Oil prices fell to over three-week lows on Friday in a volatile session, after strong U.S. jobs data raised concerns about higher interest rates and as investors sought more clarity on the imminent EU embargo on Russian refined products.

Brent crude futures fell $2.23, or 2.7%, to $79.94 a barrel, after rising to a session high of $84.20. It hit a session low of $79.72, its lowest since Jan. 11.

U.S. West Texas Intermediate crude (WTI) ended down $2.49, or 3.3%, at $73.39, after trading between $78.00 and $73.13, its lowest since Jan. 5.

Brent registered a 7.8% decline this week while WTI dropped 7.9%.

U.S. job growth accelerated sharply in January amid a persistently resilient labour market, but a further moderation in wage gains should give the Federal Reserve some comfort in its fight against inflation.

“The market can’t decide whether it should be nervous about a recession or more worried about the Federal Reserve being aggressive with interest rates,” said Phil Flynn, analyst at Price Futures Group.

The U.S. central bank on Wednesday scaled back to a milder rate increase than those over the past year, but policymakers also projected that “ongoing increases” in borrowing costs would be needed.

Increases in interest rates in 2023 are likely to weigh on the U.S. and European economies, boosting fears of an economic slowdown that is highly likely to dent global crude oil demand, said Priyanka Sachdeva, market analyst at Phillip Nova.

European Union countries agreed to set price caps on Russian refined oil products to limit Moscow’s funds for its invasion of Ukraine, the Swedish presidency of the EU said on Friday.

Meanwhile, ANZ analysts noted a sharp jump in traffic in China’s 15 largest cities after the Lunar New Year holiday but said that Chinese traders had been “relatively absent.”

The U.S. Commodity Futures Trading Commission said on Thursday that as a result of the ransomware attack on ION Trading UK, the CFTC’s weekly Commitments of Traders report will be delayed until all trades can be reported. CFTC reports provide a snapshot of investor positioning on various assets, including oil.

WTI CRUDE OIL is trading in a down channel; a downside will be seen in the coming days.

Nonfarm Payrolls on the radar after Powell’s speech propels BTC higher

WHAT IT HAD INFLUENCED:

BITCOIN

WHAT HAPPENED: Bitcoin (BTC) price is at an inflection point as it continues to rally amid multiple sell signals on lower time frames. The Nonfarm Payrolls (NFP) report, including the unemployment rate and average hourly earnings, is set to be announced on February 3 at 1330 GMT. This high-impact macro event, like the FOMC and interest rate decision events on February 1 and 2, will probably induce high levels of volatility in the markets and will help set the tone for the next move.

Economists estimate that the Nonfarm Payrolls report will show the addition of 185,000 jobs in January, as compared to December’s 223,000. Although this will mean a net decline, if the real figure comes in lower than expectations, it would be indicative of a weakening economy and hence bad for the US Dollar. This would inadvertently cause risk-on assets like Bitcoin to rally since BTC is inversely correlated to USD.

Bitcoin price was hovering around $23,000 before the US Federal Reserve hiked interest rates by 25 basis points on January 31, but went on to rally 5.1% after the announcement. In his speech, US Federal Reserve Chairman Jerome Powell adopted a hawkish tone, but some dovish comments took precedence, causing a rally among risk-on assets.

One of the more significant comments from Powell was that this was the first time the Fed had noticed “the start of a disinflationary process.”

The Fed Chair also mentioned that the board of governors did not see the need to overtighten policy.

BTC is currently trading at $23322.80 and ETH at $ 1655.71 BTC is down by 0.47% and ETH down by 0.48% in the last 24 hours.

BITCOIN is trading in a up channel; a upside will be seen in the coming days.

5 KEY EVENTS TO WATCH OUT

Retail Sales (MoM) (Dec), U.K.

WHEN: WHAT IT INFLUENCES:

06 FEBRUARY 2023 GBP and its subsequent pairs

WHAT’S HAPPENING: Retail Sales gauges the change in the aggregate value of sales at the retail level across the country. It is an important indicator of consumer spending accounting for the majority of overall economic activity.

A reading that is stronger than forecast is generally supportive (bullish) for the EUR, while a weaker than forecast reading is generally negative (bearish) for the EUR.

Initial Jobless Claims, U.S.

WHEN: WHAT IT INFLUENCES:

09 FEBRUARY 2023 USD and its subsequent pairs

WHAT’S HAPPENING: Initial Jobless Claims measures the number of people who filed for unemployment insurance for the first time during the past week. This is the timeliest U.S. economic data, but the market impact varies from week to week.

A reading that is higher than forecast is generally negative (bearish) for the USD, while a lower-than-forecast reading is generally supportive (bullish) for the USD.

RBA Interest Rate Decision (Feb), AUD

WHEN: WHAT IT INFLUENCES:

07 FEBRUARY 2023 AUD and its subsequent pairs

WHAT’S HAPPENING: The Reserve Bank of Australia (RBA) reports its decision on where to set the benchmark interest rate. As short-term interest rates are an important determinant of currency valuation, traders watch interest rate changes closely.

A reading that is stronger than forecast is generally supportive (bullish) for the AUD, while a weaker-than-forecast reading is generally negative (bearish) for the AUD.

Ivey PMI (Jan), CAD

WHEN: WHAT IT INFLUENCES:

06 FEBRUARY 2023 CAD and its subsequent pairs

WHAT’S HAPPENING: The Ivey Purchasing Managers’ Index (PMI) is a diffusion index incorporating survey results conducted on companies throughout the country. A reading above fifty suggests the manufacturing sector is expanding, while a reading below fifty suggests the manufacturing sector is in contraction. Policymakers and traders watch these surveys closely as purchasing managers usually have early access to data about their company’s performance, rather than waiting for the hard data to emerge.

A reading stronger than the forecast is generally supportive (bullish) for the CAD, while a weaker one is generally negative (bearish) for the CAD.

CPI (YoY) (Jan), CNY

WHEN: WHAT IT INFLUENCES:

10 FEBRUARY 2023 CNY and its subsequent pairs

WHAT’S HAPPENING: The Consumer Price Index (CPI) measures the change in the prices of goods and services contained in a basket of consumer items. The Central bank pays very close attention to this figure in its role of maintaining price stability.

A reading that is stronger than forecast is generally supportive (bullish) for the CNY, while a weaker-than-forecast reading is generally negative (bearish) for the CNY.

EQUITIES IN THE COMING WEEK

ABBVIE INC. (ABBV) to announce its Quarterly Results on 09 FEBRUARY 2023, EPS estimated to 3.53 per share while revenue estimated 15.328B
PEPSICO, INC. (PEP) to announce its Quarterly Results on 09 FEBRUARY 2023, EPS estimated to 1.65 per share while revenue estimated 26.837B
WALT DISNEY COMPANY (DIS) to announce its Quarterly Results on 08 FEBRUARY 2023, EPS estimated to 0.79 per share while revenue estimated 24.437B.
PAYPAL HOLDINGS INC. (PYPL) to announce its Quarterly Results on 09 FEBRUARY 2023, EPS estimated to 1.20 per share while revenue estimated 7.39B
FISERV, INC (FISV) to announce its Quarterly Results on 07 FEBRUARY 2023, EPS estimated to 1.91 per share while revenue estimated 4.347B.