Weekly Technical Analysis & Price Market Strategy

08 Jan

Weekly Technical Analysis & Price Market Strategy – 07 January 2023

/ CSFX Analytics

WEEKLY SNAPSHOT

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

WHEN: WHAT IT HAD INFLUENCED:

06 JANUARY 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 the forecast is generally supportive (bullish) for the EUR, while a weaker-than-forecast reading is generally negative (bearish) for the EUR.

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

ADP Nonfarm Employment Change (Dec), U.S.

WHEN: WHAT IT HAD INFLUENCED:

05 JANUARY 2023 USD and its subsequent pairs

WHAT HAPPENED: ADP performs payroll services for its clients. The ADP National Employment Report is a measure of the monthly change in non-farm, private employment, based on the payroll data of approximately 400,000 U.S. business clients. The release, two days ahead of government data, is used as a predictor of the government’s Labour Market Report.

A reading that is stronger than the 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.

TRADE BALANCE (Nov), CAD

WHEN: WHAT IT HAD INFLUENCED:

05 JANUARY 2023 CAD and its subsequent pairs

WHAT HAPPENED: The Trade Balance measures the difference in value between imported and exported goods and services over the reported period. A positive number indicates that more goods and services were exported than imported (a trade surplus). A negative number indicates that fewer goods and services were exported than imported (a trade deficit).

CADJPY is currently in the downward channel. The further downside can be seen in the coming week.

Gold rediscovers mojo after smaller U.S. jobs growth signals Fed rate slowing

WHAT IT HAD INFLUENCED:

GOLD

WHAT HAPPENED: The gold bull is back on track, with the yellow metal scaling near seven-month highs again Friday, as moderating U.S. jobs growth signalled more slowing of rate hikes by the Federal Reserve.

U.S. nonfarm payrolls grew by 223,000 last month, some 40,000 below November’s level and by the smallest number since the 199,000 positions added in December 2021, the Labor Department reported.

Last month’s payroll growth was still well above the 200,000 forecasts by economists, proving the tough job the Fed has in cooling a runaway jobs market that was feeding inflation.

But market punters still bet on the central bank doing a rate hike as small as 25 basis points at its next policy decision in February, after a 50-basis point hike in December and four back-to-back hikes of 75 basis points between June and November.

Gold futures’ benchmark February contract on New York’s Comex settled at $1,869.70 per ounce, up $29.10, or 1.6%, on the day. For the week, it rose 2.4%, rising for the sixth time in seven weeks. Friday’s session peak of $1,874.80 was the loftiest level for Comex gold since June 17.

The spot price of gold, which is more closely followed than futures by some traders, was at $1,868.94, up $35.89, or 2%, on the day. For the week, it rose 2.5%. Spot gold’s intraday peak of $1,869.76 on Friday was also the highest since June 17.

With this week’s ascent, spot gold seems on a stronger footing towards $1,900, said Sunil Kumar Dixit, chief technical strategist at SKCharting.com.

“Sustainability above the immediate support of $1,850 will add strength for the next leg higher of $1,878, above which $1,896 is a high probability target,” said Dixit.

The nonfarm payrolls report “supported the idea the Fed is almost done with raising rates,” Ed Moya, analyst at online trading platform OANDA, said.

A weaker reading for the U.S. ISM Services index in December also “confirms that [the] U.S. economy is showing further signs of weakening as the service sector shrinks, which should support the case for holding gold,” added Moya.

The dollar fell against a basket of major currencies while U.S. Treasury yields, benchmarked to the 10-year Treasury note, hit three-week lows, spurring gold bulls on.

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

Oil settles flat, with weekly decline on recession worries

WHAT IT HAD INFLUENCED:

CRUDE OIL

WHAT HAPPENED: Oil prices were little changed on Friday as the market balanced a weaker U.S. dollar and mixed U.S. jobs reports, but both crude benchmarks ended the first week of the year lower due to global recession concerns.

Brent futures fell 12 cents, or 0.2%, to settle at $78.57 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 10 cents, or 0.1%, to settle at $73.77.

For the week, both Brent and WTI were down over 8%, their biggest weekly dives to start the year since 2016. Both benchmarks had gained about 13% during the prior three weeks.

“The oil market might be regaining some composure following the bloodbath earlier this week, but the upside potential remains limited, at least in the near term. The economic outlook is clouded,” PVM analyst Stephen Brennock said.

U.S. services industry activity in November contracted for the first time in more than 2-1/2 years, according to a report from the Institute for Supply Management (ISM).

But another report showed the U.S. economy added jobs at a solid clip in December, pushing the unemployment rate back to a pre-pandemic low of 3.5% as the labour market remains tight.

That U.S. jobs report caused the U.S. dollar to fall and global stocks to rally as investors bet that inflation is easing and the U.S. Federal Reserve (Fed) need not be as aggressive as some feared.

A weaker dollar can boost demand for oil, as dollar-denominated commodities become cheaper for holders of other currencies.

Atlanta Federal Reserve (Fed) President Raphael Bostic said the latest U.S. jobs figures are another sign that the economy is gradually slowing and should that continue, the Fed can step down to a quarter percentage point interest rate hike at its next policy meeting.

The world’s top crude exporter, Saudi Arabia, lowered prices for the Arab light crude it sells to Asia to its lowest since November 2021 amid the global pressures hitting oil.

Stock markets in China, the world’s largest crude oil importer, logged a five-day winning streak on Friday on investors’ expectations that the Chinese economy would soon emerge from its COVID woes and stage a robust recovery in 2023.

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

FTX collapse leads Q4 2022 losses as hacks wipe out $3.7 billion from the crypto market

WHAT IT HAD INFLUENCED:

BITCOIN

WHAT HAPPENED: FTX and BNB Chain were responsible for about 75.3% of all losses noted between October to December 2022.

Immanent reported that of the overall $3.9 billion losses in 2022, $3.7 billion were lost due to hacks alone.

FTT price established another all-time low as the impact of the bankruptcy proceedings failed to initiate any recovery.

FTX not only brought unimaginable losses this year but also led the market in the same category. However, according to the report from Immune Fi, most of the losses were not even born out of FTX but still led the crypto space.

FTX collapsed in November, triggering one of the biggest crashes noted in the crypto market since its inception. But according to the latest report from Immune Fi, about $1.2 billion worth of losses came from FTX and BNB chain alone, representing more than 75% of the Q4 losses.

Overall, in the last 12 months, the market seems to have seen a lot resulting in total losses worth $3.9 billion. The leading cause of these losses, although seems to be hacked. Hacks accounted for about 92.6% of the $3.9 billion, leading to losses amounting to $3.7 billion.

Furthermore, among all the cryptocurrency blockchains, the BNB Chain and Ethereum were the primarily targeted chain. More than half of the blockchain attacks were focused on these chains, as the BNB chain suffered 18 incidents while Ethereum witnessed 14 incidents. Combined, they suffered 64% of all blockchain attacks in 2022.

BTC is currently trading at $16936.10 and ETH at $ 1266.05. BTC is down by 0.07% and ETH is down by 0.23% in the last 24 hours.

BITCOIN is trading in a down channel; a downside will be seen in the coming days.

5 KEY EVENTS TO WATCH OUT

Unemployment Rate (Nov), U.K.

WHEN: WHAT IT INFLUENCES:

09 JANUARY 2023 GBP and its subsequent pairs

WHAT’S HAPPENING: The Unemployment Rate measures the percentage of the total workforce that is not working, yet actively seeking employment. The data tends to have a muted impact as there are several earlier indicators related to labour conditions in the eurozone.

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

Core CPI (MoM) (Dec), U.S.

WHEN: WHAT IT INFLUENCES:

12 JANUARY 2023 USD and its subsequent pairs

WHAT’S HAPPENING: The Core Consumer Price Index (CPI) measures the changes in the price of goods and services, excluding food and energy. The Central bank pays very close attention to this figure in its role of maintaining price stability. Because the Fed believes that core inflation is a better gauge of underlying price pressures, it is more closely watched than overall inflation which tends to be more volatile.

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

Retail Sales (MoM) (Nov), AUD

WHEN: WHAT IT INFLUENCES:

11 JANUARY 2023 AUD 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 the forecast is generally supportive (bullish) for the AUD, while a weaker-than-forecast reading is generally negative (bearish) for the AUD.

Building Permits (MoM) (Nov), CAD

WHEN: WHAT IT INFLUENCES:

09 JANUARY 2023 CAD and its subsequent pairs

WHAT’S HAPPENING: Building Permits reports the change in the number of new building permits issued by the government relative to the prior month. Building permits are an important leading indicator of housing starts.

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

Building Consents (MoM) (Nov), NZD

WHEN: WHAT IT INFLUENCES:

12 JANUARY 2023 NZD and its subsequent pairs

WHAT’S HAPPENING: Building Consents (also known as Building Permits) measures the change in the number of new building permits issued by the government relative to the prior month. Building consents are a forward-looking indicator of new home construction.

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

EQUITIES IN THE COMING WEEK

UnitedHealth GROUP INCORPORATED (UNH) to announce its Quarterly Results on 13 JANUARY 2023, EPS is estimated to be 5.17 per share while revenue is estimated at 82.484B
JP MORGAN CHASE & C0. (JPM) to announce its Quarterly Results on 13 JANUARY 2023, EPS is estimated to be 3.11 per share while revenue is estimated at 34.292B
CITY GROUP, Inc. (C) to announce its Quarterly Results on 13 JANUARY 2023, EPS is estimated to be 1.19 per share while revenue is estimated at 17.929B.
KB HOME (KBH) to announce its Quarterly Results on 11 JANUARY 2023, EPS estimated to 2.87 per share while revenue estimated 1.985B
ALBERTSONS COMPANIES, Inc. (ACI) to announce its Quarterly Results on 10 JANUARY 2023, EPS estimated to 0.67 per share while revenue estimated 17.616B.