Weekly Technical Analysis & Price Market Strategy – 12 February 2023

12 Feb 2023

WEEKLY SNAPSHOT

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

WHEN: WHAT IT HAD INFLUENCED:

06 FEBRUARY 2023 GBP and its subsequent pairs

WHAT HAPPENED: 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 EUR, while a weaker-than-forecast reading is generally negative (bearish) for the EUR.

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

Initial Jobless Claims, U.S.

WHEN: WHAT IT HAD INFLUENCED:

09 FEBRUARY 2023 USD and its subsequent pairs

WHAT HAPPENED: Initial Jobless Claims measure 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.

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

RBA Interest Rate Decision (Feb), AUD

WHEN: WHAT IT HAD INFLUENCED:

07 FEBRUARY 2023 AUD and its subsequent pairs

WHAT HAPPENED: 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 the forecast is generally supportive (bullish) for the AUD, while a weaker-than-forecast reading is generally negative (bearish) for the AUD.

AUDUSD is trading in a downward channel. The further downside can be seen in the coming week.

Gold pinned at one-month low amid rate hike uncertainty

WHAT IT HAD INFLUENCED:

GOLD

WHAT HAPPENED: Gold prices hovered around a one-month low on Friday amid pressure from rising short-term yields, and were headed for a second consecutive weekly loss as markets reassessed their expectations of more interest rate hikes from the Federal Reserve.

The yellow metal struggled to recover from sharp losses logged last week – its worst week so far this year. A string of hawkish signals from Fed officials also kept the yellow metal under pressure, as Fed Chair Jerome Powell and several other speakers warned that interest rates will likely rise further.

But higher-than-expected unemployment claims data released overnight painted a mixed picture of the jobs market, given that a strong nonfarm payroll reading for January was what rattled gold markets last week.

Spot gold was flat at around $1,861.76 an ounce, while gold futures fell 0.3% to $1,872.80 an ounce by 19:39 ET (00:39 GMT). Both instruments were set to lose about 0.2% this week.

Uncertainty over a U.S. recession also grew, as a deepening inversion in the yield curve sent warning signs on the economy. Rising short-term yields also pressured non-yielding assets like gold.

A new year rally in gold now appears to have run out of steam, with investors reassessing their expectations for more interest rate hikes by the Federal Reserve. While a potential U.S. recession is expected to eventually benefit gold, the metal could face more short-term headwinds from rising interest rates.

Other precious metals were also pressured by higher yields. Platinum futures fell 0.1% to $959.65 an ounce, while silver futures plummeted 0.9% to $21.940 an ounce. Both metals were also headed for steep weekly declines.

Among industrial metals, copper prices were set for a muted week as fears of a looming recession were countered by some optimism over a demand recovery in China, the world’s largest importer of the red metal.

High-grade copper futures fell 0.1% to $4.0635 a pound and were set to end the week largely unchanged.

Focus this week is on Chinese inflation data to gauge whether spending picked up in January after the country relaxed most anti-COVID restrictions. The business activity saw a somewhat mixed recovery in January, data showed last week.

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

Oil prices rise over 2% on Russian plan to cut output

WHAT IT HAD INFLUENCED:

CRUDE OIL

WHAT HAPPENED: Oil prices rose more than 2% on Friday and posted weekly gains of over 8%, as Russia announced plans to reduce oil production next month after the West imposed price caps on the country’s crude and fuel.

Brent crude futures rose to settle at $1.89, or 2.2%, to $86.39 a barrel. U.S. West Texas Intermediate crude futures (WTI) were up $1.66, or 2.1%, at $79.72.

Brent posted a weekly gain of 8.1%, while WTI gained 8.6%.

Russia plans to reduce its crude oil production in March by 500,000 barrels per day (bpd), or about 5% of output, Deputy Prime Minister Alexander Novak said.

Western nations have imposed restrictions, trying to choke off Russia’s oil revenues in response to the country’s actions in Ukraine. The production cut indicates that the European Union’s recent price cap and ban on Russian oil products, which came into effect on Feb. 5, have had some impact.

Russia’s output last year defied predictions of a decline, but its oil sales will prove more difficult in the face of the new sanctions.

OPEC+ plans no action after Russia announced oil output cuts, two OPEC+ delegates told Reuters.

“In the very short-term, (Russia’s output cut) doesn’t mean very much as there’s significant refinery maintenance schedule dampening demand today, but as we go forward and world oil demand continues to recover, it increases the supply deficit,” said Andrew Lipow, president of consultants Lipow Oil Associates.

Economic concerns still pressured prices, with weak demand data from China and recession fears in the United States. Also limiting gains were a rise in weekly U.S. jobless claims and higher oil inventories.

Goldman Sachs Lowered its Brent 2023 price forecast to $92 a barrel from $98 and its 2024 price forecast to $100 from $105.

OPEC country officials told Reuters that oil may resume its rally in 2023 as Chinese demand recovers after COVID curbs were scrapped and lack of investment limits growth in supply, with a growing number seeing a possible return to $100 a barrel.

The total oil and gas rig count, an early indicator of future output, rose two to 761 in the week to Feb. 10.

The U.S. Commodity Futures Trading Commission (CFTC) will again postpone the publication of a weekly Commitments of Traders report due on Friday after a ransomware attack on a unit of ION Markets, the agency said in a statement.

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

Crypto traders panic sell $4.7 billion USDC for fiat on Coinbase, here’s what this means

WHAT IT HAD INFLUENCED:

BITCOIN

WHAT HAPPENED: Coinbase has burned $4.7 billion USDC converting the stablecoin to fiat in response to the actions of US regulators.

$330 USD million were burned within a 24-hour period.

Bitcoin whales are sending BTC back to exchanges while retail investors pull their holdings out of crypto platforms.

Coinbase, one of the largest cryptocurrency exchanges, witnessed a massive increase in the volume of USDC burned on its platform.

A wallet address burned – meaning converted $4.7 billion USDC to fiat – amidst rising uncertainty in crypto after the SEC leveled charges against Kraken.

Peck Shield, a blockchain intelligence firm, alerted crypto market participants of the $4.7 billion USDC burn which happened on Coinbase, within the last 24 hours.

Colin Wu, a Chinese reporter noted the move by crypto traders on Coinbase and interpreted this as “panic selling” caused by the actions of US regulators. US financial regulator, the Securities and Exchange Commission, charged cryptocurrency exchange platform Kraken for its crypto staking-as-a-service product.

The exchange settled for $30 million, while fear, uncertainty, and doubt about the future of crypto staking and liquid staking platforms prevail. Crypto market participants exchanged their stablecoins for fiat, in a risk-averse move, in the face of increasing regulatory crackdown in the US.

BTC is currently trading at $21681.20 and ETH at $ 1530.26 BTC is up by 0.24% and ETH is up by 0.48% in the last 24 hours.

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

5 KEY EVENTS TO WATCH OUT

GDP (QoQ) (Q4), U.K.

WHEN: WHAT IT INFLUENCES:

14 FEBRUARY 2023 GBP and its subsequent pairs

WHAT’S HAPPENING: Gross Domestic Product (GDP) gauges the inflation-adjusted value of all goods and services produced within the economy. It is the most comprehensive measure of economic activity and an important indicator of economic health.

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.

Retail Sales (MoM) (Jan), U.S.

WHEN: WHAT IT INFLUENCES:

15 FEBRUARY 2023 USD 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 USD, while a weaker-than-forecast reading is generally negative (bearish) for the USD.

Employment Change (Jan), AUD

WHEN: WHAT IT INFLUENCES:

16 FEBRUARY 2023 AUD and its subsequent pairs

WHAT’S HAPPENING: Employment Change reports the change in the number of people employed across Australia. Jobs and the income they generate is an important factors in consumer spending.

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.

Manufacturing Sales (MoM) (Dec), CAD

WHEN: WHAT IT INFLUENCES:

15 FEBRUARY 2023 CAD and its subsequent pairs

WHAT’S HAPPENING: Manufacturing Sales reports the change in the value of sales made by manufacturers across Canada.

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.

GDP (QoQ) (Q4), JPY

WHEN: WHAT IT INFLUENCES:

14 FEBRUARY 2023 JPY and its subsequent pairs

WHAT’S HAPPENING: Gross Domestic Product (GDP) measures the change in the inflation-adjusted value of all goods and services produced by the economy. It is the broadest measure of economic activity and the primary indicator of the economy’s health.

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

EQUITIES IN THE COMING WEEK

CISCO SYSTEMS, INC. (CSCO) to announce its Quarterly Results on 15 FEBRUARY 2023, EPS estimated to 0.85 per share while revenue estimated 13.419B
SHOPIFY, INC. (SHOP) to announce its Quarterly Results on 15 FEBRUARY 2023, EPS estimated to –0.01 per share while revenue estimated 1.65B.
ENERGY TRANSFER LP (ET) is to announce its Quarterly Results on 15 FEBRUARY 2023, EPS is estimated to be 0.39 per share while revenue is estimated at 24.194B.
EXELON CORPORATION (EXC) to announce its Quarterly Results on 14 FEBRUARY 2023, EPS estimated to 0.43 per share while revenue estimated 4.115B
ANALOG DEVICES, INC (ADI) to announce its Quarterly Results on 15 FEBRUARY 2023, EPS estimated to 2.61 per share while revenue estimated 3.151B.