Weekly Technical Analysis & Price Market Strategy – 14 January 2023

15 Jan 2023

WEEKLY SNAPSHOT

Unemployment Rate (Nov), U.K.

WHEN: WHAT IT HAD INFLUENCED:

09 JANUARY 2023 GBP and its subsequent pairs

WHAT HAPPENED: The Unemployment Rate measures the percentage of the total work force 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 euro zone.

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.

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

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

WHEN: WHAT IT HAD INFLUENCED:

12 JANUARY 2023 USD and its subsequent pairs

WHAT HAPPENED: 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.

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

Retail Sales (MoM) (Nov), AUD

WHEN: WHAT IT HAD INFLUENCED:

11 JANUARY 2023 AUD 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 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 upward channel. Further upside can be seen in coming week.

Gold nears 9-month high and $1,950 test on softening U.S. inflation

WHAT IT HAD INFLUENCED:

GOLD

WHAT HAPPENED: Gold neared a nine-month high on Friday, approaching the key $1,950-an-ounce resistance, as softening U.S. inflation and rate hike expectations boosted contrarian safe-haven trades.

Gold for February delivery on New York’s Comex settled at $1,921.70, up $22.90, or 1.2%, on the day. Its session high of $1,925.25 was the loftiest for a front-month contract in Comex gold since the April 25 peak of $1,935.50.

U.S. gold futures have risen 5% since 2023 began, extending their near 4% gain from December and 7% from November.

Gold has rallied over the past three months as receding inflation drove bond yields and the dollar lower on expectations that the Federal Reserve will be a lot less aggressive with rate hikes this year versus 2022, and might even wrap its monetary tightening well before the end of 2023.

“Gold prices are rising as Wall Street grows confident that the Fed is almost done with raising rates,” said Ed Moya, analyst at online trading platform OANDA. “Non-interest-bearing gold is loving the slide in bond yields and that could continue as earnings come in softer-than-expected.”

The dollar sank to a seven-month low against a basket of currencies on Friday after data showed U.S. consumer price index inflation fell to its slowest pace in a year during December. The trend of softening inflation is likely to invite an eventual shift in the Fed’s hawkish rhetoric.

Growing expectations of this shift have spurred a sharp rally in gold since late-December, given that it heralds some relief for the yellow metal after it was battered by a sharp rise in interest rates throughout 2022.

Markets are now pricing in a nearly 95% chance that the Fed will hike rates by 25 basis points in its February meeting, according to the CME Group’s Fed Watch tool.

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

Oil posts biggest weekly gain since October on China hopes, dollar slump

WHAT IT HAD INFLUENCED:

CRUDE OIL

WHAT HAPPENED: Oil prices settled more than a dollar a barrel higher on Friday, notching their biggest weekly gains since October, as the U.S. dollar dropped to a seven-month low and more indicators pointed toward growing demand from top oil importer China.

Brent crude futures settled at $85.28 a barrel, up by $1.25, or 1.5%. West Texas Intermediate (WTI) crude futures rose for the seventh-straight session to settle at $79.86 a barrel, up by $1.47, or 1.9%.

Brent gained 8.6% this week, while WTI rose by 8.4%, recouping most of the previous week’s losses.

The U.S. dollar index slumped to the lowest in more than seven months, a day after data showed inflation fell in December for the first time in 2-1/2 years, feeding hopes the Federal Reserve would slow its rate hikes.

A weaker greenback tends to boost demand for oil, making it cheaper for buyers holding other currencies.

Recent Chinese crude purchases and a pick-up in road traffic in the country are also fuelling hopes of a demand recovery in the world’s second-largest economy following the reopening of its borders and easing of COVID-19 curbs after protests last year.

“Everyone is looking at Chinese mobility indicators and they point upward, indicating recovering oil demand and supporting prices,” said UBS analyst Giovanni Stankov.

“Next thing to watch is if this translates also into higher Chinese crude imports and if energy agencies (IEA, OPEC) revise upwards their (first quarter) demand estimates,” Stankov said.

The Organization of the Petroleum Exporting Countries and allies, including Russia, will meet in February to assess market conditions, and there is some concern that the group could cut oil output again to lift prices after recent declines.

“We have the seven-day winning streak under our belt… but we are still nowhere near where we were the last time OPEC+ folks cut production,” Mizuho analyst Robert Yawger said.

OPEC+ had announced a 2-million-barrel-per-day cut to production in October as global oil prices fell under $90 a barrel.

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

Total crypto market cap closes in on $1T right as Bitcoin price moves toward $20K

WHAT IT HAD INFLUENCED:

BITCOIN

WHAT HAPPENED: The total cryptocurrency market capitalization reached its highest level in over two months on Jan. 13 after breaking above the $900 billion mark on Jan. 12.

While the 15.5% year-to-date gain sounds promising, the level is still 50% below the $1.88 trillion crypto market cap seen before the Terra-Luna ecosystem collapsed in April 2022.

The global crypto market cap has risen more than 8% over the last 24 hours.

BTC has broken the psychological $20k level for the first time since November 2022.

The global crypto market cap has risen 8.69% over the last 24 hours according to Coin Market Cap. At press time, the global crypto market cap is estimated to be $982.81 billion. This increase in the crypto market cap is just a summary of the positive week that the crypto market has had over the past week.

All of the top 10 cryptos by market cap posted significant gains over the last 7 days. Leading the charge is the Ethereum killer, Solana (SOL), with its weekly gain of just over 78%. The altcoin’s price has also risen 40.37% over the last 24 hours.

Sentiment, the blockchain analytics firm, tweeted today. The tweet shared that the “altcoin party” has continued as the week comes to a close. Perhaps the key takeaway from the tweet is the fact that the market leader, Bitcoin (BTC), was on the verge of breaking its psychological level of $20k for the first time since November 7, 2022, at the time the tweet was made.

Currently, the market leader’s price has been able to break the psychological level and now stands at $20,864.96 following a 10.93% increase in price over the last 24 hours. In addition to the 24-hour rise, BTC’s price has also risen more than 23% in the past week.

BTC is currently trading at $20478.20 and ETH at $ 1517.31. BTC is up by 2.73% and ETH up by 4.52% 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

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

WHEN: WHAT IT INFLUENCES:

18 JANUARY 2023 GBP 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 EUR, while a weaker than forecast reading is generally negative (bearish) for the EUR.

PPI (MoM) (Dec), U.S.

WHEN: WHAT IT INFLUENCES:

18 JANUARY 2023 USD and its subsequent pairs

WHAT’S HAPPENING: The Producer Price Index (PPI) measures a change in input prices of raw, semi-finished or finished goods and services. If input costs rise, some will be absorbed by the producer and some passed on to the consumer. Conversely, if input costs fall, some of the decline will be enjoyed as wider profit margins by the producer and some will be passed on to the consumer in the form of lower prices. Because PPI impacts consumer prices, it is watched by central bankers as part of fulfilling their mandate of price stability.

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.

GDP (YoY) (Q4), CNY

WHEN: WHAT IT INFLUENCES:

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

Core CPI (MoM) (Dec), CAD

WHEN: WHAT IT INFLUENCES:

17 JANUARY 2023 CAD and its subsequent pairs

WHAT’S HAPPENING: The Core Consumer Price Index (CPI) measures the change in the prices of goods and services from the perspective of the consumer (excluding food and energy). The Central bank pays very close attention to this figure in its role of maintaining price stability, as it excludes the volatile food and energy components.

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.

BoJ Outlook Report (YoY)

WHEN: WHAT IT INFLUENCES:

18 JANUARY 2023 JPY and its subsequent pairs

WHAT’S HAPPENING: Bank of Japan Outlook Report provides insight into the BoJ’s view of economic conditions and inflation – key factors which shape the future of monetary policy.

EQUITIES IN THE COMING WEEK

PROCTER & GAMBLE COMPANY (PG) to announce its Quarterly Results on 19 JANUARY 2023, EPS estimated to 1.58 per share while revenue estimated 20.698B
MORGAN STANLY (MS) to announce its Quarterly Results on 17 JANUARY 2023, EPS estimated to 1.25 per share while revenue estimated 12.541B
NETFLIX, Inc. (NFLX) to announce its Quarterly Results on 19 JANUARY 2023, EPS estimated to 0.58 per share while revenue estimated 7.838B.
GOLDMAN SACHS GROUP, Inc. (GS) to announce its Quarterly Results on 17 JANUARY 2023, EPS estimated to 5.56 per share while revenue estimated 10.755B
SCHLUMBERGER N.V. (SLB) to announce its Quarterly Results on 20 JANUARY 2023, EPS estimated to 0.68 per share while revenue estimated 7.785B.