WEEKLY TECHNICAL ANALYSIS & PRICE MARKET STRATEGY

18 Dec

WEEKLY TECHNICAL ANALYSIS & PRICE MARKET STRATEGY – 18 December 2022

/ CSFX Analytics

WEEKLY SNAPSHOT

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

WHEN: WHAT IT HAD INFLUENCED:

16 DECEMBER 2022 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.

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:

15 December 2022 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.

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

GDP (QoQ) (Q3), NZD

WHEN: WHAT IT HAD INFLUENCED:

15 December 2022 NZD and its subsequent pairs

WHAT HAPPENED: 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.

AUDNZD is currently in the downward channel. Further downside can be seen in the coming week.

Gold fails to catch a bid above $1,800 as recession fears grow

WHAT IT HAD INFLUENCED:

GOLD

WHAT HAPPENED: Gold prices were muted on Friday after logging sharp losses in the prior sessions as growing fears of a recession were compounded by signals from several major central banks that interest rates were far from peaking.

While the yellow metal had caught some bids earlier this week on signs of easing U.S. inflationary pressures, it swiftly reversed this trend after the Fed warned that U.S. interest rates will likely peak at higher-than-expected levels. This was followed by the European Central Bank also signalling that it will continue raising rates, with headline inflation continuing to trend above the bank’s target range.

A batch of weak U.S. and euro zone economic data also showed that both economies are struggling under the yoke of high inflation and rising interest rates.

The yellow metal was also set to lose around 1.1% this week, rattled by a recovery in the dollar as investors sought safe haven in the greenback.

Gold has largely lost its status as a safe haven this year, as rising U.S. interest rates pushed up the opportunity cost of holding non-yielding assets. This saw the dollar largely overtake gold as the market’s favoured safe haven, despite growing fears of a U.S. recession.

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

Oil slumps by over $2/barrel, dogged by recession fears

WHAT IT HAD INFLUENCED:

CRUDE OIL

WHAT HAPPENED: Oil fell by about $2 per barrel on Friday, swept up in a wider rout in global equities on fears of a looming recession, after central banks across Europe and North America signalled, they will continue to battle inflation aggressively.

The U.S. Federal Reserve indicated it will raise interest rates further next year, even as the economy slips toward a possible recession. On Thursday, the Bank of England and the European Central Bank also raised interest rates to fight inflation.

“The talk around the campfire has suddenly become all about demand destruction in the face of a recession,” said Robert Yawger, director of energy futures at Mizuho.

“The economic situation is less than stellar. Not today, but we are drifting in the direction of testing $70-per-barrel WTI again, and things could get very ugly from there.”

Brent futures are still on pace for their biggest weekly gains since October after a rally earlier in the week. However, this week’s gains follow the worst weekly rout since August for the oil benchmark.

Heavy crude benchmarks have strengthened as the Canada-to-U.S. Keystone pipeline shutdown continues without a timetable for restart. While the outage is supportive for prices of heavier crude oil grades, it is “doing nothing” for lighter global benchmarks, said Matt Smith, lead oil analyst at Kepler.

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

Global Markets Have Shed $234 Million in the Past 24 Hours

WHAT IT HAD INFLUENCED:

BITCOIN

WHAT HAPPENED: In the past 24 hours, the global crypto market cap has dropped approximately 5.50% according to the crypto market tracking website, Coin markets. At press time, the crypto market cap stands at $802.89 billion. This drop is in line with the Nasdaq drop over the same time period. The market liquidation is now approximately $234 million

Looking at the top 10 cryptos by market cap, the crypto market leader, Bitcoin (BTC), has seen its price drop 4.02% over the last 24 hours. Ethereum (ETH) is down 7.34%, Binance Coin (BNB) is down 12.54%, and the price of Dogecoin (DOGE) dropped 10%. Cardano (ADA) and Polygon (MATIC) experienced 12.61% and 8.87% price drops respectively.

File coin (FIL) experienced the biggest price drop over the last 24 hours. At press time, the price of FIL stands at $3.02 after it plummeted 27.11% in just the last day. This has pushed its weekly performance to -31.39%.

BTC is currently trading at $16725.40 and ETH at $ 1181.55. BTC is up by 0.57% and ETH by 1.25% 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

Wages In Euro Zone (YoY) (Q3), U.K.

WHEN: WHAT IT INFLUENCES:

19 DECEMBER 2022 GBP and its subsequent pairs

WHAT’S HAPPENING: Breakdown of total nominal hourly labour costs, whole economy: wages. % Change from previous year, not seasonally adjusted. In addition to employees’ gross earnings, total labour costs include indirect costs such as employers’ social contributions and taxes connected to the employment. Gross earnings or wages are those paid directly and regularly by the employer at the time of each wage payment. They include the value of any social contributions, income taxes, etc. payable by the employee, even if actually withheld by the employer and paid directly to social insurance schemes, tax authorities, etc. on behalf of the employee.

GDP (QoQ) (Q3), U.S.

WHEN: WHAT IT INFLUENCES:

22 DECEMBER 2022 USD and its subsequent pairs

WHAT’S HAPPENING: Gross Domestic Product (GDP) measures the annualised 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 USD, while a weaker than forecast reading is generally negative (bearish) for the USD.

RBA Meeting Minutes, AUSTRALIA

WHEN: WHAT IT INFLUENCES:

20 DECEMBER 2022 AUD and its subsequent pairs

WHAT’S HAPPENING: The Reserve Bank of Australia (RBA) Monetary Policy Meeting Minutes are a detailed record of the bank’s most recent policy-setting meeting, containing in-depth insights into the economic conditions that influenced the rate decision.

More dovish than expected minutes could be taken as negative/bearish for the AUD, while more hawkish than expected minutes could be taken as positive/bullish for the AUD.

Core CPI (MoM) (Nov), CANADA

WHEN: WHAT IT INFLUENCES:

21 DECEMBER 2022 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 Monetary Policy Statement, JAPAN

WHEN: WHAT IT INFLUENCES:

20 DECEMBER 2022 JPY and its subsequent pairs

WHAT’S HAPPENING: Bank of Japan Monetary Policy Statement contains the outcome of the BoJ’s decision on asset purchases and commentary about the economic conditions that influenced their decision.

EQUITIES IN THE COMING WEEK

NIKE, Inc. (NIKE) to announce its Quarterly Results on 20 DECEMBER 2022, EPS is estimated to be 0.65 per share while revenue is estimated at 12.583B.
FEDEX CORPORATION (FDX) is to announce its Quarterly Results on 21 DECEMBER 2022, EPS is estimated to be 2.82 per share while revenue is estimated at 23.702B.
PAYCHEX Inc., (PAYX) is to announce its Quarterly Results on 22 DECEMBER 2022, EPS is estimated to be 0.95 per share while revenue is estimated at 1.19B.
CARMAX Inc. (KMX) to announce its Quarterly Results on 22 DECEMBER 2022, EPS is estimated to be 0.73 per share while revenue is estimated at 7.342B.
GENERAL MILLS Inc. (GIS) is to announce its Quarterly Results on 20 DECEMBER 2022, EPS is estimated to be 1.07 per share while revenue is estimated at 4.142B.