26 Feb

Weekly Technical Analysis & Price Market Strategy – 26 February 2023

/ CSFX Analytics

WEEKLY SNAPSHOT

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

WHEN: WHAT IT HAD INFLUENCED:

23 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.

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

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

WHEN: WHAT IT HAD INFLUENCED:

23 FEBRUARY 2023 USD and its subsequent pairs

WHAT HAPPENED: 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.

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

Wage Price Index (QoQ) (Q4), AUD

WHEN: WHAT IT HAD INFLUENCED:

22 FEBRUARY 2023 AUD and its subsequent pairs

WHAT HAPPENED: The Wage Price Index reports the change in the amount of money businesses and the government in Australia pay for labour, relative to the prior quarter. The figure excludes bonuses. It is an indicator of potential inflationary pressures.

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

Gold prices edge higher but eye weekly loss, PCE data awaited

WHAT IT HAD INFLUENCED:

GOLD

WHAT HAPPENED: Gold prices rose slightly on Friday but were set for a fourth consecutive week in red amid growing uncertainty over U.S. monetary policy, with markets seeking more cues from a reading on the Federal Reserve’s preferred inflation gauge later in the day.

The yellow metal saw some relief as U.S. fourth-quarter GDP data was revised slightly lower, indicating that the economy had cooled more than expected under the yoke of high interest rates. The reading pushed up some hopes that the Fed will have less economic headroom to keep raising rates.

Spot gold rose 0.1% to $1,823.84 an ounce, while gold futures rose 0.2% to $1,831.15 an ounce by 19:36 ET (00:36 GMT). Both instruments were set to lose between 0.5% and 0.8% this week.

A reading on the Personal Consumption Expenditures price index – the Fed’s preferred inflation gauge – is expected to reiterate that price pressures remained elevated in January. Curbing inflation is the central bank’s main priority, with the Fed giving little indication that it plans to pause its rate hiking spree. This bodes poorly for gold, given that rising yields push up the opportunity cost of holding non-yielding assets such as metals.

A slew of Fed speakers pushed the case for more interest rate hikes this week, with some even calling for a faster pace of hikes in the coming months. The minutes of the Fed’s February meeting also showed that most officials were in support of rates going higher.

But markets remain uncertain over where interest rates will peak. This has limited the upside for metal prices, with traders fearing a higher-than-expected terminal rate.

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

Oil prices recoup weekly losses on the prospect of tighter supply

WHAT IT HAD INFLUENCED:

CRUDE OIL

WHAT HAPPENED: Oil prices rose on Friday and were close to trading positive for the week as the prospect of deeper-than-expected cuts in Russian supplies largely offset concerns that rising interest rates will dampen demand this year.

Crude prices marked a strong recovery from recent losses on Thursday as a Reuters report suggested that Russia plans to cut up to 25% of oil exports from its western ports in March, which is more than the 500,000 barrel per day supply cut announced earlier.

Brent oil futures rose 0.3% to $82.75 a barrel, while West Texas Intermediate crude futures jumped 0.8% to $75.97 a barrel by 21:06 ET (02:06 GMT). Both contracts were trading down less than 0.5% each for the week, having largely trimmed their initial losses.

The prospect of deeper Russian supply cuts also helped markets look past a bigger-than-expected build in U.S. crude inventories, which grew for a ninth consecutive week amid slowing consumption in the country.

Strength in the dollar also weighed on crude markets, given that a stronger greenback makes oil more expensive for international buyers.

Fourth-quarter U.S. GDP data was revised lower on Thursday, indicating that rising interest rates may have had a deeper-than-expected impact on the U.S. economy so far. While slowing growth bodes poorly for crude demand, it could also reduce the economic headroom the Fed has to keep raising rates.

High inflation readings from Singapore, the euro zone, and Japan this week also raised concerns over tightening monetary conditions in the rest of the globe. Oil prices are trading lower for the year amid persistent fears of a global recession this year.

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

Cryptocurrencies test support after pessimism peaked

WHAT IT HAD INFLUENCED:

BITCOIN

WHAT HAPPENED: Bitcoin stuck to support near $24K on Thursday. Cryptocurrencies balance gains and losses while waiting for meaningful signals from traditional financial markets. This consolidation could prove beneficial, confirming cryptocurrency’s total capitalisation of over $1 trillion and paving the way for another leg higher.

In our view, the crypto market has passed its peak of fear, and we should expect an uneven but still upward movement with periodic corrections.

Local significant support has formed at $23.7K, but local reversals to the downside are coming from lower levels: $25K on Tuesday, $24.5K on Thursday and $24.1K on Friday morning.

A step back to a broader picture show that the observed pullback remains within a typical correction following the rally from mid-February, which left bitcoin above January’s highs. The real threat to our bullish view on bitcoin is a break below $21.5K, which would update local lows and break below the 50-day moving average, now acting as a trend indicator.

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

5 KEY EVENTS TO WATCH OUT

Manufacturing PMI (Feb), U.K.

WHEN: WHAT IT INFLUENCES:

01 MARCH 2023 GBP and its subsequent pairs

WHAT’S HAPPENING: The Manufacturing Purchasing Managers’ Index (PMI) is a diffusion index incorporating survey results provided by manufacturing firms throughout the region. 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. While manufacturing accounts for a far smaller percentage of economic output than services, it is far more cyclical and is therefore a useful indicator of where in the economic cycle the economy is currently situated.

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.

Pending Home Sales (MoM) (Jan), U.S.

WHEN: WHAT IT INFLUENCES:

27 FEBRUARY 2023 USD and its subsequent pairs

WHAT’S HAPPENING: The National Association of Realtors (NAR) Pending Home Sales Report measures the change in the number of homes under contract to be sold but still awaiting the closing transaction. The report excludes new construction.

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.

Retail Sales (MoM) (Jan), AUD

WHEN: WHAT IT INFLUENCES:

28 FEBRUARY 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 most of the 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.

GDP (MoM) (Dec), CAD

WHEN: WHAT IT INFLUENCES:

28 FEBRUARY 2023 CAD and its subsequent pairs

WHAT’S HAPPENING: 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.

Manufacturing PMI (Feb), CNY

WHEN: WHAT IT INFLUENCES:

01 MARCH 2023 CNY and its subsequent pairs

WHAT’S HAPPENING: China Manufacturing Purchasing Managers Index (PMI) provides an early indication each month of economic activities in the Chinese manufacturing sector. It is compiled by China Federation of Logistics & Purchasing (CFLP) and China Logistics Information Centre (CLIC), based on data collected by the National Bureau of Statistics (NBS). Li & Fung Research Centre is responsible for drafting and disseminating the English PMI report. Every month questionnaires are sent to over 700 manufacturing enterprises all over China. The data presented here is compiled from the enterprise’s responses about their purchasing activities and supply situations. The PMI should be compared to other economic data sources when used in decision-making.
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

BROADCOM INC. (AVGO) to announce its Quarterly Results on 02 MARCH 2023, EPS estimated to 10.18 per share while revenue estimated 8.895B.
SALESFORCE INC. (CRM) to announce its Quarterly Results on 01 MARCH 2023, EPS estimated to 1.36 per share while revenue estimated 7.997B.
TARGET CORPORATION (WMT) to announce its Quarterly Results on 28 FEBRUARY 2023, EPS estimated to 1.40 per share while revenue estimated 30.652B.
MONSTER BEVERAGE CORPORATION (MNST) to announce its Quarterly Results on 28 FEBRUARY 2023, EPS is estimated to 0.63 per share while revenue estimated 1.601B.
LOWE`s COMPANIES, INC. to announce its Quarterly Results on 01 MARCH 2023, EPS estimated to 2.21 per share while revenue estimated 22.709B.