Daily analysis of the global market

[ZforexCM]

Currently, US stock index futures, major currencies, and precious metals are slightly lower, Asian markets have also seen a decline, and the US dollar index (DXY) is continuing to decrease.

On Tuesday, many currencies in Asia experienced a decline due to concerns of a worldwide economic downturn in 2022. The Yuan was one of the weakest currencies as data revealed that the Chinese economy had been greatly affected by the COVID-19 lockdowns.

The Chinese economy saw a significant decrease in growth in 2022 compared to the previous year, primarily due to the effects of intermittent lockdowns to combat COVID-19. However, in the last quarter of 2022, the economy performed better than anticipated, with industrial production and retail sales in December surpassing expectations as the country started to move away from its strict anti-COVID strategy.

Early morning, the futures for the Dow Jones, S&P 500, and Nasdaq100 all experienced a slight decrease. With the start of the earnings season, investors have shifted their attention to corporate financial reports. Last week on Friday, attention was on banks as investors analyzed statements about the possibility of a recession. On Tuesday, Goldman Sachs and Morgan Stanley will announce their earnings before the market opens, and United Airlines will report after the market closes.

Today, United States 10-year treasury yield increased to 3.54%. The 2-10-year yield spread is at -73 bps. However, the real rate widens to 118 bps.

Investors will keep a keen eye on any announcements from the World Economic Forum’s gathering in Davos as well as high importance economic reports being released by Germany and the UK, including figures for Consumer Price Index, Unemployment Rate , and German ZEW Economic Sentiment.

[ZforexCM]

As of the moment, futures for the US stock index are showing a slight uptick, while major currencies remain unchanged. Precious metals, on the other hand, are experiencing a slight decline. Asian markets are displaying a mixed performance, and the US dollar index (DXY) is on the rise.

Today, the economic calendar is packed with important events. The release of economic reports from Japan, England, Europe, and America will have a significant impact on shaping the direction of the markets. UK inflation is expected to remain above double digits in the near future, but the annual readings may be slightly lower than in November. Eurozone inflation is also being monitored, with the final reading of the preliminary estimate being released.

Upon the announcement that the Bank of Japan (BoJ) would hold rates and retain the existing range for its yield curve, the Japanese Yen experienced a decline in relation to the American Dollar. This decision came as a surprise to the market.

Early morning, the futures for the Dow Jones, S&P 500, and Nasdaq100 all experienced a slight increase. During the overnight hours in the United States, the stock of Goldman Sachs Group Inc. experienced a decrease in value following the release of their fourth quarter report, which revealed a decline in investment-banking fees.

United States’ 10-year treasury yield decreased to 3.48%. The 2-10-year yield spread is at -65 bps. However, the real rate tightening to 113 bps today.

Investors will keep a keen eye on high importance economic reports will be released by EU, US, and the UK, including figures for Consumer Price Index, PPI and Retail Sales.

[ZforexCM]

"Market Update: US Index Futures Flat, Major Currencies Slightly Up, Precious Metals Rise, Asian Markets Quite and Oil Negative, US Dollar Index Downs"

Today, the Asian market had a calm session as several markets are still on holiday.

The US stock market futures remained stable after the major averages had two consecutive days of gains during Monday’s regular session. Investors are now looking forward to more earnings reports to get an insight into the corporate activity. The futures contracts for the three major indexes were all nearly at the same level. In the regular trading session on Monday, the Nasdaq100 Index increased by 2.01%, the S&P500 increased by 1.19%, and the Dow30 increased by 0.76%. All three benchmarks have now turned positive for the year again.

On Tuesday, the value of the U.S. dollar was weak, and it was close to its lowest point compared to the Euro in nine months. Additionally, the dollar lost some of its recent gains against the Japanese yen. This is because traders were assessing the risk of a recession in the U.S. and trying to predict the future actions of the Federal Reserve. The Euro, on the other hand, received a boost in value due to remarks from officials at the European Central Bank, who hinted at taking strong measures to control inflation.

United States 10-year treasury yield went up to 3.51%. The 2-10-year yield spread is at -71 bps. However, the 10Y real rate widens to 109 bps today.

In Tuesday’s trading session, investors will pay attention to data on manufacturing and service sector activity from Germany, UK, and US. Moreover, they will watch inflation report from New Zealand, and additionally, investors will closely follow earnings reports from companies such as Microsoft and Johnson & Johnson.

[ZforexCM]

"Market Update: US Index Futures Negative, Major Currencies Mixed, Precious Metals Down, Asian Markets Increase and Oil Slightly Up, US Dollar Index Downs"

On Tuesday, the stock market in the United States had a mixed performance, with some companies reporting better than expected profits while others warning of a difficult year ahead. Additionally, data showed that business activity in the US contracted for the seventh consecutive month in January, which caused concern among investors.

The price of gold down but remained close to its highest level in nine months as concerns of an impending recession continue to drive demand for a safe investment option.

Today, the price of crude oil increased slightly. This was due to the belief that there will be a resurgence in demand in China and the likelihood that major oil-producing nations will maintain their current level of production cuts. These factors outweighed concerns about a global economic downturn.

The value of the U.S. dollar was weak, and it was close to its lowest point in nine months. United States 10-year treasury yield down to 3.46%. The 2-10-year yield spread is at -75 bps. However, the 10Y real rate tightens to 100 bps today.

Data released on today revealed that the rate of inflation in Australia increased during December. This suggests that the economy is facing increased stress and may further prompt the Reserve Bank of Australia to continue raising interest rates.

In New Zealand, the rate of inflation for the fourth quarter of 2022 remained unchanged at 7.20% compared to the previous quarter. This means that the cost of goods and services in New Zealand has increased by 7.20% over the last year.

In Today’s trading session, investors will pay attention to data on German IFO Business Climate Index. Additionally, investors will follow Crude Oil Inventories.

EURUSD

Christine Lagarde, the head of the European Central Bank, stated that it is important for interest rates to increase at a consistent rate in order to prevent inflation from becoming a long-term problem. In the past six months, the ECB has raised its key policy rates by the fastest pace in its history, 2.5 percentage points. Lagarde also stated that the goal is to bring inflation down and they will deliver on this goal. Based on the statement, it is expected that the ECB policymakers will raise rates at their meetings in February and March.

The EUR/USD currency pair is currently trending upward, with the 8-day moving average supporting the trend. It may continue to rise and reach the upper boundary of the ascending channel. The Euro has recently hit its highest point in the last 9 months and appears to be in a bullish trend. The key resistance level to watch is 1.0930. In the event of a pullback, the support level is at 1.0845 (8-day moving average), and further declines could see support at the 21-day moving average at 1.0740.

Support : 1.0845 – 1.0740 – 1.0650

Resistance: 1.0930 – 1.0970 – 1.1020

GBPUSD
The British pound dropped to 1.2320. This was due to weaker-than-expected data that highlighted the potential for the UK to fall into a recession. A recent PMI survey revealed that the UK’s economic activity in the business sector dropped at its fastest rate in two years in January, due to rising interest rates, strikes, and weak consumer demand caused by the increasing cost of living.

From a technical analysis perspective, The British pound has appeared to have weakened its bullish stance in the past 3 days. The pound has dropped to the 8-day moving average level and is now looking for support from these levels However, it may encounter resistance at the 1.2445 level. As long as it remains above the 8-day moving average, it could continue to reach higher resistance levels. Conversely, if it falls below this level, it could signal a change in trend. On the downside, there are support levels at 1.2265 and 1.2180.

Support: 1.2265 – 1.2180 – 1.2070

Resistance: 1.2445 – 1.2585 – 1.2650

USDJPY

On Wednesday, Prime Minister Fumio Kishida stated that he will determine the next governor of the Bank of Japan (BOJ) by monitoring future economic trends. The value of the Japanese yen dropped to 130 per dollar. This happened because even though the inflation rate is rising and the market is pushing for a change in policy, the Bank of Japan is still holding on to its ultra-low interest rate policy.
Technically, the currency pair has difficulty surpassing the 21-day moving average (in yellow) for a prolonged period. At present, the pair seems to be facing resistance at 130.80/90 when trying to break above these levels. The 130.80 level is currently acting as resistance and the next level to watch for is 131.30. On the lower side, the 129.00 and 127.75 levels are offering support.
Support: 129.00– 127.75 – 126.50
Resistance: 130.80 – 131.30 – 132.50

XAUUSD
On Wednesday, the price of Gold declined, moving further away from its recent nine-month high. This was caused by some investors taking profits and the US dollar stabilizing ahead of economic data from the US that may influence the Federal Reserve’s future policy tightening decisions.

Technically, yesterday, the price of Gold surpassed the 1935 level and reached the 1943 level, but it was unable to maintain those levels and moved lower. However, Gold continues to trend upward, with the 8-day moving average (1919) supporting the trend. If the price of gold breaks above the 1935 level, the next resistance levels to watch for are 1945-1955. In case of a pullback, the support levels are between 1919 and 1908.

Support : 1919 – 1908 – 1897

Resistance: 1945 – 1955 – 1970

XAGUSD
The price of Silver is hovering at 23.50. Despite speculation that the Federal Reserve will only raise its key interest rate by a minimal 0.25% at its upcoming meeting, policymakers have stated that there is still much work to be done before reaching the inflation target and have also suggested that the final interest rate could be higher than the 5% forecasted by financial markets. Economic data that will be released by the US on Thursday is expected to have an impact on the price of the US dollar index (DXY) and on the prices of precious metals.

Technically, silver prices continue to move in a horizontal trend. The 23.15-22.95 level is a significant support level for silver, and it is further reinforced by the 50-day moving average also being located at that level, making it a strong support level. There are nearby resistance levels at 23.75 and 24.20.

Support : 23.15 – 22.95 – 22.10

Resistance : 23.75 – 24.20 – 24.50

UKOIL
Brent crude oil prices remained steady above $86 on Wednesday, recovering from a 2% drop the previous day. This was due to the balance of positive outlook on demand recovery in China and concerns of a global economic slowdown. Investors are also closely monitoring any further announcements from OPEC+ as delegates have indicated that the organization’s advisory committee is likely to recommend maintaining current oil production levels during their next meeting next week.

From a technical analysis perspective, it is trying to stay above the 8-day moving average. This average, which is at 86 levels, can determine the direction of the trend in the short term. Furthermore, the upward trend of the Brent crude oil prices can be confirmed by the 8-day moving average crossing over the 21-day moving average. The nearest support level is at 84.90, and the resistance level is located at 88.15. The next resistance level to keep an eye on is 89.50.

Support : 84.90 – 83.50 – 82.10

Resistance : 88.15 – 89.50 – 91.40

[ZforexCM]

EURUSD

In the latter part of January, the value of the euro increased and approached $1.09, which is the highest level in nine months. This was due to growing expectations for the European Central Bank (ECB) to implement more aggressive monetary policy tightening measures, while the market began to factor in a potential shift in the policy of the Federal Reserve (Fed). The ECB is believed to continue its strong stance and raise interest rates by 0.5% in both February and March.

The EUR/USD currency pair is currently showing an upward trend, with the 8-day moving average supporting this trend. It has the potential to continue rising and reach the upper boundary of the ascending channel. The Euro has recently reached its highest point in the last 9 months and is showing a bullish trend. The important resistance level to watch is 1.0930. If there is a correction, the support level is at 1.0845 (8-day moving average), and further drops may find support at the 21-day moving average at 1.0740.

Support : 1.0845 – 1.0740 – 1.0650

Resistance: 1.0930 – 1.0970 – 1.1040

[ZforexCM]

“Market Update: US Index Futures Up, Major Currencies Flat, Precious Metals Mixed, Asian Markets Increase and Oil Remain Unchanged, US Dollar Index Downs”

Asian stock market indices reached a new high on Thursday, with Hong Kong’s shares making up for lost ground from the previous three days due to the Lunar New Year holiday, as trading resumed. There was not much activity in trading on Thursday as the stock market in Australia was closed for a holiday and many areas of Asia were not open for business due to the ongoing Lunar New Year holiday, including China.

The Nasdaq100 index, which mostly consists of technology stocks, fell by 2.3% at the beginning of trading but recovered to end the day down by only 0.3%. The S&P 500 index ended the day slightly down, less than 0.1%, while the Dow Jones Industrial Average index finished the day with a small gain of 0.3%

The Bureau of Economic Analysis is releasing a report on the growth of the economy during the fourth quarter. It is predicted that the GDP will have grown at a rate of 2.5%, which is a slower growth rate compared to the 3.2% increase seen in the third quarter.

The value of the U.S. dollar was weak, and it was close to its lowest point in nine months. The United States’ 10-year treasury yield is down to 3.44%. The 2-10-year yield spread is at -75 bps. However, the 10Y real rate tightens to 98 bps today.

In Today’s trading session, investors will pay attention to US GDP, core Durable Goods Orders, Initial Jobless Claims, and New Home Sales.

[ZforexCM]

"Market Update: US Index Futures Down, Major Currencies Mixed, Precious Metals Decrease, Asian Markets Increase and Oil Moves Higher, US Dollar Index Downs"

Data from the previous night indicated that the economy of the United States, which is the largest in the world, had a stronger growth rate during the last three months of the year than analysts had predicted. This news eased fears that the country was about to enter a period of economic decline. As a result, stock prices on the New York Stock Exchange increased significantly, and this trend also affected markets in Asia.

Another report indicated that the labor market is still tight, and this could cause the Federal Reserve to maintain higher interest rates for an extended period. This is because when the labor market is tight, it means that there are more job opportunities available than people are looking for work, which can lead to wage growth and inflation. The Fed will want to keep interest rates higher to keep inflation in check and prevent the economy from overheating.

During the evening trading on Thursday, The US Futures decreased. This happened even though major stock market indexes ended the regular trading session with gains, following the release of a positive Gross Domestic Product (GDP) report. Investors are still closely observing the release of a large number of companies’ earnings results.

On Friday, investors will pay close attention to several key economic indicators. These include the Core Personal Consumption Expenditures (PCE) price index. Additionally, they will be monitoring the data on personal income, personal spending, consumer sentiment as measured by the University of Michigan, and pending home sales. All these indicators are key to understanding the state of the economy and making decisions about investments.

The United States’ 10-year treasury yield went up to 3.52%. The 2-10-year yield spread is at -68 bps. However, the 10Y real rate widens to 100 bps today.

[ZforexCM]

"Market Update: US Index Futures Up, Major Currencies Increase, Precious Metals Rise, Asian Markets Decrease, Oil Up and US Dollar Index Downs"

On Thursday, various Asian currencies experienced a significant increase, while the value of the dollar dropped to a new low of nine months. This happened despite the recent interest rate increase implemented by the Federal Reserve. Market analysts predict that the bank may eventually change its current stance as a result of the predicted slowdown in the economy of the United States.

The Federal Reserve hiked its interest rates by 25 basis points, resulting in an interest rate range of 4.50% to 4.75%. The central bank also acknowledged the recent slowdown in inflation and assessed the impact of its previous interest rate hikes on consumer prices in a released statement. The recent 25 bps hike is slower in pace compared to the previous 50 bps hike in December and 75 bps hikes in each meeting from June to November. Although the statement acknowledges the slight decrease in inflation and its contribution to global uncertainty, Fed Chair Jerome Powell has a more optimistic view, claiming that the decrease in inflation has started.

Oil prices regained some ground on Thursday, following a drop in the previous session, as a declining dollar boosted the appetite for risk assets and the decision by OPEC+ to maintain a reduction in production alleviated worries about oversupply.

Investors are paying close attention to the ECB and BoE’s interest rate decisions and accompanying press conferences taking place today, as well as another key report including US Initial Jobless Claims.

The United States’ 10-year treasury yield decreased to 3.42%. The 2-10-year yield spread is at -68 bps. However, the 10Y real rate tightens to 111 bps today.

[ZforexCM]

"Market Update: US Index Futures Down, Major Currencies Mixed, Precious Metals Rise, Asian Markets Negative, Oil Up and US Dollar Index Increases"

The U.S. Index futures declined during Monday morning trading. During the previous week, the benchmark averages had a mixed performance due to positive economic reports leading to the anticipation of increased interest rates from the Federal Reserve. However, investors are still closely monitoring a hectic week of earnings announcements.

Significant news from the weekend, A U.S. military fighter aircraft shot down a supposed Chinese spy balloon off the coast of South Carolina on Saturday. This happened one week after the balloon entered U.S. airspace, leading to a publicly known espionage incident that worsened the relationship between the U.S. and China.

Asian stock markets declined on Monday due to concerns about the deterioration of relations between China and the US after a Chinese spy balloon was shot down. The markets also reevaluated their view on US monetary policy following strong employment data.

On Monday, the value of the Japanese yen dropped to its lowest point in over three weeks compared to the US dollar. This was due to a report indicating that Masayoshi Amamiya, a supporter of aggressive monetary policy, would become the next governor of the Bank of Japan.

The United States 10-year treasury yield increased to 3.54%. The 2-10-year yield spread is at -76 bps. However, the 10Y real rate tightens to 117 bps today.

[ZforexCM]

"Market Update: US Index Futures Up, Major Currencies Increase, Precious Metals Rise, Asian Markets Mixed, Oil Downs and US Dollar Index Decreases"

Federal Reserve Chairman Jerome Powell’s remarks on Tuesday regarding the process of reducing inflation in the US economy had a significant impact on the markets. The market closed higher after a volatile trading session, as investors weighed in on Powell’s comments on the length of time the central bank might need to control inflation.

Powell stated that 2023 will see “significant decreases in inflation,” boosting investor confidence in a less aggressive monetary policy. This confidence had weakened following the release of the strong US jobs report last Friday. During an interview with David Rubenstein at the Economic Club of Washington, D.C., Powell emphasized that the reduction of inflation has begun, particularly in the goods sector, which accounts for 25% of the economy. He also warned that the process will not be smooth or quick and that the Fed may need to raise interest rates to achieve their inflation target.

When questioned about the better-than-anticipated December jobs report, Powell commented that the strong job market is why the Fed believes reducing inflation will take a considerable amount of time. He added that the robust labor market is positive and that inflation has started to decrease despite it.

In conclusion, Powell’s remarks have provided insight into the Fed’s approach to controlling inflation and have had a positive impact on the markets. Investors are now more confident in a less aggressive monetary policy and are optimistic about the future of the economy. The strong job market and the decrease in inflation, despite it, further reinforce this confidence.

The United States 10-year treasury yield increased to 3.65%. The 2-10-year yield spread is at -78 bps. However, the 10Y real rate tightens to 126 bps today.

[ZforexCM]

"Market Update: US Index Futures Down, Major Currencies Decrease, Precious Metals Down, Asian Markets Sink, Oil Up, and US Dollar Index Rises"

On Friday, currencies in Asia declined as the sudden increase in U.S. Treasury yields caused concerns about an impending recession. Additionally, the value of the Chinese yuan was impacted by the recently released data indicating a modest increase in inflation following the easing of anti-COVID restrictions. The Consumer Price Index (CPI) of China increased by an annual rate of 2.1% in January. This is higher than the previous month’s growth rate of 1.8%, but slightly below the expected 2.2%.

However, the market remains uncertain regarding the direction of monetary policy in the U.S. due to recent data indicating a slowdown in the job market. An increase in weekly jobless claims and a growing number of layoffs in the country are likely to limit the Federal Reserve’s ability to continue raising interest rates.

Attention is now focused on the upcoming U.S. inflation data, which will be released next week and provide further insight into the state of the world’s largest economy, as it grapples with a slowdown in activity.

The United States 10-year treasury yield increased to 3.66%. The 2-10-year yield spread is at -82 bps. However, the 10Y real rate widens to 118 bps today.

[ZforexCM]

"Market Update: US Index Futures Down, Major Currencies Decrease, Precious Metals Down, Asian Markets Mixed, Oil Downs, and US Dollar Index Rises"

On Wednesday, several currencies in Asia experienced a decline as the unexpected rise in U.S. Consumer Price Index (CPI) resulted in increased yields on short-term Treasury bonds. This, in turn, fueled speculation of more interest rate hikes by the Federal Reserve, causing the U.S. dollar to strengthen as well.

The Bureau of Labor Statistics released its report on the Consumer Price Index (CPI) for January. The report revealed that prices had gone up by 0.5% in the first month of the year, surpassing the predictions made by economists. The annualized CPI also showed a sharp rise of 6.4%, indicating a significant increase in inflation. Moreover, the Core CPI, which excludes the unstable food and energy components from the report, increased by 0.4% from the previous month and 5.6% year-over-year, which was higher than anticipated.

During a speech at the New York Bankers Association on Tuesday, John Williams, the President of the New York Fed, expressed his concern about inflation and stated that it remains his top priority. He also emphasized that the Fed will continue to pursue a policy of raising rates until the central bank achieves its goal of 2% inflation.

Williams said, “We will remain committed to this course until we have accomplished our objective. It is essential to restore equilibrium to the economy and sustainably reduce inflation to 2 percent.”

The United States 10-year treasury yield increased to 3.74%. The 2-10-year yield spread is at -87 bps. However, the 10Y real rate widens to 131 bps today.