Started by PocketOption, Mar 13, 2023, 08:32 am
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Welcome to the Key to Markets preview of the Week Ahead.
5-day performance as of March 9, 2023. 09:30 GMT.
In case you missed it...
Fed Powell warns of a return to more extensive rate hikes. The Fed Chair cautioned that the Fed could return to more extensive rate hikes & raise rates higher than initially expected after robust data across February.
China's GDP forecast disappointed. Beijing forecasts 5% GDP growth in 2023, below the 5.3% forecast by analysts.
Goldman Sachs initiates a cover on Apple. The investment bank sees a 30% upside to the stocks thanks to its services business.
RBA hikes rates but signals a pause could be coming. The Australian central bank hiked rates by 25 bps as expected, its 10th straight hike, but a delay is expected in the coming months as growth & inflation cool.
Meta cuts more jobs. The social media giant will reportedly cut thousands of jobs after 11,000 jobs were cut in November.
Uber is considering spinning off its freight business. The move would see more focus on the ride-hailing & food delivery businesses which are still growing, while the freight unit is struggling. The share price jumped 3% on the news.
Tesla rose after price cuts. The EV maker cut the prices of its most expensive cars to fuel sales and drive demand. This comes after price cuts to cheaper models earlier in the year.
The 2-year treasury yield rose above 5%. The 2-year yield rose above 5% for the first time since 2007 as investors digested Fed Chair Powell's hawkish comments.
Salesforce throws its hat into the AI ring. The cloud software maker unveiled Einstein GPT, which will be integrated into its CRM system to create marketing content, code, emails and client summaries.
BoC kept interest rates on hold. In line with expectations and as signalled in the previous meeting, the BoC kept interest rates on hold to assess the impact of the eighth rate hike over the past year. USD/CAD rose above 1.38.
The chart shows the 2-year yield exceeding the 10-year by 1%, giving the loudest warning signal of recession since 1981. This was when Fed Chair Volcker aggressively raised rates to tackle double-digit inflation while sending the US into a prolonged recession.
This deep inversion suggests that the US is heading for a hard landing. Typically, an inversion precedes a recession by 12-18 months.
The move came after Fed Chair Powell testified before Congress and warned that rates could rise higher for longer. He firmly opened the door to a 50 bps hike later this month.
1. US CPIAs pointed out by Fed Chair Powell last week, US inflation has been stickier than expected. The January CPI didn't cool as much as expected, falling to 6.4% from 6.5%, and core inflation slipped from 5.7% to 5.6%. In February, inflation is expected to continue its slow grind lower. However, after stronger-than-expected data across February, the US economy shows no signs of cooling quickly. Hotter-than-expected CPI data could fuel bets that the Fed will raise rates by 50 basis points in March, lifting the USD.
2. ECB rate decisionThe ECB will meet on Thursday, 16th February, and is widely expected to hike interest rates by 50 basis points taking the rate to 3.5%. ECB President Christine Lagarde as good as confirmed in recent speeches that the market will be paying more attention to what comes next. Several ECB policymakers, including Lagarde, said further hikes could be necessary after the March meeting. Any hints that the terminal rate could be close to the 4% that some market participants have started to price in could lift the euro.
3. UK BudgetAfter the chaos of Kwasi Kwarteng's Autumn Statement, the markets will be hoping for a less eventful affair. The Spring Budget will be unveiled by the Treasury Secretary on Wednesday and comes at a time when public finances remain fragile and the cost-of-living crisis continues. The energy cap is set to rise, and there could also be a tax break for businesses to help offset a planned rise in corporation tax. Defence spending is also expected to rise.
4. China retail salesData last week from China raised concerns over the strength of the economic recovery as the country recovers from strict Covid restrictions. Retail sales data will shed more light on the consumer's health as the county re-opened after a volatile January. Expectations are for sales to rebound in February by 3.4% after falling -1.8% in January, which could help ease last week's worries.
5. Adobe Q4 earningsAdobe Q4 earnings come as the share price trades down over 50% since Q4 2021. A recent rebound appears to have lost momentum after regulators opposed Adobe's acquisition of Figma, a collaborative design platform, for $20 billion. Expectations are for a 9% increase in adjusted profit to EPS of $3.68 on an 8% increase in revenue to $4.62 billion.
Economic Calendar Highlights
TA of the major asset classes (Forex – Commodities – Indices...).
EUR/USD (Daily Candlestick Chart)
EUR/USD is in a downtrend, posting lower lows and highs below the 50 SMA.The two bullish engulfing candles came to nothing with a near-term double top at 1.069, resulting in a big bearish engulfing pattern back to support at 1.053. One of these respective levels must break to set the next direction.
GBP/USD (Daily Candlestick Chart)
GBP/USD is in a downtrend, posting lower lows and highs below the 50 SMA.The downside action has been constrained with a down-sloping channel. The break of 1.183 completes the long-term double-top pattern. The following support lies at 1.164. However, a false breakdown from the DT could bring new upside potential.
USD/JPY (Daily Candlestick Chart)
USD/JPY is in an uptrend, posting higher highs and lows above the 50 SMA.Price has reversed from the resistance above 137.8 and targets support above 135. A breakdown could see a test of the 50 DMA, but a bounce could bring the next leg up to 140.0.
Gold (Daily Candlestick Chart)
XAU/USD is in a downtrend, forming lower lows and below the 50 SMA.The price made a fakeout over the mid-February resistance at 1845. A break to new lows could target the 50% Fib at 1786. A move back over 1850 opens up 1900.
Brent Oil (Daily Candlestick Chart)
XBRENT is in a sideways consolidation.Price is hugging the uptrend line connecting the lows since mid-November. A double top at 86.60 suggests this uptrend line could break for a new test of the lows at 75 and possibly lower.
XUS500 (Daily Candlestick Chart)
XUS500 is a downtrend, forming lower lows and below the 50 SMA.A three-day rally off last week's low around 3900 failed at under 4100, and a test of a possible rousing channel line and the January lows around 3880 looks likely. The next significant support is 3800.
Thank you very much for reading - and have a great week trading!
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The post The Week Ahead 13th – 17th March: the loudest signal of recession since 1981 appeared first on Key To Markets Blog.
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