The Week Ahead 📈 17th – 21th JAN

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The Week Ahead 📈 17th - 21th JAN

Hello, welcome to the Key To Markets preview of the Week Ahead.

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Contents

• Currency Pair Performance


• 10 Big Stories Last Week


• Chart of the Week


• Economic Calendar Highlights


• 5 Things to Watch this Week


• Technical Analysis: EUR/USD | GBP/USD | USD/JPY | AUD/USD | USD/CAD | Gold | Oil | S&P 500

Currency Pair Performance

5-day performance as of January 13, 2022. 19:00 GMT

Source: finviz.com

10 Big Stories Last Week

In case you missed it....

The US is inflating – US CPI for December reached 7% y/y for the first time in 40 years, while PPI hit the highest on record.

Powell hits USD – A less hawkish than expected testimony from Fed Chair Powell sent the US dollar tumbling. DXY hit a 2-month low.

GBP ignores Boris scandal – An email revealing a bring-your-own booze party during covid lockdown at 10 Downing St has been brushed off by Sterling bulls.

n rouble – The rouble saw sharp declines (USD/RUB gains) this week after no progress was made at talks with  and NATO.

Oil rallies as Omicron fades – While the US braces for Omicron, evidence from the UK suggests tight restrictions aren't needed and oil is pricing in stronger economies.

Gold > 1800 – XAU/USD was helped back over 1800 thanks to dollar-weakness and inflation concerns.

Stocks rollercoaster – It was an up-and-down week for stock markets as investors digested high inflation data and scope for higher rates.

Nasdaq underperforms – An underperformance from growth and tech stocks saw the Nasdaq index drop more than its peers in the US.

Microsoft's bad week – Shares of MSFT were set for the first week in 14 months with a drop of more than 4%.

Biden's vax mandate – An executive order from President Joe Biden to mandate vaccines for certain parts of the workforce was struck down by the Supreme Court

Chart of the Week

Source: Fundstrat, data.gov.uk

It's a new year and unfortunately we're still talking about covid. But this time the news is brighter. Omicron cases look to have peaked in the UK after 21 days – a repeat of what happened in South Africa. This has implications for economic growth and the assets – notably including oil prices – that benefit from strong growth. Crude oil was up circa 4% this week.

Economic Calendar Highlights

Source: FX Street

5 Things to Watch This Week

1)     Global inflation

After massive CPI and PPI prints from the US this week, the focus will turn to releases from the UK, Eurozone and Canada next week – all of which are expected to see price gains accelerate in December.

2)     Dollar sell-off

Profit-taking and 'technical selling' have been the given explanations for the dollar sell-off this week in light of strong inflation data and a hawkish Fed. If true, the question is when will bulls reignite USD long positions?

3)     China GDP

China remains a source of uncertainty as the New Year begins and as many Chinese head off for New Year holidays. A strong or weak print for China Q4 GDP could determine positioning before Chinese markets close for a week.

4)     BOJ

Rumours are that the Bank of Japan might opt to start tightening policy before its 2% inflation target is hit. This would be an import sign that global developed central banks are following the Fed's lead.

5)     Earnings

More big bank earnings and a number of major US companies report Q4 results in the coming week, including Netflix, Goldman Sachs, Morgan Stanley and Bank of America.

Technical Analysis

Here you can find analysis of the major asset classes including the major forex pairs, gold, oil, and the S&P 500.

EUR/USD (H4 Candlestick Chart)

EUR/USD finally broke out of its trading range with a rally up to 1.148, just shy of 1.15. The uptrend should remain while above 1.138, the old range top.

GBP/USD (H4 Candlestick Chart)

GBP/USD extended its rally further last week, rising to 1.375. Another leg up could challenge 1.38 but the pair is overbought and at risk of a correction.

USD/JPY (H4 Candlestick Chart)

USD/JPY has tumbled lower from the rising trendline we mentioned last week and is now testing what could be the bottom trendline in a rising long term channel.

AUD/USD (H4 Candlestick Chart)

AUD/USD rebounded from its drop under the 20 DMA and made fresh highs above 0.73 before meeting trendline resistance.

USD/CAD (H4 Candlestick Chart)

USD/CAD saw a big drop from the test of its 20 DMA and fell to make new lower lows under 1.25. The trend has turned lower with next support at 1.235.

Gold (H4 Candlestick Chart)

XAU/USD is stalling at 1830 resistance after recovering from a drop under the 1800 round number and a 3-week low. A breakout could target 1850.

Brent Oil (H4 Candlestick Chart)

BRENT hit new highs above 85 and is now just short of multi-year highs with resistance at the October peaks. 80 is major psychological support.

US 500 (D1 Candlestick Chart)

US500 is range trading in choppy conditions underneath record highs at 4800 while supported by a rising trendline connecting the October and December lows.

Thank you very much for reading - and have a great week trading!

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