16/01/2023 Daily Reports
- The EUR/USD trimmed daily losses during Friday’s American session, rising back above 1.0800. The euro was holding onto significant weekly gains, headed toward the biggest close since May 2022.
- US Dollar recovers but remains under pressure. The US Dollar rebounded modestly on Friday after a sharp decline the day before, following US inflation data. The numbers showed the Consumer Price Index slowed down further in December, increasing expectations that the Federal Reserve will hike by 25 basis points in February, instead of 50 bps.
- Data released on Friday showed the University of Michigan Consumer Sentiment Index rose in January to 64.6, surpassing expectations of 60.5 and above the 59.7 of December. The numbers helped risk appetite but not the Dollar that pulled back.
- EUR/USD extends the solid rebound to levels last seen in late April 2022 around 1.0870 at the end of the week. Price action around the European currency should continue to closely follow dollar dynamics, as well as the impact of the energy crisis on the euro bloc and the Fed-ECB divergence. Back to the euro area, the increasing speculation of a potential recession in the bloc emerges as an important domestic headwind facing the euro in the short-term horizon.
- Technical readings in the daily chart support the bullish stance. The RSI indicator is above 50. The Momentum indicator is also above the mid-line, indicating bullish potentials. On downside, the immediate support is 1.0780 and below this level will open the gate to 1.0730.
- The Pound Sterling (GBP) slid slightly vs. the US Dollar (USD) Friday, following the release of the University of Michigan (UoM) Consumer Sentiment for January in the US, which exceeded estimates, while the poll showed that inflation expectations for one-year were downward revised.
- The GBP/USD languished late in the European session/early New York session after printing a four-week high. Data released on Thursday flashed that inflation in the United States (US) is indeed cooling down. With December’s Consumer Price Index (CPI) dropping beneath 7% and core CPI below 6%, spurring hopes that the US Federal Reserve would shift to lower-sized rate hikes, in the amount of 25 bps.
- Later, the University of Michigan (UoM) revealed that Consumer sentiment for January was better than expected, with the reading hitting 64.6 vs. forecasts of 60.5. Americans estimate inflation for one year would edge to 4%, from December’s 4.4%, while estimates for five years uptick to 3%, from 2.9%.
- Looking ahead to next week, the UK economic docket will feature labor market data, the Consumer Price Index, and Retail Sales. Across the pond, the US economic docket will unveil Retail Sales, US Housing Starts, Initial Jobless Claims, and Existing Home Sales.
- Technical indicators are showing bullish sign. RSI indicator is around 58, while the Momentum indicators slightly above 0, which suggesting a near term uptrend condition. On downside, the immediate support is 1.2185, unable to defend this level will resume the decline to 1.2135.
- Gold price hit a new 9-month high at $1,913.18 on Friday, amidst investors’ speculations that the US Federal Reserve (Fed) could shift to a less aggressive stance following the release of softer inflation data. Therefore, XAU/USD is trading at $1,912, gains 0.82%, headed for a fourth consecutive week of gains.
- XAU/USD got bolstered by speculations of a less hawkish Fed, falling US bond yields. Global equities remain mixed, while Wall Street is headed for a soft opening. Earnings season began in the United States (US), with banks like Bank of America and JP Morgan topping expectations, while Wells Fargo missed estimates, as reported by Q4 results. Thursday’s US inflation report, which witnessed December’s Consumer Price Index (CPI) dropping beneath 7% and core CPI below 6%, was cheered by the financial markets
- In the meantime, the greenback is staging a recovery though it’s been ignored by Gold traders. The US Dollar Index, which tracks the buck’s value against a basket of peers, is trimming some of its weekly losses, gaining 0.18%, at 102.418.
- Meanwhile, the University of Michigan’s Consumer Sentiment for January beat estimates of 60.5 and reached 64.6. Regarding consumer inflation expectations, for one year, it dropped from 4.4% to 4%, while for a 5-year horizon ticked to 3% from 2.9%.
- From a technical perspective, the RSI indicator holds above the mid-line and stabilized around 75, still on a bullish strength. The Momentum indicator continued developing above the mid-line, suggests more upside potentials. On downside, the immediate support is 1907, below this area may resume the decline to 1900.
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- The USD/JPY is falling sharply for the second day in a row and it is trading under 128.00 at the lowest level since late May of last year. The decline takes place even amid a modest recovery of the US Dollar following Thursday’s slide after US CPI data.
- The divergence between the Federal Reserve and the Bank of Japan that has been boosting the USD/JPY pair for months has now partially reversed, not because of clear action but on the back of a change in expectations. The Fed is seen near the end of its rate hike cycle while there are growing speculations about a shift at the Bank of Japan. Some reports indicate the BoJ could review the side effects of its ultra-accommodative policy as soon as next week.
- Japanese bond yields soared also helping the JPY. The 10-year yield rose to the highest since 2015. On the contrary, the decline in US yields weighed on USD/JPY. The US 10-year yield stands at 3.46% compared to 3.70% from a week ago.
- On Friday, the deterioration in risk sentiment contributed to the strength of the Japanese currency. The Dow Jones is falling by 0.15% while the Nasdaq declines by 0.35%. The latest economic report of the week showed the US Michigan Consumer Sentiment Index rose in January to 64.6 surpassing expectations of 60.5.
- Technical indicators still suggest the bearish strength, hovering below the mid-line. RSI fell below 50, while the Momentum indicator continued in negative territory, suggests bear potentials. On downside, the immediately support is 128.85, break below this level will open the gate to 126.55 area.
- DJI gained strength on Friday, hit a fresh three-week high of 34463, the market was well supported by 34000 area early US session and then surged 400 points to 34400 area. market shows a strong bullish sign in the hourly chart. Right now market is standing above both 20 and 50 MAs, suggests a bullish sign. also we can see a cross between 20 and 50MA which brought more buying confidence. On upside, overcome 34463 may encourage bulls to challenge 34700, break above that level will open the gate to 34960.
- Technical indicators also suggest the bullish movement, developing above the mid-line. RSI stabilized around 60, while the Momentum indicator hovering well above the mid-line, suggests upside potentials. On downside, the immediately support is 34040, break below this level will open the gate for more decline to 33830 area.
- The Brent continued its rally above 85 on Friday. The oil price has been in a bullish trajectory from the past week as the Chinese economy has picked the path of recovery after remaining locked for a lengthy period to augment lockdown curbs to cease the further spread of the Covid-19 epidemic. The market is showing strong bullish sign in the hourly chart. The prices are standing on with a golden cross between two legs, indicating a bull potential. On upside, overcome 87.00 may encourage bulls to challenge 89.20, break above that level will open the gate to 91.00.
- Technical indicators also suggest bullish movement, hovering around the mid-line. RSI climbs to 70, while the Momentum index is well the mid-line, suggests a uptrend. On downside, the immediately support is 83.50, break below this level will open the gate for more decline to 82.30 area.
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