Daily Market Outlook, January 20, 2023

Daily Market Outlook, January 20, 2023 Chinese Market Head Into Lunar New Year Near Bull Market TerritoryAsian equities close out the week on a firm footing as Chinese investors wind down ahead of  next week’s lunar new year holiday. Western markets remained subdued as FOMC vice chair Brainard, deemed to be in the dovish camp, made remarks that were more aligned with the ‘higher for longer’ view on US interest rates . European Central Bank Chief Lagarde appearing at the World Economic forum in Davos also struck a hawkish tone in her speech, stating that  inflation remains “way too high”, Lagrade speaks again today and is likely to reiterate her hawkish stance. UK data out this morning  confirmed concerns regarding the UK consumer as January GfK consumer confidence dropped  to -45 from -42 in December, although still at depressed levels this print remains above the record lows seen in September -49, however, sentiment with respect to UK personal finances for the year ahead showed some signs of improvement, retailers will take little solace from this given December retail sales dropped  for a second consecutive month, declining 1.0%, led by lower non-food sales while grocery sales were modestly weaker. The ONS highlighted that  consumers were cutting back due to increased prices and ongoing affordability concerns linked to the cost of living crisis.In the Eurozone, German producer price inflation retreated for a third month in a row  to print  21.6% in December from 28.2% in November. US existing home sales data due later today, is expected to show another decline as the restrictive rate environment continues to weigh on home buyers' appetite, if the data confirms another drop, this would mark the eleventh consecutive decline in home sales stateside . Ahead of next week’s blackout period for Fed officials, the Fed’s Harker and Waller are both on deck today, Harker has recently suggested he would be more inclined to back a 25bps rate move at the next meeting, markets will look for additional colour on his views today.Markets-wise, investors are nursing losses heading into the weekend, US markets have been on the back foot with the benchmark SP500 testing pivotal support at the 3900 level, however, European markets are clinging to modest gains at the open of trade. Commodities remain front and centre with WTICrude reclining the $80 handle to trade back above $81 per barrel, Gold also regained its shine, as  the yellow metal remained supported above 1900  bulls keep their sights on a test 1950, the Dollar continues to rotate around the 102 mark, as the Euro continues to cling to 1.08  buoyed by Lagarde’s hawkish rhetoric.Overnight News of NoteUS Stock Futures Tick Up After Dow Goes Negative For The YearAsian Stocks Edge Up, Dollar Sags As Markets Mulls Fed RisksOil Heads For Second Weekly Rise As China Outlook BrightensGold Set For Fifth Straight Weekly Rise On Fed Slowdown BetsTop Fed Officials Make Case For High Rates To Cool InflationPoll: Fed To Deliver Two 25Bp Hikes, Followed By Long PauseFed To Face Tough Choice Longer Debt Ceiling Impasse StaysUS Firms Renew Pleas For Biden To End Trump’s China TariffsChina Keeps Benchmark Lending Rates Steady In Fifth MonthChina Inject Record Amount Of Cash This Week Pre-HolidaysJapan Inflation Hits 4% As BoJ Pivot Speculation SmoulderingEU Consider More Russia Sanctions Despite Difficult DebatesUK Chancellor Hunt Warns Not To Expect Tax Cuts In BudgetUK GfK Consumer Confidence Fall Back To Near 50-Year LowCrypto Lender Genesis Files For Bankruptcy As Crisis SpreadsNetflix Co-Founder Steps Down As CEO But Adds Subscribers(Sourced from Bloomberg, Reuters and other reliable financial news outlets)Options Expiration For the New York Cut 10am EST(BOLD expiries with  a value of a Billion+more magnetic if price is within the daily trading range)EURUSD 1.0650 1.0800 1.1000GBPUSD 1.20AUDUSD 0.6900Technical & Trade ViewsSP500 Bias: Bullish Above Bearish Below 3869 Primary support is 3869Primary objective is 4055Below 3840 opens 380020 Day VWAP bullish, 5 Day VWAP bearishEURUSD Bias: Bullish Above Bearish below 1.0735Primary support  is 1.0735Primary objective is 1.09Below 1.0730 opens 1.061020 Day VWAP bullish, 5 Day VWAP bearishGBPUSD Bias: Bullish Above Bearish below 1.2250Primary support  is 1.2250Primary objective 1.2460Below 1.2240  opens 1.218520 Day VWAP bullish, 5 Day VWAP bullishUSDJPY Bias: Bullish above Bearish Below 132.30Primary resistance is 132.30Primary objective is 125.00Above 133.00 opens 135.0020 Day VWAP bearish, 5 Day VWAP bearishAUDUSD Bias: Bullish Above Bearish below .6950Primary resistance is .6950Primary objective is .6790Above .7025 opens .711020 Day VWAP bullish, 5 Day VWAP bearishBTCUSD Bias: Bullish Above Bearish below 20000Primary support 20000Primary objective is 22000Below 19600 opens 1900020 Day VWAP bullish, 5 Day VWAP bearish

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Market Spotlight: BTC Rally Stalls Amidst Further Bankruptcy News in the Sector

Genesis Files for BankruptcyThe crypto world has been hit by further bad news this week as crypto-lender Genesis Global Capital files for bankruptcy. The lender, owned by Digital Currency Group, reportedly froze customer accounts in mid-November on the back of FTX Capital collapsing in a bid to prevent a mass-withdrawal. The collapse of FTX fuelled a wave of concern that similar companies might go under.Legal DisputeIn the bankruptcy claim filed with the Southern District of New York, Genesis reported that it had assets between $1 billion and $10 billion with more than 100,000 creditors. The news comes while Genesis is already engaged in a legal wrangle with Gemini Trust Co. The group, owned by the Winklevoss twins, had been jointly engaged on a crypto project called Earn, with Genesis. Gemini claims Genesis owes around $900 billion to around 340,000 investors. Both groups were recently charged by the SEC with illegally selling securities through the Earn program.BTC Recovering in 2023Crypto sentiment has been improving recently with BTC up almost 50% from last year’s lows. However, the rally has stalled for now amidst the broader downturn in risk appetite we’ve seen on the back of dismal US retail sales for December. Looking ahead, BTC should continue to gain if fresh USD weakness materialises, perhaps in response to a smaller hike at the February FOMC.Technical ViewsBTCThe rally in BTC has seen the market breaking above the bearish trend line and above several key resistance levels. For now, the rally has stalled though price remains atop the 20575 level. While price holds above here, the focus is on a continued push higher with 22600 the next upside level to note, ahead of the bigger target at 24930.

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FOMO Friday: DAX On The Rocks

Dax Turns Down Following Recent GainsLooking across markets, aside from the volatility we had around the BOJ meeting, it’s been a much quieter week. The calm before the storm perhaps, as we approach the upcoming February FOMC meeting. However, there have still been some noteworthy moves and chatting with traders ahead of the weekend, it seems the move capturing the most attention is the more than 2% reversal in the DAX which, prior to falling in the back half of this week, had been on a solid rally across early 2023, rallying almost 10%. So, let’s take a look at what caused the move and, as ever, if you caught it? Well done! If you missed it? There’s always next week.What Caused the Move?Global Recession FearsWe saw some initial weakness on Wednesday as asset markets reacted to news of much-weaker-than forecast US data for December (retail sales & PPI). The data put recession fears back into focus, sending stock prices falling across the board. While losses were more limited in Europe than in the US, the deeper fall was to come on Thursday.Hawkish ECB CommentsECB’s Lagarde upset the apple cart on Thursday as she warned that inflation remains ‘way too high’. Lagarde advised that the ECB would ‘stay the course’ on rates and keep going until CPI was comfortably back in the bank’s 2% target zone. With energy prices tanking over recent months and better data out of the eurozone recently, traders were beginning to mull the idea of a slower pace of tightening, in line with what we’ve seen from the Fed. However, Lagarde’s comments were seen effectively pouring cold water on this notion, sending the DAX heavily lower yesterday.Upside RisksLooking ahead, the outlook for the DAX remains broadly favourable. On the back of the strong gains we’ve seen only the past two weeks, the current pull-back should prove to be a correction. While Lagarde’s comments provide headwinds for now, the idea of a pivot is likely to gain in traction if we see inflation beginning to cool faster-than-expected in coming months. Additionally, as the economic picture in the eurozone improves, this too should continue to support stock sentiment.Technical ViewsDAXThe rally in the DAX saw the index trading up to a test of the 15163.41 level. Price has stalled there for now. However, the key area to note is the 14703.98 area, where we also have the rising trend line off last year’s lows. While this level holds the focus is on a further push higher an dan eventual breakout to 15642.76.

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Signs of a Risk-Off in Risk Asset Markets Curb Optimism in EURUSD

The minutes of the December policy meeting of the ECB released today reinforced the hawkish policy stance that the ECB tried to communicate during and after the meeting: the Bank is far from completing the tightening cycle and more rate hikes are necessary.The key takeaways of the December minutes were that “the direction of monetary policy must be resolutely tightened and that the current configuration of interest rates and expectations incorporated in asset prices has not been sufficiently restrictive to bring inflation back to the target level in a timely manner.” Several ECB members have called for a 75bp rate hike (instead of the agreed 50 bp), and also opted for a fast pace of reinvestment of matured bonds under the APP.Ahead of the forthcoming ECB meetings, it is becoming clear that the central bank intends to deliver more rate hikes. Basically, the message creates a benign environment for more Euro gains against its peers, including USD.It should be understood though that the softer inflation that we’ve seen recently in the euro area has little to do with the removal of the ECB stimulus. The spike in inflation was mainly the aftermath of higher energy prices, and the recent drop correlates with lower energy prices, especially gas prices:Therefore, when predicting what the ECB will do next, it makes sense to analyze not what the ECB should do, but what the bank says it will do. Hawkishness is no longer a characteristic of just a few members of the ECB. It has become mainstream.Another 50bp rate hike at the February meeting two weeks later is apparently priced in, and another 50 bp rate hike at the March meeting even looks very likely. As long as core inflation remains consistently high and core inflation forecasts remain above 2%, the ECB will continue to raise rates. To some extent, we are seeing a mirror image of the ECB to 2019. At the time, the Bank was clearly easing and pursuing disinflation by all means possible, even though the root causes of disinflation lay outside the ECB's purview. Now the ECB has a clear desire to tighten and is chasing inflation, which may also have its root cause in something the ECB can't handle. However, it looks like the current generation of ECB policymakers will only let them go when they are fully convinced that inflation is no longer a problem. As a result, a modest improvement in growth prospects in the euro area, as well as the abundant fiscal stimulus, gave the Bank even more reason to continue its hawkish mission. With all this in mind, the ECB is unlikely to cut interest rates again. Current market expectations for ECB rate cuts in 2024 are premature. If anything, these expectations, reflected in the cut in long-term interest rates, are an additional argument for the ECB to remain hawkish. The ECB's aggressiveness in December was also the result of the central bank’s view that market pricing lagged the pace of actual policy tightening. Today's comments by Christine Lagarde and Klaas Noth once again illustrate the ECB's determination to go all the way.EURUSD continues to consolidate near 1.08 with no obvious attempts to test the levels below. Market participants are trying to assess the risk of a slowdown in the Fed's tightening to 25 bp February, as well as softening the rhetoric regarding inflation. US stocks fell, reacting to the slew of weak eco updates on the US economy. The weakness of the dollar now depends on two factors: the market's assessment that weakening activity in the US will infect other economies (which will increase demand for the dollar as a defensive asset) and the Fed's reaction to a series of soft data for December. If the Fed begins to worry about a recession and changes the policy vector to a dovish one, we can expect a rebound in risk asset markets and a continuation of the EURUSD rally. Moderately hawkish comments may allow the dollar to bounce and cause a correction in EURUSD to 1.07 - 1.0650:

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Best debit and credit cards to use while travelling

If you’re going on holiday or travel regularly, it’s worth knowing what the best possible card is to avoid hefty fees while abroad

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Council tax increases 2023 – how much more will you pay?

Your council tax bill will go up in April - we reveal the councils taht have confirmed what this year’s increase will be

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Bitcoin is on the Rise: What’s Next?

Bitcoin broke the psychological level of 20000, touching the resistance at the level of 210000. Now, the price of Bitcoin is getting ready for the pullback. Bitcoin might potentially gain the required support at the level of 20000, pull from it, and jump. So, let’s observe what will happen next.Silver has approached the resistance at the level of 24.75 for the second time in a row but pulled back from this level and dropped. The asset might test the supporting level of 22.30 and jump anytime soon.Brent oil has touched the weekly downtrend denoted by the bold red line on the chart as well as the broken local uptrend. Currently, the price of oil is trying to pull from the crossing point of these trendlines and drop to the supporting level of 77.82.

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Dovish surprise in US retail sales leaves little to salvage dollar bulls

The Bank of Japan dismissed market rumors about further adjustments in the yield curve control and left the policy unchanged today, disappointing recent yen buyers. The  Bloomberg report released yesterday about the ECB plans to execute more caution in the rest of the tightening cycle caused brief market embarrassment sending EURUSD to 1.08 and below, but later, as expected, bearish mood proved to be transitory. The dollar index, following a week of consolidation, traded below 102 points on signals of the growing slack in the US economy.Dollar sentiment began to deteriorate yesterday after release of the Empire State manufacturing index. The headline reading plunged to -32.9 points vs. -9 points forecast, indicating a significant decline in business activity in the sector. The auction of 3- and 6-month Treasuries showed strong demand yesterday, indicating investors' preference to buy more fixed income in anticipation of weakening activity in the US, which should obviously be reflected in softer inflation figures.The greenback buyers who bet on a rebound after consolidation faced strong headwinds after the release of the key for this week US eco reports. The US retail sales report and PPI released today were noticeably worse than expected:Basically, dovish surprise in key consumption component and business activity prompted quick revision of the US inflation forecast towards a faster decline and less hawkish Fed in 2023. The market reaction was clear: sell the dollar and bid stocks and bonds. As mentioned earlier, the dollar index fell below 102 points, while the US futures posted a moderate increase within 0.5%. A significant reaction was observed in Treasuries - the yield on 10-year bonds fell to 3.45%, and two-year - to 4.08%. EURUSD broke through 1.0850 and the breakout of 1.09 is next, followed by a move towards 1.10, where the main resistance is expected:Yesterday was a day of controversial headlines for the euro. In a lengthy interview with the Financial Times, Chief Economist Philip Lane provided detailed arguments in support of the ECB's recent hawkish rhetoric. Later in the day, however, a Bloomberg report quoted some ECB officials as saying that members of the Governing Council were actually considering a slower tightening (25bps). On this news, EUR/USD fell below 1.08, but today's data on the US formed the counterbalance and the pair quickly recovered.This morning data on the consumer price index for December were published in the UK, which generally coincided with the consensus forecasts. Headline inflation fell from 10.7% to 10.5%, while core inflation remained at 6.3%. The peak appears to be behind us and the headline inflation in the UK could return to 6% in the summer and 3.5-4% by the end of the year.It is important to note that the rise in prices for core services accelerated from 6.4% to 6.8%, which the Bank of England should especially take into account, and when added to yesterday's wage data, the balance of risks should shift upward to a possible 50 bp tightening in February.The EUR/GBP pair returned to pre-Christmas levels below 0.8800 thanks to some peculiar lagging of the euro and support of the pound. As discussed above, ECB-related euro weakness may not last long and EUR/GBP may struggle to trade sustainably below 0.8800 for now, also given the absence of strong bullish forces in the pound.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/dovish-surprise-in-us-retail-sales-leaves-little-to-salvage-dollar-bulls"
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ONS: House prices up 10.3% in November

Official data shows house prices went up in November 2022, but a slowdown is still on thee cards

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UK inflation slows to 10.5%

Figures from the Office for National Statistics showed the decrease was largely due to falling fuel prices

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Gold at $5,700? I like the sound of that

Dominic Frisby explains why the gold price could be set up for a major rally as sentiment towards the yellow metal shifts.

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Market Spotlight: Low Bar Set for Today's US PPI & Retail Sales

Key US Data Up NextToday sees a double whammy for US data with both December PPI and Retail Sales due. On the back of weaker-than-forecast US inflation, today’s data is drawing more attention-than-usual. USD has been in decline since those Dec CPI figures were released with traders now anticipating a further pivot from the Fed when it meets in a fortnight’s time. The clear winner from this recent shift in Fed expectations has been the equities sector with stock indices broadly higher as traders look towards a smaller Fed hike in Feb. With this in mind, today’s data will be closely watched by traders and has the potential to drive meaningful action in both USD and equities alike.Low Expectations for Today’s DataTypically, better-than-forecast PPI and Retail Sales would help lift USD given PPI’s importance for gauging inflationary trends and Retail Sales’ importance for calculating GDP. With both readings expected to have weakened further on the prior month, the bar is set quite low today for an upside surprise. However, whether such results would fuel a USD rally is a little less certain.Trading ScenariosThe main story currently is the drop in inflation and so it would likely take a large upside shock today to derail expectations for a smaller Fed hike next month. Similarly, if PPI is confirmed to have weakened further, especially if below forecasts, this would likely see USD lower on the back of the release with stocks rallying.Technical ViewsNASDAQThe rally in the Nasdaq so far this year has seen price moving sharply higher off the 10700.41 lows. Price has now broken back into the bull channel off last year’s lows and is currently testing the 11540.72 level. This is a key level, with the long-term bear trend line sitting just above. If bulls can break above here, focus will be on a move up towards 12220.22 next.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/market-spotlight-low-bar-set-for-today-s-us-ppi-and-retail-sales"
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Market Spotlight: GS Shares Plunge As Q4 Results Worst in Decade

GS Shares Tank on Q4 ResultsShares in Goldman Sachs are on the backfoot today following heavy losses yesterday amidst a weaker-than-expected set of Q4 earnings. On the back of solid results from JPM and Citi last week, investors were hoping for a similar display from Goldman. However, with EPS coming in at $3.32 vs $5.56 expected on revenues of $10.59 billion vs $10.75 billion expected, shares were seen shedding 6% over the session and are back under pressure ahead of the open today.Worst in Decade The bank’s Q4 results transpired to be its worst quarterly performance in over a decade with profits seen falling by two-thirds on the prior year. Notably, expenses were seen higher by 11% which, along with the tumble in overall revenues, partially explains the dismal performance. Looking ahead, the recent layoffs at Goldman look likely to be repeated as the company seeks to trim back costs. More worrying still is the almost $1billion bad-loans provision the company built up, compared with under $400 million last year. The bank cited “early signs of consumer credit deterioration” as the driver behind this move.Looking at the breakdown of the bank’s businesses; investment banking saw revenues drop by a massive 48% while asset and wealth management revenues fell by 27%. Looking ahead, Goldman CEO David Solomon said the bank will focus on “realizing the benefits of our strategic realignment which will strengthen our core businesses, scale our growth platforms and improve efficiency.”Technical ViewsGSThe reversal from earlier highs in the week now risks creating a lower peak against the November 2022 highs. If price breaks through the rising trend line and the recent 2023 lows, this will open the way for a deeper run down towards the 324.85 level next.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/market-spotlight-gs-shares-plunge-as-q4-results-worst-in-decade"
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JPY Sinks As BOJ Sticks To Bond Purchases

BOJ Holds SteadyTraders were treated to some late New Year fireworks overnight as the Japanese Yen collapsed across the board in reaction to the latest BOJ meeting. Ahead of the January monetary policy meeting, traders had been increasingly expectant that the BOJ would signal a shift in policy. With the bank having recently lifted the upper limit on its yield curve control target band, many took this as a pre-cursor to a more concrete move to be announced at the meeting. Consequently, JGB yields were seen pushed above that upper limit for three consecutive days into the meeting.Implied Volatility Hit Record HighsIt’s fair to say that expectations were split however. Implied volatility in the options market ahead of the event hit its highest level in JPY since November 2008 (GFC).  In terms of trading ranges, options traders were broadly favouring a 2% move in either direction. Ultimately, JPY bulls were left empty handed as the BOJ stuck to its ultra-loose easing policy.Bond Purchases to ContinueWhile refraining from any hawkish policy shifts, the BOJ surprised by announcing that it will press ahead with large-scale bond purchases and will now be more flexible around duration e.g, running the operation for longer. Additionally, the BOJ was seen unveiling a new tool as it adjusted rules around its funds-supply market operation meaning it can now be used to help suppress yields, bolstering its yield-curve control operations.Traders had been anticipating that BOJ governor Kuroda might look to lay the groundwork for a shift away from the bank’s ultra-loose policy ahead of his departure in April. However, on the back of this announcement, this now looks highly unlikely. With inflation now running at a 40-year high, however, the case for tightening is growing and critics warn that continued easing will only make the situation worse in Japan.Market ReactionJPY was seen lower across the board on Wednesday. Losing almost 3% against USD, GBP and EUR. Meanwhile, Japanese stocks roared back into action with the Nikkei surging higher by almost 3% also. The key now will be to see whether the current reaction reverses or whether JPY settles into trading lower again. If USD data today sees risk assets trading higher into the end of the week, this may well keep JPY pressured lower for now on weaker safe-haven demand.Technical ViewsUSDJPYThe rally off the 126.93 lows has stalled for now into a retest of the broken 131.36 level and the bear channel top. Price has been moving steadily lower within this bear channel and while the structure holds, the focus is on a further move lower. A break of 131.36, however, opens the way for a bigger push back towards 139.33.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/jpy-sinks-as-boj-sticks-to-bond-purchases"
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