Análisis de mercado diario

Sterling hijacked our attention last Friday after collapsing like a house of cards!

It has stumbled into the new week under renewed pressure, struggling to nurse deep wounds inflicted by the dismal retail sales and consumer confidence data. Mounting concerns over the cost-of-living crisis dragging the UK economy into a recession continue to hammer the pound, which is currently trading at levels not seen since September 2020. Disappointing economic data may fuel speculation over the BoE slowing interest rate rises while political noise from Westminster regarding the post-Brexit trade deal is likely to compound the currency’s woes. Since the start of April, sterling has weakened against most G10 currencies, shedding over 3% versus the dollar of writing.

Taking a quick peek at the technicals, prices look heavily bearish on the weekly timeframe with support at 1.2750. A solid breakdown below this point could drag the GBPUSD to levels not seen since mid-2020 around 1.2500.

More pain on the horizon for sterling?

Since the start of 2022, the pound has weakened against almost every single G10 currency. It's is down over 6% versus the dollar and more than 5% against the Canadian dollar.

The pound has the potential to weaken further if disappointing economic data forces the Bank of England to adopt a cautious approach towards rate hikes. In fact, Andrew Bailey, BoE governor recently hinted that the UK interest rates may be increased less aggressively amid recession fears.

Indeed, retail sales fell by an unexpected 1.4% in March as the rising cost of living hit consumer spending. Consumer confidence plunged to its lowest level since the 2008 recession while PMIs decline in April, signalling that the economy is slowing considerably. But with inflation hitting a 30 year high of 7% which is more than triple the target of 2%, the BoE is certainly in a tricky position.

The central bank is widely expected to raise interest rates by 0.25bp in May, with a total of 6 hikes expected by the end of 2022.

However, repeatedly weak economic data and post-Brexit related uncertainty could throw a spanner in the works for BoE hawks – resulting in a weaker pound. This weakness is likely to be intensified by an increasingly aggressive and hawkish U.S Federal Reserve.

The week ahead…

It's a relatively quiet week on the UK economic calendar. However, this does not mean it will be a quiet week for the British pound.

The GBPUSD has already dropped over 100 pips this morning, with weakness being seeing across the board.

There is a lot going on with the dollar with key economic data likely to inject the currency with renewed vigour. Over the next few days, US consumer confidence data, Q1 GDP, consumer sentiment and the PCE deflator among other key reports will be published. Should they reinforce market expectations over the Federal Reserve aggressively raising interest rates, the dollar is set to appreciate further – dragging the GBPUSD lower.

GBPUSD bears step into higher gear

The GBPUSD is heavily bearish on the daily timeframe as there have been consistently lower lows and lower highs. Prices are trading well below the 50, 100 and 200-day Simple Moving Average while the MACD trades below zero. Interestingly, the RSI has fallen below 30 which suggests that the GBPUSD could be oversold.

A solid daily close below the 1.2750 support level could see the currency pair sink towards 1.2600 before experiencing a technical bounce. Alternatively, should 1.2750 prove to be reliable support, the GBPUSD could rebound back towards 1.2900 before resuming the downtrend.

On the monthly timeframe, the GBPUSD is respecting a monthly bearish trend. A solid monthly close below 1.2750 could open the doors towards 1.2500 and 1.2300.  If bears run out of steam, a move towards 1.3000 and 1.3150, respectively.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

It was a slow start to another busy week for financial markets. 

Asian shares kicked off the week on a cautious note as investors digested a slew of Chinese economic data. The major standout was the GDP report which revealed that China expanded at an 8.1% annual pace in 2021, though growth slowed 4% in the Q4 amid Covid-19 and property woes. US markets were closed for the Martin Luther King Jr. holiday.

Our trade of the week was the GBPUSD. We expected some action on the Pound thanks to key economic reports from the UK and the threat of more political drama at Westminster. Sterling certainly did not disappoint with bears eventually winning the tug of war to drag the GBPUSD below 1.3600. There were a couple of takeaways from the UK this week with the biggest one being inflation – which soared to a 30 year high. On Tuesday, the dollar regained some strength as treasury yields pushed higher while oil prices rallied to a fresh 7 year high as geopolitical tensions sizzled in the Middle East.

On Wednesday, oil bulls were injected with renewed confidence as both benchmarks hit fresh 7-year highs. Equity bulls were stung by inflation fears as oil prices rallied further. With investors adopting a cautious stance and accessing outlooks for earnings growth, risk aversion swept across the board. Gold prices appreciated aggressively amid the risk-off sentiment along with other safe-haven currencies like the Yen. 

Thursday we certainly an eventful day for markets as geopolitical tensions between Russia and Ukraine left investors on edge. Oil markets remained near 7-year highs which fuelled inflation fears while Treasury yields climbed above 1.90% before moderating. In Asia, stocks were helped by a mortgage rate cut in China but US stocks got no love with the S&P500 descending deeper into the abyss. 

It was already shaping up to be a terrible week for Wall Street but the disappointing earnings from Netflix delivered a knockout blow. U.S stocks crumbled on Friday, closing out a losing week with the Nasdaq one the biggest casualties. The Nasdaq tumbled over 2.5% on Friday while the S&P500 fell almost 2% after Netflix posted disappointing quarterly earnings. The company’s share fell over 20% after Q4 earnings showed a slowdown in subscriber growth.

In the commodities markets, oil bulls took a tea break after dominating throughout the week. Oil may edge lower in the week ahead until a new higher low is created. This could provide a strong foundation to springboard bulls closer to the $100 level.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

Here are the key economic events and data releases to look out for this week:

Monday, January 17

• CNH: China 4Q GDP, December industrial production and retail sales
• US markets closed for Martin Luther King Jr. holiday

Tuesday, January 18

• JPY: Bank of Japan decision
• EUR: Germany ZEW survey expectations
• GBP: UK November jobless claims, December unemployment
• Goldman Sachs Q4 earnings

Wednesday, January 19

• EUR: Germany December inflation
• GBP: UK December inflation
• GBP: Bank of England Governor Andrew Bailey speech
• Bank of America Q4 earnings
• Morgan Stanley Q4 earnings

Thursday, January 20

• CNY: PBOC loan prime rate decision
• JPY: Japan December external trade
• AUD: Australia December unemployment
• EUR: European Central Bank publishes Dec meeting account
• USD: US weekly initial jobless claims
• US crude oil: EIA inventory report
• Netflix Q4 earnings

Friday, January 21

• JPY: Japan December inflation
• GBP: BOE policy maker Catherine Mann speech, UK December retail sales
• EUR: Eurozone January consumer confidence

The potential for the removal of the liquidity punchbowl (aka monetary policy tightening) is dominating the market’s thinking at present.

The strong US CPI report released last week added more pressure on the US Federal Reserve to stat lifting rates earlier than once thought, potentially as soon as March. We’ve had numerous FOMC members recently marking a more hawkish bias to the committee’s views, including notably, the fabled dove Brainard in her Fed chair nomination appearance before the Senate.

Another Fed official, Waller, also mentioned the chance of five rates hikes this year, although he doesn’t favour a 50bp hike in March. It’s worth remembering that it is a US holiday on Monday, so their markets are closed, and the blackout period has started before the next Fed meeting on 26 January so there won’t be any more Committee members to listen out for on the wires.

Company earnings also continue with more bulge bracket US banks releasing their fourth quarter results. US stocks notched their second straight weekly decline, pushed lower by disappointing earnings from financial industry bellwether JPMorgan Chase which has clouded an already mixed outlook for the US economy.

Asian policymakers in focus

We kick off the week with Chinese fourth quarter GDP (4% y/y vs. 3.3% est.), as well as December's industrial production (4.3% vs. 3.7% est.) and retail sales (1.7% vs. 3.8% est.). The full-year GDP came in at 8.1%, slightly above the median estimate by economists but well above the government's 2021 target of over 6%. Still, the data confirmed that the final quarter was losing momentum but the real test for the domestic economy will come in the first quarter of this year, due to current regional lockdowns on top of the ongoing woes in the property sector.

With this in mind, the PBoC lowered both the one-year medium-term lending facility rate abd the seven-day reverse repurchase rate by 10 basis points respectively, a move not seen in nearly two years, and also injected more liquidity into the financial system via US$110 billion in loans.

The Bank of Japan meeting on Tuesday is also getting some airtime after “sources” said it is thinking of a rate hike at some point beyond this year and debating how to manage the messaging. Inflation is picking up and possibly risks to prices may now be described as “balanced” but hitting the 2% inflation target is still a long way off.

UK data to add pressure to the BoE

We get the usual mid-month data dump in the UK with signals about labour market strength, the pace of consumer price inflation and retail sales. These are the last official updates before the BoE meeting on 3 February, with CPI expected to rise above the forecast 5% going forward and a labour marker remaining tight.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

We have seen a slightly brighter mood emerge overnight across Asia after US stock markets closed lower for a fourth day. Japan again leads the way with the Nikkei hitting a six-month high, while tech stocks are rebounding after being hit recently on the potential for more Chinese regulation. Japan has been the highlight this week as the Suga-succession race hots up and M&A newsflow spurs risk appetite.

News that US President Biden also spoke to his counterpart in China, Xi Jinping for the first time since February has added to the more positive risk tone. The countries have vowed to hold regular communications, although Biden did express his frustration with recent dead-end talks.

ECB looking to December

President Lagarde did pretty much what was expected at yesterday’s ECB meeting. Although not called tapering, the “re-calibration” (slowing the pace of the pandemic bond buying programme) is a very tentative sign that tapering will eventually come.

Officials were cautiously optimistic and raised the staff projections for both growth and inflation. But they also reiterated a pledge to keep the €1.85 trillion programme running until March 2022 or later if needed, signalling they’re not ready to discuss ending the measure just yet. The inflation bump is seen as transitory.

The euro found support at the 50-day moving average and the mid-August high around 1.18 after three straight days of losses. A breach of 1.18 will find modest support in the mid-figure area. Resistance comes in around 1.1850 and then 1.19/10.

UK GDP disappoints

July monthly UK GDP has just been released and showed that growth conditions look to have peaked during the summer months. The m/m reading printed at 0.1% versus 0.6% expected and 1% prior. More sluggish momentum is forecast towards the latter part of this quarter as the UK furlough scheme ends.

Speaking of which, Goldman Sachs believes there could be a messier end to this program that finishes at the end of this month, and this will prompt the Bank of England to delay raising rates. While the money markets are pricing in a rate rise next May, with 28 basis points of increases by the end of next year, the US investment bank don’t see borrowing costs rising until the third quarter of 2023.

GBP/USD pushed high yesterday but is trading around 1.38 and the 200-day moving average. The downtrend at the start of the week looked ominous but bulls will look to push higher above 1.3862 to close the week on a strong note.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

It was a week defined by global growth jitters, Delta variant fears and Fed taper concerns.

Monday kicked off on a negative note as a combination of events gave investors the summer blues ahead of another busy week. Risk-off was the name of the game, especially after the disappointing economic data from China compounded to the dismal US consumer sentiment figures witnessed last Friday.

In the currency markets, the dollar index (DXY) found support above 92.50. Gold extended gains towards the $1792 resistance level while oil prices fell amid concerns over weaker fuel demand.

Tuesday was jampacked with key economic data major economies and a speech by Federal Reserve Chairman Jerome Powell. The eurozone economy grew 2% in the second quarter confirming its earlier reading as easing restrictions rekindled economic activity. In the UK, the jobs report exceeded market forecasts while American retail sales fell more than expected in July.

Everyone was talking about the Kiwi after new lockdowns in New Zealand resulted in the NZDUSD tumbling over 100 pips!

The New Zealand Dollar weakened against every G10 currency on Tuesday.

Guess what our trade of the week was? It was none other than the NZDUSD. We questioned whether the kiwi could recover after New Zealand enforced a three-day lockdown. Interestingly, the NZD index remains under pressure with prices trading around 0.7405 as of writing.

Note that this index measures the NZD’s performance across six currency pairs, all in equal weights: NZDUSD, EURNZD, GBPNZD, NZDCHF, NZDCAD, AUDNZD.

Mid-week, all eyes turned to the FOMC meeting minutes. Markets were relatively quiet ahead of this risk event as investors remained on the side lines. In this short period of calm, we discussed the Reserve Bank of New Zealand’s hawkish hold. On Wednesday evening, US equities tumbled after the FOMC minutes showed that most officials saw tapering starting this year.

Asian stocks slumped to their lowest levels in 2021 on Thursday morning as Fed taper fears and global growth concerns sapped risk sentiment. It was a sea of red across global equity markets with no prisoner taken as the risk-off mood repelled investors from riskier assets.

King Dollar dominated the scene, appreciating against every single G10 currency this week thanks to the hawkish Fed minutes.

Focusing on the technical picture, the DXY is heavily bullish on the daily charts. The daily close above 93.43 could open doors towards 94.28 and 94.74, respectively.

In the commodities arena, oil was treated without mercy as the spread of the Delta variant clouded the demand outlook. Output data from China also showed the least crude is being processed by Chinese refineries in 14 months. WTI Crude concluded the week almost 9% lower while Brent Oil shed over 7.5%.

Looking at the technical picture, Brent has the potential to extend losses if a weekly close below $64 is achieved.

We heavily focused on technical setups on Thursday, covering movers & shakers across equity, forex and commodity markets. These setups will certainly be revisited over the next few weeks.

The mood across markets remained gloomy on Friday morning with Asian shares extended their losses from the 2021 lows. It was a rough and rocky week for financial markets as investors juggled growth fears, Delta variant jitters and Fed taper concerns. However, the S&P 500 and Nasdaq staged a rebound – ending a week of selling on a positive note.

Markets remain highly sensitive to taper expectations. This was confirmed by the intense reaction to the hawkish Federal Reserve meeting minutes. Investors will turn their attention towards the Jack Hole Symposium next week. It is worth keeping in mind that this is seen as a key event that may provide valuable insight into the plans of the Fed. Should Fed Chairman Jerome Powell use this annual central bank gathering to signal timings on tapering, there could be a more explosive response from markets.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.