The U.S. equity market left little changed and the dollar index traded flat last night before the release of the PCE price index later today (24th Feb). Mixed U.S. economic data, including lower-than-expected initial jobless claims and lower-than-expected GDP were released yesterday and left investors uncertain over the Fed’s next moves. In Japan, the incoming BoJ governor, Kazuo Ueda, stated that the  Ultra-loose monetary policy is appropriate as Japan is yet to sustainably and steadily meet the target of 2%. Japanese Yen traded wobbly against the strengthened dollar at above ¥134 especially after the hope of the BoJ policy shift evaporated. On the other hand, oil prices extended their gain for the second day, inspired by the news that Russia is going to cut 25% of its oil supply in the coming month as well as a drop in U.S. crude inventories despite the reading being higher than the market expected. 

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Look Out For

Current rate hike bets on 22nd March Fed interest rate decision: 

25 bps (71.6%) VS 50 bps (28.4%)

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Market Overview

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Economic Calendar

Market Movements

DXY

The Dollar Index, a measure of the greenback’s value against a basket of six major currencies, remained largely unchanged, hovering at a crucial level. Recent data has indicated signs of economic robustness and persistent inflation, which have bolstered the US Dollar’s bullish momentum in the short term. Adding to the optimistic outlook, US Initial Jobless Claims decreased to 192K from the previous reading of 195K, surpassing market expectations of 200K. Moreover, the recent Consumer Price Index (CPI) and Producer Price Index (PPI) readings have encouraged investors to raise their Personal Consumption Expenditure (PCE) projections, propelling the US 10-year Treasury yield to its highest level since November and supporting the dollar bull’s trend.

The Dollar Index is trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 63, suggesting the index might extend its gains after it successfully breakout since the RSI stays above the midline.  

Resistance level: 104.60, 105.55

Support level: 103.85, 102.85

XAU/USD

Gold prices declined primarily as a result of the US Dollar’s strength. In recent weeks, positive economic data and hawkish comments from US policymakers have bolstered demand for the greenback, curbing the allure of gold, which is priced in USD. Market watchers are focused on several key data releases, with the consensus pointing to robust personal consumption and spending figures, which could signal strong domestic demand. As such, investors will be closely monitoring any potential developments that could impact the dollar’s trajectory, which could influence gold’s direction in the near term.

Gold prices are trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 39, suggesting the commodity might extend its losses after breakout since the RSI below the midline.  

Resistance level: 1845.00, 1860.00

Support level: 1820.00, 1795.00

EUR/USD 

The U.S. dollar remained strong, especially after the release of U.S. initial jobless claims as the reading is lower-than-expected to reflect a hot labour market which ultimately may bolster consumer spending. This firms the investors’ beliefs that the Fed may be more aggressive in its upcoming monetary policy. Investors are awaiting higher inflation-related data, the U.S. PCE price index that will be released later today to gauge for the Fed’s next moves. Besides, the German GDP will also be released today (24th Feb); a higher-than-expected reading may spur the Euro to trade above its key resistance at $1.0600. 

The Euro traded flat hovering on its crucial support level at $1.0600. The indicators showed a neutral signal as the RSI has a minimal volatility above the 30-level while MACD stayed flat flowing below the zero line. 

Resistance level: 1.0760, 1.0866

Support level: 1.0583, 1.0458

BTC/USD

Bitcoin is consolidating in the price range between $23700 to $24560 while the investor’s risk appetite for riskier assets is affected by the concern about rising interest rates. The dollar strengthened with the expectation of a more substantial rate hike from the Fed suppressed BTC prices as well. On top of that, the crypto market has yet to get rid of the regulatory woes with the U.S. SEC, which has strongly intervened in the crypto market lately. Crypto investors currently having the “wait-and-see” sentiment left BTC prices seesawed over the week. 

The price volatility of BTC has narrowed for the past few days and the trading volume is decreasing as well. The RSI stays close to 50-level and the MACD has broken below the zero line; these give a neutral bearish-bias signal for BTC. 

Resistance level: 25085, 26250

Support level: 23713, 22816

Nasdaq

The Nasdaq composite increased by 0.72% to 11,590 points on Thursday. The index was mainly lifted by Nvidia Corp (NVDA.O), which posted positive earnings and surged 14% after reporting a surge in the use of chips to power artificial intelligence services. Moreover, other chip makers also gained, including Broadcom Inc (AVGO.O), Intel Corp (INTC.O) and Qualcomm Inc (QCOM.O), rising between 0.6% to 1.8%. The market direction was mixed recently, as investors might grapple with how interest rate policy might affect the U.S. economy. 

Stocks market has been volatile this year, pulling back in February after a strong rally in January as investors tried to figure out what the U.S. Federal Reserve would do with the monetary policy. Therefore, investors can look for more economic data to be released for clues about the market directions. as you can see, the price was hovering from 10778 to 11993. We expect the trend to trade within this range in the short term until the new breakout. Meanwhile, MACD has illustrated a diminishing bullish momentum. While RSI is trading at 45, indicating a neutral-bearish momentum ahead. 

Resistance level: 11993, 13013

Support level: 10778, 9816

GBP/USD 

The pound dropped 0.34% to $1.2019 against the dollar on Thursday. The Bank of England policymaker Catherine Mann said that inflation has slightly cool down from last year, suggesting the central bank should continue to raise borrowing costs. Moreover, positive readings from the PMI survey earlier this week increased the likelihood of another interest rate hike in March from the BoE. Market participants are pricing in a 95% chance of a 25 basis point rate hike, after which it is expected to halt hiking rates. However, recent economic data gives more challenges to the BoE in bringing down inflation and avoiding a deeper downturn in the UK. 

As we can see, the pound remains struggling for direction at the moment. Furthermore, the 1.20 level is an area where we had seen quite a bit of support previously, and investors are suggested to keep watching for the possibility of a breakout. Meanwhile, MACD has illustrated diminishing bullish momentum ahead. While RSI is at 44, indicating the pair is in neutral-bearish momentum in the near term. 

Resistance level: 1.2126, 1.2211

Support level: 1.2000, 1.1915

Dow Jones

Investors are grappling with how interest rate policy might affect the US economy as the Dow Jones hovers near the low session. Recent strong January economic data and hawkish statements from the Fed have fueled speculation about aggressive rate hike decisions. The Labor Department reported that US Initial Jobless Claims unexpectedly fell, pointing to tight labor conditions. However, the US Gross Domestic Product for the fourth quarter increased by only 2.70%, below market expectations of 2.90%. Investors should keep an eye on the potential implications of these mixed data points for the US economy and the Federal Reserve’s rate hike decision-making process.

Dow Jones is trading lower while currently testing the support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 39, suggesting the index is entering the overbought territory. 

Resistance level: 34310.00, 35640.00

Support level: 32730.00, 30945.00

CL OIL

Oil prices eked out gains on Thursday as market participants weighed the potential for sharp cuts to Russian production next month against a backdrop of a stronger dollar and elevated US oil inventories, which stoked demand worries. The news of Russia’s plans to slash oil exports from its western ports by up to 25% in March, surpassing its prior expectation production cuts of 500,000 (5% of its output) barrels per day, provided an early lift to prices. However, the upbeat sentiment was later met with some selling pressure after the latest US government data revealed that the country’s inventories climbed for the ninth consecutive week. Specifically, the Energy Information Administration (EIA) reported that the US Crude Oil Inventories soared to 7.648 million, far above the market forecast of 2.083 million.

Oil prices are trading higher following the prior rebound from the support level. MACD has illustrated increasing bullish momentum, while RSI is at 60, suggesting the commodity might trade higher as the RSI stays above the midline.   

Resistance level: 76.10, 77.30

Support level: 74.65, 73.35