U.S. core retail sales data came much higher than expected to 2.3% from the previous reading of -0.9%, which is in line with the hot labour market data. Notwithstanding the strong job report, high CPI and now way stronger retail sales, the market turned risk-on with gold prices dropping by 1% last night and Bitcoin gaining more than 9%. On the other hand, Australia’s unemployment rate went up to 3.7% from 3.5% last month which led to the Aussie Dollar dropping about 1% last night. The RBA may have to be more cautious in interest-rate increases to ensure a soft-landing, giving its economy a cushion to adapt. Elsewhere, the U.S. IEA forecasted that oil demand this year will climb by 2 million barrels per day, eventually bringing the total demand to average of 101.9 million barrels per day. The demand outlook for oil is bright despite the U.S. crude inventories data showing a surge to more than 16 million barrels yesterday.

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 Look Out For

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

25 bps (90.8%) VS 50 bps (9.2%)  

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Market Overview

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Economic Calendar

Market Movements

DXY

The Greenback jumped to a six-week peak against a basket of six major currencies following the United States releasing its upbeat retail sales data, sparking hopes for the Federal Reserve to maintain its aggressive tightening monetary policy on a long-term basis to combat the skyrocketed inflation. According to Census Bureau, US Retail Sales for last month increased by 3%, surging by the most in nearly two years since the global government eased down the pandemic restrictions. Economists had predicted the sales would only increase by 1.80%.

The Dollar Index is trading higher while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 59, suggesting the index might encounter technical correction since the RSI retreated from the overbought territory.   

Resistance level: 103.95, 104.85

Support level: 102.55, 101.80

XAU/USD

The strong US Dollar, with investors bracing for a string of better-than-expected economic data from the United States, continues to drag down the appeal of the dollar-denominated gold. Market participants are widely expecting the Fed would implement its monetary tightening even if it means causing a potential recession in the US economy. As for now, the interest rate futures market speculates that the US interest rate will peak above 5.2% in July, revised up from the earlier Fed policymakers’ median projection of 5.1% this year. The interest rates currently stand at 4.5% to 4.75%.

Gold prices are trading lower following the prior breakout below the previous support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 33, suggesting the commodity is entering the oversold territory.   

Resistance level: 1860.00, 1905.00

Support level: 1820.00, 1766.35

EUR/USD 

U.S. core retail sales report was released last night with a much higher-than-expected reading of 2.3% compared to the previous reading of -0.9%. However, the market is able to shrug off that Hawkish-related news and the risk-on sentiment is growing in the market. Dollar is not able to break through its resistance at 103.95 despite a high consumer spending report released. On the other hand, ECB’s chair, Christine Lagarde has commented that the ECB has the intention to raise rates by 50 bps in March which provided some strength for the euro to trade higher last night. 

On the technical front, the pair has climbed back to its long-run bullish support line and is trading above its psychological support level at 1.0700. The indicators give a neutral signal for the pair where the RSI has been flowing close to the 50-level and the MACD flows along the zero line. 

Resistance level: 1.0775, 1.0920

Support level: 1.0685, 1.0585

BTC/USD

BTC soared more than 9% overnight, trading above $24000 for the first time since last August. The rally came after investors perceived that the regulation from the U.S. SEC would not destroy the stablecoin and the crypto market. Penalization on Kraken has ended, and Paxos, a company behind Binance’s stablecoin, is working in close coordination with the New York Department of Financial Services; this has fended off the worry of crypto investors. BTC has been riding on the risk-on sentiment in Wall Street, where the gold plunged by more than 1% and prices of risky assets gained last night. 

Despite a big surge in BTC last night, the indicators depicted that the bullish momentum may have just started. RSI is yet to break into the overbought zone and the MACD just converges between the MACD line and the signal line. 

Resistance level: 24720, 26280

Support level: 23148, 22480

DOW JONES

The Dow Jones index rose by 0.11% to 34,128 points on Wednesday, suggesting a resilient economy because market participants might already price in on the Fed’s rate hike decision of staying higher for longer. Some investors were doubtful the gains could stay longer because it is hard to justify further upside. Most earning estimates are declining, and recession worries surround markets, strength could be transitory anytime. Investors are suggested to focus on more economic data to be released for further trading signals. 

The overall dow jones index’s movement remains testing its resistance level of 34400, which is a crucial level to focus on. Investors can keep watching whether it can break through the resistance. The MACD has illustrated neutral-bullish momentum. RSI is trading at the midline of 55, suggesting a neutral-bullish momentum. 

Resistance level: 34390.00, 35640.00

Support level: 32730.00, 30945.00

GBP/USD 

Pound Sterling slumped over the backdrop against a string of soft inflation data yesterday. The UK’s Office for National Statistics reported that the UK Consumer Price Index (CPI) declined from the previous reading of 10.5% to 10.1% annually. In addition, the Core CPI also came in at 5.8%, which also fared lower than expectations of 6.2%. The UK’s inflation rate had slowed for a third month, despite remaining stubbornly in double digits. BoE Governor Andrew Bailey claimed that inflation might fall sharply this year, citing deterioration of economic conditions and lower energy prices.

GBPUSD is trading lower following the prior breakout below the previous support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 42, suggesting the pair might trade higher as technical correction since the RSI rebounded sharply from the oversold territory. 

Resistance level: 1.2105, 1.2265

Support level: 1.1930, 1.1790

USDJPY

The Japanese Yen dropped 0.57% to 133.71 against the strengthened US dollar on Wednesday. Data showed that US retail sales increased to 3%, higher-than-expected 1.8%, leading to the dollar gain, Yen dropped. Moreover, the growth in Japan’s export slowed sharply in January amid weakening Chinese demand for cars and chipmaking machinery, increasing concern about a global slowdown. Trade figures released on Thursday showed exports are still weakening even though data show an increase to 3.5%, a higher-than-expected 0.8%, but the import is much higher at 17.8%. The trade balance was a 3.49 trillion yen deficit in merchandise trade in January, the highest record since 1979. imports of coal, liquefied natural gas, and crude oil drove up overall import bills. Importing more than exporting drags down the demand for the country’s currency. Therefore, the Japanese yen may depreciate further. 

USDJPY is moving upward to the next resistance level of 135.224. MACD has illustrated bullish momentum in the short term. While RSI is at 62, suggesting a bullish momentum ahead. 

Resistance level: 135.224, 139.124

Support level: 131.604, 127.148

CL OIL

Oil prices rebounded after the International Energy Agency (IEA) ‘s optimistic forecast on oil demand in future. Yesterday, the International Energy Agency (IEA) claimed that oil demand growth from China would increase after it relaxed its Covid-19 restrictions. The group forecasted oil demand would increase by 2 million barrels per day (bpd) in 2023, with China making up 900,000 barrels per day (bpd). Since the concerns about the Covid-19 pandemic continues to ease, air travel and human mobilities will surge significantly in future, prompting a significant global demand for this black commodity. Nonetheless, the gains were capped by the EIA US Oil Inventories figures. According to the Energy Information Administration (EIA), US Crude Oil Inventories came in at 16.283M, exceeding the market expectations of 1.166M.

Oil prices are trading higher while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 50, indicating the commodity might trade lower since the RSI retreated sharply from the overbought territory.  

Resistance level: 78.50, 80.20

Support level: 77.35, 76.15