Calendar Week 04-2023

 

Despite the Fed heads jawboning, which bonds reacted to but stocks did not, the market ended last week jubilant that a soft landing is likely. Chinese GDP stronger, and a slowing Fed, along with recession pre-emptive moves by tech leaders has given investors positive sentiment vibe.

 

Market is pricing in a 25bps point move next week, the first non 50-point move since this started almost a year ago in March ’22. This is seen as a good thing that the Fed is slowing its trajectory rate.

 

The fears of recession biting hard has forced tech leaders (Google, Microsoft, Amazon etc) to slash jobs, over 70,000 lost in last year, in a bid to tighten their belts ahead of the economic downturn. This has saved them some US$12 Billion in wages alone. But it also seen as a positive for pundits as the Nasdaq screamed up 3% on Friday.

 

In bond land, they closed the week stronger but finished it unchanged after flip flopping around the week. Commodities saw mixed results with the Bloomberg Index unchanged. Oil up smalls, as was copper. Gold held above $1900 as Iron Ore and Coal stepped sideways and gas slipped.

 

In FX, it was even duller as US dollar tracked sideways for the shortened week. Very much ho hum week for currency traders.

 

Major data this week from NZ and Australia with CPI from both. Canadian central bank meets with another +0.25% rise on the cards, and US GDP numbers.

 

Currency Guidance

 

USD – The technical picture from last week has changed little. Still support at 101, momentum still oversold, so the probabilities are for a minor rally with resistance at 103.10.

 

AUD – Failed to hold above 70cents post the poor jobs number, and whilst it should get through it again this week, I don’t see it holding onto it for the second time. In fact, I think this week will be crisscrossing the 70 line a number of times.

 

EUR – Again the technical chart is little changed from 7 days ago, expect a minor dip to 1.07.

 

GBP – 1.2450 looks to be building as a major resistance level having failed to get through twice now. Momentum indicator is over bought so the odds are that we move south off this level again, with a double top sure to be in place.

 

JPY – The 127 level held as I suspected it would, and the channel it has been in since November is holding. The upper level of that channel neatly combines with a couple of turning highs and lows, circa 131.50.