Daily market analysis

Market slow as US Market holiday

February 21, 2023

U.S. stock futures were trading lower during Monday’s evening deals, with significant benchmark averages remaining closed during the regular session for a public holiday.

Contracts on the S&P 500 Index slipped 0.3%, with Treasury futures dropping across the curve. Stocks ended last week on a muted note after Richmond Fed President Thomas Barkin and Fed Governor Michelle Bowman both expressed their support for continued rate hikes.

On the bond markets, United States 10-Year rates were at 3.842%. As Germany’s 10-year yield advanced two basis points to 2.46% and Britain’s 10-year yield declined four basis points to 3.47%.

There are six big stock buybacks follow by this week.

TWLO announced a share repurchase program of up to 1 billion of its outstanding Class A common stock. Shares gained more than 17% last week.

Citizens Financials 1.15 billion buyback expansion. This is incremental to the $850M of capacity remaining as of December 31, 2022, under the prior June 2022 authorization, of which $400M will be utilized during Q1/23. Also, there are 4 more share buybacks for CHKP with 2 billion, WAB with 750 million, TTD with 700 million, and NTR with 5% of its issued common shares.

Main Pairs Movement

DXY trades within a tight range near Friday’s closing levels in the sub-104.00 zone.

The ongoing price action favors the continuation of the uptrend for the time being. Further bouts of strength are now expected to put a potential test of the 2023 top at 105.63 (January 6) back on the investors’ radar in the future. In the longer run, while below the 200-day SMA at 106.44, the outlook for the index remains negative. At the time of writing, the price is trading at 103.895.

WTI crude oil remains depressed near $76.50 as it fades from late Friday’s bounce off a 10-week low during early Monday in Asia. In doing so, the black gold remains below the convergence of the 21-DMA and the 50-DMA, as well as the downward-sloping resistance line from November and the 100-DMA. At the time of writing, the price is trading at 77.36.

Gold price struggles for clear directions around 1,840, following a mildly negative start to the week’s trading, as traders await the preliminary readings of the United States Purchasing Managers Index for February. At the time of writing, the price is trading at 1842.44.

Technical Analysis

EURUSD (4-Hour Chart)

The EURUSD advanced toward the 1.0690 level in the second half of Monday and managed to erase its losses. As trading action turns subdued with US markets remaining closed in observance of Presidents’ Day, the pair could find it difficult to gather directional momentum. The US Dollar started the week advancing against most major rivals as geopolitical headlines took over the weekend. However, the EURUSD pair is confined to a tight 30 pips range since the market opened. A scarce macroeconomic calendar and a holiday in the US will limit volatility until Tuesday’s Asian opening. The Eurozone published December Construction Output, which contracted 1.3% YoY and 2.5% MoM, worse than anticipated.

From a technical perspective, the four-hour scale RSI indicator remained flat in the neutral region, suggesting that the pair currently lack of catalyst to make a decisive move. As for the Bollinger Bands, the pair continued to move along with the 20-period moving average. We think the EURUSD would move in a small range from 1.0650 to 1.0700 until there is any unanticipated event to fuel the market mood.

Resistance: 1.0794, 1.1022

Support: 1.0634, 1.0505

XAUUSD (4-Hour Chart)

The XAUUSD consolidate Friday’s gains, moving slightly in a narrow range around the $1840 mark as United States markets are closed amid President’s Day holiday. The financial markets are trying to digest the latest US Federal Reserve officials’ hawkish messages. Hopes for a soon-to-come pivot in monetary policy have faded ever since the year started, with the terminal rate now expected above 5%. Apart from this, tensions between the US and China over the balloons shots earlier this month continue as US top diplomat Anthony Blinken said Beijing’s actions were irresponsible, while Chinese officials responded US reaction was “hysterical.” Meanwhile, North Korea fired an intercontinental ballistic missile on Saturday that landed in the Sea of Japan. Finally, US President Joe Biden arrived in Ukraine in a surprise visit to Kyiv to announce additional weapons supplies. The mounting geopolitical crisis may provide a boost for the safe-haven gold.

From a technical perspective, the four-hour scale RSI indicator little changed on Monday, staying in the neutral area, which suggests that the pair currently failed to gather directional momentum. As for the Bollinger Bands, the pair was pricing stably above the 20-period moving average, showing the pair is more favored to the upside path in the near term.

Resistance: 1870, 1900, 1920

Support: 1820, 1800

Economic Data

CurrencyDataTime (GMT + 8)Forecast
AUDRBA Meeting Minutes08:30 
EURGerman Manufacturing PMI (Feb)16:3048
GBPComposite PMI17:30 
GBPManufacturing PMI17:3048
GBPServices PMI17:3049
EURGerman ZEW Economic Sentiment (Feb)18:0022
CADCore CPI (MoM) (Jan)21:300.20%
CADCore Retail Sales (MoM) (Dec)21:30-0.30%
USDExisting Home Sales (Jan)23:004.10M

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