Weekly Market Analysis

By Samir El Khoury, ACSI, ACICMP?

The most important events of the past week

United States of America

? The Manufacturing Purchasing Managers’ Index rose, recording a growth of 50.3 points, which exceeded expectations and the previous reading (47.9).

? The Services Purchasing Managers’ Index rose, recording a growth of 52.9 points, which exceeded expectations (51.0) and the previous reading (52.9).

? The GDP index in the fourth quarter recorded a growth of 3.3%, which exceeded expectations (2.0%) and the previous reading (4.9%).

? The basic durable goods orders index rose, recording a growth of 0.6%, which exceeded expectations (0.2%) and the previous reading (0.5%).

? The new home sales index rose to 664K, which exceeded expectations (645K) and the previous reading (615K).

? The initial jobless claims index rose to 214K, which exceeded expectations (200K) and the previous reading (189K).

? US crude oil inventories fell by 9.23 million barrels, which is lower than expectations (-2.15M) and the previous reading (-2.49M).

? The core personal consumption expenditures price index declined on an annual basis, recording 2.9%, which is lower than expectations (3.0%) and the previous reading (3.2%).

? The personal spending index rose on a monthly basis, recording 0.7%, which exceeded expectations and the previous reading (0.4%).

? The pending home sales index rose to 8.3%, which exceeded expectations (1.5%) and the previous reading (-0.3%).

Eurozone

? The Manufacturing Purchasing Managers’ Index rose, recording a contraction of 46.6 points, a percentage that exceeded expectations (44.8) and the previous reading (44.4).

? The services PMI declined, recording a contraction of 48.4 points, which is lower than expectations (49.0) and the previous reading (48.8).

? The European Central Bank decided to keep interest rates unchanged, settling the interest rate on major refinancing operations at 4.50%, in line with market expectations.

United Kingdom

? The Manufacturing Purchasing Managers’ Index rose, recording a contraction of 47.3 points, which is a percentage that exceeded expectations (44.8) and the previous reading (44.4).

? The Services Purchasing Managers’ Index rose, recording a growth of 53.8 points, which exceeded expectations (53.2) and the previous reading (53.4).

Australia

? The manufacturing purchasing managers’ index rose, recording a growth of 50.3 points, which is higher than the previous reading (47.6).

? The services Purchasing Managers’ Index rose, recording a contraction of 47.9 points, which is higher than the previous reading (47.1).

Canada

The Central Bank of Canada decided to keep interest rates unchanged, with the main interest rate remaining at 5.00%, in line with market expectations.

Japan

? The Bank of Japan decided to maintain its accommodative monetary policy, meaning to maintain negative interest rates at -0.10%, in line with market expectations.

? The Manufacturing PMI declined, recording a contraction of 48.0 points, which is lower than expectations (48.2) and the previous reading (47.9).

? The services Purchasing Managers’ Index rose, recording an increase of 52.7 points, which is higher than the previous reading (51.5).

? The core CPI fell year-on-year in Tokyo, recording 1.6%, which is lower than expectations (1.9%) and the previous reading (2.1%).

The most important events of this week

This week, financial markets are eagerly awaiting the release of several key economic indicators:

? On Tuesday, the markets are awaiting the retail sales index in Australia, the consumer confidence and gross domestic product indices in the Eurozone, and the consumer confidence and job opportunities indices in the United States of America.

? On Wednesday, the markets await the interest decision issued by the US Federal Reserve amid expectations that it will keep interest rates unchanged at levels of 5.00%-5.25%. Attention is turning to the speech and tone of Federal Reserve Chairman Jerome Powell regarding the path of interest rates in the next stage, especially at the March meeting, where markets are pricing in a 50% probability of reducing interest rates at this meeting.

It releases the industrial production and retail sales indices in Japan, the consumer price index in Australia, the manufacturing and non-manufacturing purchasing managers’ indices in China, retail sales in Switzerland, the indices of change in non-farm private sector jobs issued by ADP, and the US crude oil inventories in the United States of America, in addition to the gross domestic product in Canada.

? Regarding Thursday, the markets are awaiting the interest decision issued by the Bank of England, amid expectations that it will keep interest rates unchanged at the level of 5.25%. Attention is turning to the speech and tone of the Chairman of the Bank of England, Andrew Bailey, regarding the interest rate path in the next stage.

It topped the Building Permits Index in Australia, the Caixin Manufacturing Purchasing Managers Index in China, the Consumer Price Indexes and the unemployment rate in the Eurozone, in addition to the initial jobless claims, construction spending, and manufacturing purchasing managers indexes issued by the Institute for Supply Management (ISM) in the United States of America.

? Finally, on Friday, the producer price index in Australia, the non-farm payrolls report (NFP), the unemployment rate, average hourly wages, factory orders, and the Michigan Consumer Confidence Index in the United States of America will be released.

Technical Analysis:

EUR/USD:

If the euro against the dollar breaks the pivot point of 1.0865, it may potentially target and test the support levels of 1.0799, 1.0745, and 1.0679. Conversely, if it surpasses the pivot point, it is likely to test resistance levels of 1.0918, 1.0985, and 1.1038.

GBP/USD:

If the pound against the dollar breaks the pivot point of 1.2708, it has the potential to test the support levels of 1.2642, 1.2582, and 1.2516. However, if it exceeds the pivot point, it may test resistance levels of 1.2768, 1.2834, and 1.2894.

USD/JPY:

If the pivot point of 147.82 is broken for the dollar against the yen, there is a possibility that it will target the support levels 146.95, 145.77, and 144.90. But if it exceeds the pivot point, it is likely to target the resistance levels 149.00, 149.86, and 151.04.

GOLD:

If the pivot point of 2030 is broken for gold, there is a possibility that it will target the support levels 2015, 1994, and 1978. But if it exceeds the pivot point, it is likely to target the resistance levels 2051, 2067, and 2088.

BRENT CRUDE OIL:

If the pivot point of 81.72 for crude oil is broken, there is a possibility that it will target the support levels of 79.63, 75.72 and 73.63. If it exceeds the pivot point, it is likely to target the resistance levels 85.63, 87.72, and 91.63.

US30:

If the pivot point of 38,181 for the Dow is broken, there is a possibility that it will target the support levels 37,988, 37,718 and 37,525. If it exceeds the pivot point, it is likely to target the resistance levels 38,451, 38,644, and 38, 914.

Please note that this analysis is provided for informational purposes only and should not be considered as investment advice.

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