Weekly Market Commentary | 12.02 – 18.02

Curious to know what’s happening on the markets this week? Take a quick tour of the latest news, economic updates, and trading setups that will keep you up-to-date and in the know!

 Monday

• The week kicks off on a subdued note, with Japan and China taking a breather; China notably embarks on a week-long hiatus celebrating the New Year and Spring Festival.
• Amidst a calm macroeconomic landscape, a highlight emerges with a speech from Bank of England Governor Bailey, poised to capture the attention of investors during the American session.

Tuesday

• New Zealand sets the stage early with inflation expectations, offering a glimpse into future economic sentiment.
• The UK follows suit, presenting its claimant count change, a key indicator of the job market’s health.
• The day crescendos with a dual inflation focus: Switzerland is anticipated to report a monthly inflation rise to 0.6%, while the US eyes a yearly inflation deceleration to 2.9%, setting the tone for potential policy adjustments.

Wednesday

• The UK’s inflation trajectory is set to ascend slightly to 4.1%, spotlighting the cost-of-living conversation.
• Governor Bailey returns to the podium, likely to weave the fresh inflation data into a narrative on monetary policy and economic outlook.

Thursday

• Australia’s labor market is under the microscope, with unemployment rates expected to inch up, signaling shifts in employment dynamics.
• The UK’s GDP projection tilts towards contraction, stirring discussions on economic resilience.
• Across the pond, US retail sales and the Empire State Manufacturing Index are projected to dip, painting a picture of consumer and business sentiment.

Friday

• The UK’s retail scene is anticipated to see a 1.5% uptick, offering a pulse on consumer spending.
• The US rounds out the week with a modest projection for producer inflation at 0.1%, alongside a hopeful nudge in consumer sentiment to 79.9, as per the Preliminary University of Michigan measure.

Setups for This Week:

 AUD/USD

• Primary View:
  • The AUD/USD pair showcases a substantial head and shoulders pattern, highlighted with a yellow outline, indicating a bearish outlook.
  • Currently trading below the neckline, identified with a green color, indicating bearish momentum.
  • Despite hovering below the critical green and black downtrend lines, the pair’s decline isn’t accelerating, keeping the bearish sentiment intact.
• Alternative View:
  • A breakout above the black downtrend line could shift momentum, potentially initiating a buy signal.

Dow Jones

• Primary View:
  • On the hourly chart, Dow Jones trends upward within a channel-up formation, delineated by red lines.
  • Although the index reached new long-term highs (blue marker), it faced rejection, hinting at potential volatility.
  • The continuation within this ascending channel suggests a prevailing positive outlook.
• Alternative View:
  • The recent high might be a deceptive breakout, and a breach below the channel’s lower boundary could signal a shift to bearish territory.

USD/JPY

• Primary View:
  • The pair exhibits an ascending triangle formation, with resistance marked in green and supportive base in blue.
  • Breaking above the green resistance has activated a bullish signal, suggesting upward potential.
• Alternative View:
  • Should the price retract beneath both the green and blue supports, it could transition into a sell signal, indicating bearish reversal.