Sample Category Title

Gold has been in an uptrend in the four-hour chart, which temporarily paused near the 1,914 territory. However, gold spiked higher as markets turned pessimistic over Credit Suisse’s solvency, while technically, the ascending 50-period period moving average (SMA) is positively closing the gap with the 200-period SMA.

The momentum indicators are endorsing this bullish breakout. Specifically, the RSI is ascending sharply within the overbought zone, while the stochastic oscillator is sloping upwards after posting a bullish cross.

Should gold extend its advance, the 1,935 resistance territory could curb its upside. Surpassing that zone, the price might ascend to test the 1,948 barrier. Failing to stop there, the bulls might aim for the February peak of 1,959.

On the flipside, if sellers re-emerge and push the price lower, the resistance region of 1,914 could now act as support. Diving lower, the commodity could face the recent low of 1,886 before the spotlight turns to 1,872. Even lower, the 1,858 hurdle could provide downside protection.

Overall, gold appears ready to edge higher as the completion of a golden cross could boost bulls’ appetite. Nevertheless, short-term oscillators are currently approaching overbought territories, so a move to the downside could not be ruled out.

Daily Pivots: (S1) 1.0691; (P) 1.0721; (R1) 1.0762; More...

Intraday bias in EUR/USD is back on the downside with today's sharp decline. Fall from 1.1032 is resuming through 1.0523 support. Main focus is now on support zone between 38.2% retracement of 0.9534 to 1.1032 at 1.0258 and 1.0482. Strong support from there, followed by rebound through 1.0759 resistance, will retain near term bullishness. However, sustained break of 1.0258 will complete a head and shoulder top (ls: 1.0733, h: 1.1032, rs: 1.0759). Outlook will be turned bearish for 61.8% retracement at 1.0106.

In the bigger picture, as long as 1.0482 support holds, rise from 0.9534 (2022 low) should continue to 61.8% retracement of 1.2348 (2021 high) to 0.9534 at 1.1273. However, sustained break of 1.0482 will bring deeper fall to 61.8% retracement of 0.9534 to 1.1032 at 1.0106, with risk of breaking through 0.9534 eventually.

Daily Pivots: (S1) 1.2130; (P) 1.2166; (R1) 1.2196; More...

Intraday bias in GBP/USD stays neutral first as it's still holding on to 1.2045 support. On the upside, above 1.2203 will resume the rally from 1.2445/6 resistance zone next. However, decisive break of 1.2045 and 4 hour 55 EMA (now at 1.2039) will argue that the pattern from 1.2445 is extending with another falling leg, and turn bias to the downside for 1.1801 again.

In the bigger picture, price action from 1.2445 are seen as a corrective pattern to rise from 1.0351 medium term bottom (2022 low). Resumption is expected as a later stage and firm break of 1.2446 will target 61.8% retracement of 1.4248 (2021 high) to 1.0351 at 1.2759. This will remain the favored case as long as 38.2% retracement of 1.0351 to 1.2445 at 1.1645 holds.

Daily Pivots: (S1) 0.9104; (P) 0.9134; (R1) 0.9173; More...

USD/CHF's break of 0.9219 resistance argues that fall from 0.9439 has completed at 0.9070, head of 0.9058 low. Intraday bias is back on the upside as corrective pattern from 0.9058 is now in another rising leg. Further rally should be seen to 55 day EMA (now at 0.9304) and above). But overall, outlook will stay bearish as long as 0.9474 fibonacci level holds, and another decline through 0.9058 is expected at a later stage.

In the bigger picture, fall from 1.1046 (2022 high) is should still be in progress with 38.2% retracement of 1.0146 to 0.9058 at 0.9474 intact. Rejection by 55 week EMA is also a medium term bearish sign. Break of 0.9058 will resume such decline towards 0.8756 support (2021 low). But overall, such fall is still as a leg in the long term range pattern from 1.0342 (2016 high). So, downside should be contained by 0.8756 to bring reversal. For now, this will remain the favored case as long as 0.9439 resistance holds.

Daily Pivots: (S1) 133.20; (P) 134.05; (R1) 135.06; More...

Intraday bias in USD/JPY remains neutral first as it's staying above 132.27 temporary low. Fall from 137.90 could still extend lower and break of 132.27 will target 61.8% retracement of 127.20 to 137.90 at 131.28. Sustained break there will pave the way to retest 127.20 low. Break of 137.90 resistance is needed to confirm resumption of the rally from 127.20, or risk will stay mildly on the downside.

In the bigger picture, rebound from 127.20 should have completed at 137.90 as a corrective move, with strong break of 55 day EMA. The down trend from 151.93 (2022 high) is not over yet. Break of 127.20 will resume this down trend and target 61.8% projection of 151.93 to 127.20 from 137.90 at 122.61. This will now be the favored case as long as 137.90 resistance holds.

Retail sales declined 0.4% month-on-month (m/m) in February, bang on the median consensus forecast. January's reading was revised up to 3.2% (from 3.0%), balancing out today's loss.

Trade in the auto sector was weak, with sales at motor vehicle dealers declining by 1.8%, but from an upwardly revised reading of 7.1% in January (v. 5.9% m/m reported earlier). As we noted previously, this decline likely reflects seasonality distortions. Excluding autos, retail sales declined by 0.1%, on par with expectations.

Sales in other more volatile categories were also weaker in February. The building materials and equipment category fell 0.1% m/m while, sales at gasoline stations declined 0.6% m/m, despite stronger gas prices.

Retail sales in the "control group" which excludes the above categories and is used as a gauge in the BEA's estimation of personal consumption expenditures (PCE), rose by 0.5% m/m from an upwardly revised 2.3% m/m growth in January (+1.7% m/m reported previously). This was above the consensus forecast for a decline of 0.3% m/m.

• The largest contribution came from sales at non-store retailers (+1.6% m/m) and general merchandise stores (+0.5% m/m). Gains were also reported at food and beverage stores (+0.5% m/m) and health & personal care stores (+0.9% m/m).
• The rest of the categories were in the red in February with the biggest losses coming from categories that had oversized gains last month: furniture stores, electronics & appliance stores (-1.5% m/m) and miscellaneous stores retailers (-1.8% m/m).

Food services & drinking places – the only services category in today's report – was down 0.3% m/m, reflecting deceleration of demand growth as reported in the ISM Services.

Key Implications

On the surface it looks like consumers stopped spending in February, but with upward revisions in January, an average nominal growth for this quarter is 8.6% (annualized). We think that this strength is attributable to warmer weather and expect more give back in March. Still, strong momentum puts our estimates of real consumer spending on track to advance by 3.0% (annualized) in the first quarter.

This is the only official report on consumer demand before the FOMC members meet on March 21st. Looking at raw data in isolation, the Fed would have been deliberating on the choice between a 25- or 50-point rate hike. However, the collapse of the SVB and Signature Bank, which today transmitted to the global banking system, made financial stability equally, if not more important than price stability, shifting the debate to whether hike at all. We think that the Fed won't be able to ignore the recent acceleration in demand, which is ultimately helping to fuel price pressures, and will raise the policy rate by 25 basis points in March.

Daily Pivots: (S1) 142.92; (P) 143.67; (R1) 144.79; More....

EUR/JPY's steep decline today and strong break of 141.36 confirms resumption of the decline from 145.55. The development also solidify the case that whole correction from 148.38 is in its third leg. Intraday bias is back on the downside for retesting 137.37 low, and then 135.40 fibonacci level. For now, risk will stay heavily on the downside as long as 141.36 resistance holds.

In the bigger picture, as long as 55 week EMA (now at 139.54) holds, larger up trend from 114.42 (2020 low) is still in progress for 149.76 long term resistance. However, firm break of 55 week EMA will bring deeper fall to 38.2% retracement of 114.42 to 148.38 at 135.40. Sustained break there will raise the chance of trend reversal, and target 61.8% retracement at 127.39.

The financial markets are once again in a state of panic as Credit Suisse saw its shares plummet by over -20% and hit a new record low, dragging European stocks deeply down with it. Bonds are becoming the go-to for worried investors again, with US 10-year yield breaking the 3.5 handle and Germany 10-year yield breaking the 2.2 handle. There are serious concerns that recent bank routs would develop into another global financial crisis.

In the currency markets, the Euro is suffering from a steep sell-off, with the case for the ECB to deliver a 50bps rate hike in doubt given the current state of the region. Swiss Franc and Sterling are also among the weakest currencies, indicating funds flowing out of Europe. The Yen is experiencing a strong rally, while the Dollar trails behind as the second strongest performer.

Technically, Gold's rise from 1804.48 resumes today and hit as high as 1930.02 so far. Further rise is expected as long as 1885.54 support holds, for 1959.47 high next. Decisive break there will resume whole rally from 1614.60 to 61.8% projection of 1614.60 to 1959.47 from 1804.48 at 2017.60.

In Europe, at the time of writing, FTSE is down -2.92%. DAX is down -3.00%. CAC is down -3.58%. Germany 10-year yield is down -0.2464 at 2.168. Earlier in Asia, Nikkei rose 0.03%. Hong Kong HSI rose 1.52%. China Shanghai SSE rose 0.55%. Singapore Strait Times rose 1.38%. Japan 10-year JGB yield is up 0.0328 at 0.316.

US retail sales down -0.4% mom in Feb, ex-auto sales dropped -0.1% mom

US retail sales declined -0.4% mom to USD 697.9B, below expectation of 0.2% mom. Ex-auto sales fell -0.1% mom to USD 567.2B, matched expectations. Ex-gasoline sales dropped -0.4% mom to USD 639.5B. Ex-auto, gasoline sales was flat over the month at USD 508.9B.

Total sales for the December 2022 through February 2023 period were up 6.4% from the same period a year ago.

US PPI down -0.1% mom in Feb, goods fell -0.2% mom, services dropped -0.1% mom

US PPI for final demand dropped -0.1% mom in February, below expectation of 0.3% mom. Prices for goods dropped -0.2% mom while prices for services was down -0.1% mom. Prices less foods, energy, and trade services rose 0.2% mom.

For the 12 months ended in February, PPI slowed from 5.7% yoy to 4.6% yoy, below expectation of 5.1% yoy. Prices for final demand less foods, energy, and trade services advanced 4.4yoy .

Eurozone industrial production rose 0.7% mom in Jan, EU up 0.3% mom

Eurozone industrial production rose 0.7% mom in January, above expectation of 0.5% mom. Production of intermediate goods grew by 1.5%, while production of capital goods fell by -0.2%, durable consumer goods by -0.7%, energy by -0.8% and non-durable consumer goods by -2.1%.

EU industrial production rose 0.3% mom. Among Member States for which data are available, the highest monthly increases were registered in Ireland (+9.3%), Sweden (+5.0%) and Romania (+2.0%). The largest decreases were observed in Denmark (-7.1%), Hungary (-5.0%) and the Netherlands (-4.3

Ifo Spring Forecast: German economy to contract slightly in 2023

According to the Spring 2023 economic forecast released by Germany's Ifo, the country's economy is expected to contract by -0.1% in 2023 before growing 1.7% in 2024. Headline inflation is projected to slow slightly to 6.2% in 2023 before dropping to 2.2% in 2024. However, core inflation, which excludes energy prices, is expected to rise further to 6.3% in 2023 and then decline to 2.8% in 2024.

Ifo stated that the "subdued performance of the global economy is dampening German exports," while high inflation rates are "depressing consumer spending and construction activity through declining purchasing power and significantly increased financing costs." The report also noted that inflation has become increasingly broad-based over the past year, remaining at historic highs for several months. While the direct contribution of energy prices has weakened, inflation in all other goods and services has increased steadily, reaching 7.6% in February.

The report added, "In addition to higher production costs passed on by companies to consumers, a noticeable widening of profit margins in some, particularly consumer-related, areas of the economy also contributed to this."

China posts mixed economic data in Jan-Feb period

China's economic data for the first two months of 2023 showed mixed results, with industrial production growth falling short of expectations but retail sales and fixed asset investment exceeding them.

According to China's National Bureau of Statistics, industrial production grew by 2.4% yoy, below the forecasted 2.6% yoy. Retail sales, on the other hand, rose by 3.5% yoy, slightly above expectations of 3.4% yoy.

Fixed asset investment also exceeded expectations, growing by 5.5% yoy, compared to the forecasted 4.5% yoy. Infrastructure investment saw a rise of 9.0% yoy. However, property investment showed a decline of -5.7% yoy, indicating a slowdown in the real estate sector.

The NBS released a statement that highlighted the challenges facing China's economy. "The external environment is even more complex, inadequate demand remains prominent and the foundation for economic recovery is not solid yet," the statement said.

The economic data for January and February is combined to smooth out the impact of the Lunar New Year holiday, which falls at different times during the two months in different years.

BoJ minutes: Basic stance to continue with current monetary easing

BoJ has reaffirmed its commitment to continuing with its current monetary easing policy, including yield curve control, to achieve the price stability target, according to the minutes of its meeting in January 17-18.

One member noted that there is "still a long way to go to achieve the price stability target", and thus the Bank should continue with the current monetary easing to firmly support the economy.

To encourage firms' efforts with regard to business transformation until sustained wage increases can be expected, the Bank needs to "curb interest rate rises across the entire yield curve" while paying attention to the functioning of bond markets, according to another member.

Another member added that it was "inappropriate to rush to an exit" from the current monetary policy, as overseas economies were currently heading toward slowdowns.

However, one member recognized that "at some point in the future", it will be necessary to examine and assess the balance between the positive effects and side effects of the current monetary easing policy.

The Bank's "basic stance on its future conduct of monetary policy" is to "continue with the current monetary easing -- including the conduct of yield curve control -- and thereby achieve the price stability target in a sustainable and stable manner accompanied by wage increases," the minutes read.

EUR/JPY Mid-Day Outlook

Daily Pivots: (S1) 142.92; (P) 143.67; (R1) 144.79; More....

EUR/JPY's steep decline today and strong break of 141.36 confirms resumption of the decline from 145.55. The development also solidify the case that whole correction from 148.38 is in its third leg. Intraday bias is back on the downside for retesting 137.37 low, and then 135.40 fibonacci level. For now, risk will stay heavily on the downside as long as 141.36 resistance holds.

In the bigger picture, as long as 55 week EMA (now at 139.54) holds, larger up trend from 114.42 (2020 low) is still in progress for 149.76 long term resistance. However, firm break of 55 week EMA will bring deeper fall to 38.2% retracement of 114.42 to 148.38 at 135.40. Sustained break there will raise the chance of trend reversal, and target 61.8% retracement at 127.39.

Economic Indicators Update

US retail sales declined -0.4% mom to USD 697.9B, below expectation of 0.2% mom. Ex-auto sales fell -0.1% mom to USD 567.2B, matched expectations. Ex-gasoline sales dropped -0.4% mom to USD 639.5B. Ex-auto, gasoline sales was flat over the month at USD 508.9B.

Total sales for the December 2022 through February 2023 period were up 6.4% from the same period a year ago.

Full release here.

US PPI for final demand dropped -0.1% mom in February, below expectation of 0.3% mom. Prices for goods dropped -0.2% mom while prices for services was down -0.1% mom. Prices less foods, energy, and trade services rose 0.2% mom.

For the 12 months ended in February, PPI slowed from 5.7% yoy to 4.6% yoy, below expectation of 5.1% yoy. Prices for final demand less foods, energy, and trade services advanced 4.4yoy .

Full release here.