Open Account Trading Carries Risk
Analysis

China’s Q4 2022 was the worst in decades

  • China’s GDP plummeted due to Covid restrictions
  • The drop in economic growth was one of the worst in 50 years
  • Prepare for risk aversion in today’s trading

The Chinese GPD q/y was reported at 2.9%. This was 1.3% better than expected but down massively from the 3.9% level the last quarter. The country’s economic growth plummeted near to its worst levels in decades. The Q4 growth slumped due to strict COVID restrictions and a property market weakness. This could create risk aversion in today’s trading. Heads up for the German ZEW, Canadian CPI and US Empire State Manufacturing Index releases today.

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DJH4 01 17

The 34 190 is a key level in DJ

DJ remains bullish above 34 190. If the level is broken decisively the market probably moves down to 33 880. This would create a breakout from the bearish wedge and the price channel. The nearest key resistance level is at 34 396.

NASH8 0117

Nasdaq has lost momentum as yields rise

NAS has lost some momentum inside a resistance area. The market remains in an uptrend above 11 322. A break below the level would be likely to result in Nasdaq down to 11 200 or so. On the upside, the nearest key resistance level is at 11 943. Keep an eye on the T-Bond market if the bonds can continue their recent rally, the yield-sensitive Nasdaq is likely to stay strong. Otherwise, the downside risk increases.

DE30 H8 01 17

DAX has been the strongest index

DAX uptrend stays strong above 15 038. If the level breaks DAX moves below the bull channel. This could lead to a deeper correction (there’s been none yet since the end of December!) and the market might move to 14 890 or so. The next key resistance is at 15 542. DAX has been the strongest index lately but if China worries start moving the markets then German stocks are probably sold off (China is an important trade partner for Germany).

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AUDCHFH8 01 17

AUD to suffer while CHF benefits from risk aversion?

AUDCHF has lost momentum and if we get a decisive break below the 0.6372 confluence area (support, channel low and the 20-period SMA), the market could trade down to 0.6380. The nearest key resistance level is at 0.6496. If there’s a risk-off move this pair might move lower (AUD is a risky asset and CHF on the other hand is a safe-haven asset).

XAUUSDH2 01 17

Gold is vulnerable to rising yields

Gold is trading higher above 1901. A break below the level would take the market below the bull channel and could lead to a correction that takes gold to 1886. The nearest key resistance level is yesterday’s high at 1928. A decisive break above the level could bring the 1998 level into play. If yields rise then we might see a move lower in gold.

The Next Main Risk Events

  • EUR German ZEW Economic Sentiment
  • CAD CPI 
  • USD Empire State Manufacturing Index
  • JPY BOJ Outlook Report
  • JPY Monetary Policy Statement
  • JPY BOJ Press Conference
  • GBP CPI
  • USD USD PPI and core PPI
  • USD Retail Sales and core retail sales

For more information and details see the TIOmarkets economic calendar.  

Trade Safe!

Janne Muta
Chief Market Analyst
TIOmarkets.com

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