Weekly Updates 17/4/23 – 21/4/23 April 17, 2023

This weekly update is designed to help you stay informed and relate economic and company earnings to potentially value-add your CFD (Contract For Difference) trading via hedging (risk reducing). This article should be used for educational purposes only and not as financial advice. We urge all traders to carry out your own due diligence before submitting trades.

Recap for last week (10 Apr 2023 – 14 Apr 2023)

*These prices are taken based on the previous Monday’s opening price and the preceding Friday’s closing price.

Last week’s action mainly focused on FOMC’s minutes where multiple committee members agreed that the US will most likely enter into a recession later 2023 due to the banking crisis. While CPI and PPI data came in better than expected, the US markets rallied ~1%. Analysts and market participants are being bombarded by mixed news, be it from the US Fed or macro economic news. Expect high volatility in the markets while new economic data are being absorbed.

Updates for the week (17 Apr 2023 – 21 Apr 2023)

The data below showing the economic releases read as “Analyst’s estimate/ Consensus | Previous data”.

For macro news of the week, we start the week off with manufacturing data from the US, followed by key data such as GDP, Industrial production, retail sales from China. Market participants should be wary of China macro data as being the second largest economy, a potential slowdown in its economy will cause a slowdown in the world’s economy. Lastly,some housing data coming out of the US. Analysts expect a decrease in existing home sales and a decrease in the Leading index. Overall a slowdown in the housing markets in the US.

Corporate earnings releases for the week are packed full of companies from different sectors like financials (Bank of America, Goldman, Morgan Stanley, Charles Schwab, etc) to Tech (Netflix) to the value stocks (Johnson & Johnson, AT&T, Procter & Gamble and even China Mobile). Market participants are focusing on Tesla’s upcoming earnings release on Wednesday, given that Tesla is seen as the market leader in the electronic vehicle (EV) space, it will set the tone for the EV basket of stocks. If you hold any EV stocks, you will be exposed to Tesla’s earnings and forward guidance.

If you hold equity positions in these stocks, you can hedge your positions using CFDs to mitigate the risk of disappointing earnings releases.

For those looking to speculate or capitalize on the increased volatility, CFDs provide leverage and ease of going long and short across a broad range of products available.

HKEX (0388.HK): Trading Opportunity – Alex

Trade Set-up:

• Looking at the weekly chart of HKEX, we can see that price is in a downwards channel and has broken the shorter-term upwards trend.
• Currently, price is rejecting the resistance of the channel at HK$354.40.

Trade Execution:

• We can look for shorts based on a shorter timeframe in confluence with the weekly timeframe bias. We may see price extending towards the support of the weekly channel.
• However, a break above the resistance of the downwards channel may signal an overall shift to the upside and we may look for longs upon retracement.

AUD/USD buoyed by strong labour market and dwindling US economic outlook

Trade Set-up:

• The Australian dollar (AUD) surged upward last week, lifted by a stronger than anticipated labour market data and a general improvement in demand for risk. Employment data showed 53,000 new jobs were added to the economy in March, well above the 20,000 anticipated. With unemployment stable at 3.5%, investors moved to price in future RBA rate hikes, dragging the AUD and domestic yields higher. Weaker than anticipated US PPI data and climbing US jobless claims played to an emerging narrative that suggests the Fed’s tightening cycle may be nearing its peak, albeit a slightly hawkish tone of the Fed on Friday.
• Previously, where the faster SMA20 crossed below the SMA50 at the 0.6900 handle, it sparked a push lower for the AUD/USD pair before consolidating between the 61.8% and 38.2% Fibonacci levels. The 38.2% level, coinciding at 0.6800 has now become an important resistant zone. The recent consolidation has also brought about the possibility for the SMA20 to cut back above the SMA50, generating a new uptrend signal, against a backdrop of improved Chinese Trade data and renewed risk appetite.

Trade Execution:

• The RSI, currently sitting above 50, supports the potential uptrend breakout above the 0.6800 handle. A sustained move above 0.6800 could represent buy opportunities for investors. Investors should look out for the RSI for indications that the pair could be “Overbought”.
• The pair has retreated back to the 0.6700 handle on Friday, presenting a better buy-in level at the crossover of the SMAs. Prices need to remain above this crossover to indicate further upward momentum. Buyers can protect their positions at the previous low of 0.6600 handle.

If you have any feedback or questions, feel free to email us at samht@phillip.com.sg or onishathyeyn@phillip.com.sg or cfd@phillip.com.sg.