Weekly Updates 19/6/23 – 23/6/23 June 19, 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 (12 June 2023 – 16 June 2023)
*These prices are taken based on the previous Monday’s opening price and the preceding Friday’s closing price.
Last week’s focus was mainly on the potential of China’s central bank lowering interest rates to not only stimulate the market but to place less pressure on regional banks. Furthermore, analysts are pricing in a potential targeted stimulus from the China government to target sectors that are underperforming. Lastly, the US Fed has signaled that more hikes are likely to come in July.
Updates for the week (19 June 2023 – 23 June 2023)
The data below showing the economic releases read as “Analyst’s estimate/ Consensus | Previous data”.
This week’s macro news update focuses on Housing Starts, Jobless claims, SG CPI data and leading index. Market participants are also expecting more information on China’s central bank and government’s potential rate cut and stimulus. With the quarter coming to an end, market participants are weighing the potential of a recession, AI sector and strength of the US consumer. Singapore’s CPI data will give SG investors an idea of how controlled inflation is in Singapore.
This week’s corporate earnings releases focus on FedEx, Cathay Pacific and Del Monte. Corporate earnings for this week is quite muted as the 2nd quarter of the year is coming to an end.
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.
Hong Kong Index Breakout of Downward Channel
Trade Set-up:
- Hong Kong Index had been in a downward channel after being rejected at recent high, and is now in the midst of forming the right shoulder of an Inverse Head and Shoulders pattern on a higher timeframe.
- Price has just broken out to the upside of the downward channel, which is in line with the recent opening of Hong Kong.
Trade Execution:
- Bulls can take an entry on this break up with a stop loss below the Big Round Number of 18,000, which was a recent low.
- A possible Profit Target can be slightly below recent high of 22,715 – a level which had been tested multiple times (neckline of Inverse Head and Shoulders pattern).
- Trader should also note the price action around 21,000 level (a recent resistance level).
- If momentum slows down, trader can possibly take some profits on partial position, and move the stop loss to the break-even point.
AUD/USD exhausted in upside momentum near 0.6900, focus on RBA minutes
Trade Set-up:
- AUD/USD began last week on a firm footing, picking up bids to around 0.6900 handle as the weekend news surrounding China (i.e. Beijing’s likely stimulus injections) joins receding hawkish hopes from the Fed to favor the Aussie pair buyers. However, the previously mixed US data and Monday’s US holiday limited the pair’s immediate moves ahead of an important week.
- This week, the Reserve Bank of Australia (RBA) Monetary Policy Meeting Minutes and Fed Chair Jerome Powell’s Semi-Annual Testimony will be heavily-eyed, along with the preliminary readings of the US and Australia Purchasing Manager Indexes (PMIs) for June.
- From a technical perspective, AUD/USD has worked itself into a narrow uptrend channel (i.e. building momentum too fast) establishing an uptrend SMA crossover. It has therefore stalled at the 0.6900 handle with the RSI indicating it has been overbought. The resistance cloud above 0.6930 would need to be clearly broken out to establish further upside momentum. Meanwhile, the pair would likely consolidate before this can happen.
Trade Execution:
- Technically, the pair is considered on an uptrend and the fundamental factors favouring the pair remains intact. The pair is likely to consolidate between the 0.6750 to 0.6930 handles before further upside could be seen. Traders could look for “break-out” plays i.e. to buy when prices break-out above 0.6930 or to sell when prices break-out below 0.6750, while keeping their stop-losses near.
- Traders who are already in positions could use these levels for guidance on their exit strategies.
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.
Disclaimer
This material is provided to you for general information only and does not constitute a recommendation, an offer or solicitation to buy or sell the investment product mentioned. It does not have any regard to your specific investment objectives, financial situation or any of your particular needs.
Accordingly, no warranty whatsoever is given and not liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of your acting based on this information. Investments are subject to investment risks.
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About the author
Sam Hei Tung (Dealing) and Onisha Thye (Dealing)
Sam graduated from National University of Singapore with a Master of Science in Finance. He personally manages his own investment portfolio and does equity and economic research in his free time. Sam believes that education and information is essential to making good financial decisions.
Onisha is a dealer at the CFD Dealing Desk. She graduated from Monash University with a double major in finance and econometrics. Her natural curiosity for finance is what drove her to be in this field as she is fascinated by all the possibilities and opportunities that are available to grow one’s wealth, either through trading or investment.
