Weekly Updates 22/5/23 – 26/5/23 May 22, 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 (15 May 2023 – 19 May 2023)
*These prices are taken based on the previous Monday’s opening price and the preceding Friday’s closing price.
Last week’s action revolved around a positive sentiment over the potential of the resolution of the US debt ceiling. Even with the Republicans and the White House having no visible improvement in the situation. Tensions are building up between the US and China as both countries are battling for influence in the pacific regions. US and SG 10 Year bonds spiked upwards signaling that investors expect a longer high interest rate environment. Market participants should adjust their positions on their view on the short term to long-term time horizon.
Updates for the week (22 May 2023 – 26 May 2023)
The data below showing the economic releases read as “Analyst’s estimate/ Consensus | Previous data”.
This week’s upcoming economic news release mainly focuses on the US housing market data which is expected to slow down, GDP data and US consumer data. US consumer data is particularly important as the US consumer contributes roughly ⅔ (67%) of US GDP. These data will show market participants a glimpse into the strength and resilience of the US consumer. As analysts are forecasting a recession later into 2023, investors should pay attention to the data coming up on Friday.
The upcoming week’s corporate earning releases mainly focus on chip maker like NVIDIA as the push for AI has caused NVIDIA to have an impressive ~15% gain over the last month. Retailers like Costco, Dollar Tree and Best Buy will give investors a glimpse in to US consumer spending and forward guidance. Tech stocks like Xiaomi, Netease, Weibo, Meituan and Kuaishou is set to release earnings in HK stock market. Given that Tencent and Alibaba has released subpar results, investors might want to consider a more defensive position.
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.
Straits Time Index : Trading Opportunity
Trade Set-up:
- Looking at the weekly chart of STI, we can see that price has formed a ranging channel.
Trade Execution:
- We can look for long if price move toward support level zone(3100-3120) and form a bullish candle.
- We can chose to take profit at the resistance level(3300).
- However, a break below 3100 may signal a bearish move and the long trade will be void.
GBPUSD on the fence
Trade Set-up:
- GBP sellers retained control in the past week. With a dead cat bounce at the start of the week, capturing the 1.2500 handle, GBP/USD extended its corrective move lower through the balance of the week amid resurgent demand for the USD. A combination of factors, including growing optimism over a potential US debt ceiling deal, subsiding banking sector fears, hawkish Fed comments and upbeat US economic data, provided extra legs to the USD recovery. On the other hand, UK’s unemployment number rose, signaling a cool down in the UK labor market and easing the pressure to hike rates.
- Focus shifts to the UK and US inflation data amid diverging policy outlooks. UK CPI will be widely watched on Wednesday after the country reported another double-digit inflation in March. The minutes of Fed’s May meeting will also influence GBP/USD traders later on Wednesday. Risks remain skewed to the downside for GBP/USD amid the bearish technical setup where price actions remain below the two SMAs.
Trade Execution:
- Technically, GBP/USD pair appears to be sitting on the fence, waiting for Wednesday’s data. The support zone of 1.2350-1.2450 should provide cushion for the pair until Wednesday’s data releases. This indecision is also supported by the RSI hovering on the mid-line.
- Traders looking to get into the market should hold for better indications fundamentally on Wednesday. Traders already with positions should look for critical level breakouts above 1.2580 and below 1.2350.
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.
