Weekly Updates 3/7/23 – 7/7/23 July 3, 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 (26 June 2023 – 30 June 2023)
*These prices are taken based on the previous Monday’s opening price and the preceding Friday’s closing price.
Last week closed the books on the first half of 2023. Though gains so far may have flown somewhat under the radar for some investors as the scars of 2022 may not yet have fully healed. Wall Street’s three major indexes advanced solidly on last Friday, with the tech-heavy Nasdaq boasting its biggest first-half gain in 40 years. Market participants are looking forward to the upcoming data which fueled hopes the Fed could be near the end of its rate-hiking cycle. However, hawkish remarks from Fed Chair Jerome Powell and strong economic data earlier this week boosted bets the Fed would keep hiking rates, but stock markets took comfort in signs of strength in the U.S. economy as inflation cooled.
Updates for the week (03 July 2023 – 07 July 2023)
The data below showing the economic releases read as “Analyst’s estimate/ Consensus | Previous data”.
This week’s macro news mainly focuses on the Factory Orders data and jobless claims data along with the Unemployment rates are coming out of the US. Analysts are expecting mixed data from Factory orders going up from 0.4% to 0.8% and trade balance to fall due to the hawkish tone by the FED to bring down inflation to ~2%. For China, the Caixin PMI manufacturing is expected to fall to 50, indicating that the manufacturing sector in China is sputtering. Although recent signals have been mixed, China’s manufacturing industry is expected to contract due to the weak demand for goods from local and from abroad.
This week’s corporate earnings releases mainly focuses on AZZ Inc which is the leading provider of galvanizing to many end-markets, many institutional investors and hedge funds including Vanguard Group Inc has plans to grow heir position in AZZ in Q3 2023, investors are paying a lot of attention to its upcoming earnings release. Simulations Plus has outperform its underlying earnings growth over the last 5 years which attract a lot of investors who are interested in expanding their portfolio to the biotech industry.
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.
USD/JPY Short Term Uptrend To Test Range High
Trade Set-up:
- USD/JPY was in uptrend in 2022 due to world recovery from Covid, followed by downtrend in Q1 of 2023 resulting from US debt ceiling and recession scares
- Market is now in an uptrend again with all EMAs (10 / 20 / 50) pointing up
- In the short run, USD/JPY is on track to re-test the recent high of 151.945
Trade Execution:
- Bulls may enter a long trade here with target at 151.XX level for 600-700pips reward (or wait for retracement to the 20 EMA)
- Trailing stop loss can be employed when price closes below the 50EMA – possibly signifying a shift in momentum. Initial stop loss may be placed at around 139 for a rough 1:1 Risk:Reward
EUR/USD stabilizes above 1.0900 ending the week flat
Trade Set-up:
- EUR/USD clings to daily recovery gains above 1.0900 with sharp declines seen on Wednesday and Thursday as the US dollar continue to garner strength against other major currencies. The pair ended the week flat on the back of last Friday’s rebound.
- Positive risk sentiment and hawkish expectations about the outlook of the European Central Bank (ECB) are helping to support the EUR/USD. This is especially so following the hot inflation figures from Spain and Germany earlier last week and a stronger HICP growth in the Eurozone.
- From a technical perspective, the pair traded into a mini consolidation phase just below previous resistance levels of 1.0980 and 1.1100. A breakout above 1.0980 could spark the pair’s move to 1.1100 level. This coincides with the RSI indicator gathering strength as it consolidates within the buy zone above the 50 level.
Trade Execution:
- Technically, the pair is considered on range trading. Fundamental factors favouring both the EUR and the USD remains intact. The US dollar though appears overbought and this gives rise to opportunity for EUR/USD to break through the resistance on the top-side.
- Traders could use these levels as technical guides to either limit their losses or take on new positions with breakout plays to the top-side.
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
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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.
