<p style=““ class=“text-align-justify“>After the gains on Friday, oil is giving a decent amount back today with WTI crude down 1% to $78.95 at the moment. From a technical point of view, the $80 mark and 100-day moving average highlighted at the end of last week <a target=“_blank“ href=“https://www.forexlive.com/news/oil-a-big-winner-on-the-day-as-russia-says-that-it-would-cut-production-in-march-20230210/“ target=“_blank“ rel=“follow“>here</a> remain obstacles for any upside break.</p>

This article was written by Justin Low at www.forexlive.com.

<ul><li style=““ class=“text-align-justify“>When the inflation is generated by an external shock and runs at a high level, its positive impact on public finances can be reversed</li><li style=““ class=“text-align-justify“>According to the simulations, it takes one year for the euro area budget balance to be adversely affected by the inflation surge</li><li style=““ class=“text-align-justify“>In subsequent years, however, spending pressures intensify and more than offset the benefits on the revenue side, leading to nearly 0.5% of GDP deterioration in the budget balance level in 2024</li><li style=““ class=“text-align-justify“>Beyond the short run, euro area public finances may turn out to be negatively affected by the current high inflation episode</li><li style=““ class=“text-align-justify“>This would be the case even without considering governments’ discretionary policy response to the high energy prices and inflation</li><li style=““ class=“text-align-justify“>The monetary policy reaction required to avoid this inflation shock leading to undue second-round effects is being translated into an increase in interest payments on government debt</li><li style=““ class=“text-align-justify“>Beyond the short run and conditional on the monetary policy reaction, a negative impact on economic activity from an adverse supply shock may outweigh the positive impact of higher inflation on debt ratios</li><li style=““ class=“text-align-justify“><a target=“_blank“ href=“https://www.ecb.europa.eu/pub/economic-bulletin/articles/2023/html/ecb.ebart202302_01~2bd46eff8f.en.html“ target=“_blank“ rel=“nofollow“>Full economic bulletin</a></li></ul><p style=““ class=“text-align-justify“>This is contrarian to the view of some that governments might benefit as debt is inflated away and nominal tax revenues rise. So, that is definitely some food for thought for the longer-term macro picture across the euro area should inflation continue to stay at a high level in the coming year(s).</p>

This article was written by Justin Low at www.forexlive.com.

<p style=““ class=“text-align-justify“>S&P 500 futures have now inched into positive territory, cutting down losses of over 22 points from Asia trading earlier in the day. There aren’t any major headlines driving the recovery in the past hour or so and I would very much attribute this to some added choppiness and the push and pull in markets ahead of the main event tomorrow.</p><p style=““ class=“text-align-justify“>The dollar is also sitting more mixed on the day as such, keeping higher against the yen and holding light gains against the franc, pound and loonie while sitting lower against the aussie and kiwi on the day.</p>

This article was written by Justin Low at www.forexlive.com.

<ul><li>Euro area growth in 2023 likely to be 0.9% (up from 0.3% previously in November)</li><li>To avoid the supposed earlier technical recession</li><li>Sees Q4 2022 GDP at 0.1% q/q, Q1 2023 GDP at 0.0%</li><li>Euro area inflation in 2023 seen at 5.6% (down from 6.1% previously)</li><li>Euro area inflation in 2024 seen at 2.5% (down from 2.6% previously)</li></ul><p style=““ class=“text-align-justify“>On the forecasts, the European Commission did point out that uncertainty remains high but risks to growth are seen as being more „broadly balanced“ – something which the ECB also used in its language earlier this month.</p>

This article was written by Justin Low at www.forexlive.com.

<p>USDJPY technical analysis: Looking at the phases of the market cycle using bull and bear channels</p><p>Bull channels are price trends with higher highs and higher lows. In a bull market, prices bounce off the lower trendline and rise toward the higher trendline. In times of economic development and investor confidence, financial assets are in high demand and market sentiment is favorable.
</p><p>
A bear channel is a price trend with lower lows and highs. Prices decline from the top trendline and strike bottom at the lower trendline in a bear market. During economic recession and investor pessimism, financial asset demand drops and market sentiment is negative.

Prices fluctuate in a trading range without a distinct trend. </p><p>This market behavior might arise when market uncertainty or contradictory information impacting investor mood. The market may be indecisive and waiting for a stimulus to change direction, or it may be balanced by competing forces. Investment choices need knowledge of market behaviour and market cycles.
</p><p>
The USDJPY has been moving in a bear channel, and its end, a bull channel starts. Most people would see that only when we are at least half way past the start of that move.

Next, we see to identify a possible end of the next phase, the end of the next channel.

In this video, I speculate where that can be. Those are interesting spots for traders, as the plan their next trade zones to focus on, due to the potential high reward vs risk that these spots offer. In our case now, this technical analysis is guiding me to look for a short trade if and when USDJPY gets close to (slighly above or below) 134.772</p><p>If and when it does, the reward vs. risk on that short trade would be 8 to 1, or even 10 to 1.</p><p>Naturally, traders can also decide to take a Long till then, but their stops should be below the lower band of the bear flag shown in the video, making the trade plan a bit vulnerable and less attractive in terms of reward vs risk.</p><p>Trade the US dollar vs Japanese yen at your own risk, and visit <a target=“_blank“ href=“www.forexlive.com“>ForexLive.com</a> for additional views.</p>

This article was written by Itai Levitan at www.forexlive.com.

<ul><li>This article will give some insights on the <a target=“_blank“ href=“https://www.forexlive.com/terms/t/technical-analysis/“ class=“terms__main-term“ id=“97b48ade-9582-40e4-af10-290ec70138af“ target=“_blank“>technical analysis</a> of the Russell 2000, as well as a deeper look at the important indicators that traders and investors should keep an eye on. On weekly and daily time frames, resistance and support levels, the 20 exponential <a target=“_blank“ href=“https://www.forexlive.com/terms/m/moving-average/“ class=“terms__secondary-term“ id=“d39a8864-434f-487e-bd1e-f9b895111210″ target=“_blank“>moving average</a> (EMA), trend lines, candlestick patterns, and VWAP (aVolume-Weighted Average Price) are all analyzed.</li><li>On the weekly chart, a bull flag has been spotted, and it is possible that this level of support will be retested in the near future. Because so many traders are keeping a close eye on it, the 20-day exponential moving average (EMA), which currently sits at 1857.6, is also an essential indicator to track. Be on the lookout for a potentially negative trend if two weekly candles close below the 20-period exponential moving average.</li><li>On the daily chart, there are many supports in the short term. These include the two-week low at 1883.1 and the 1900 round number, which is a favorite area for traders to set their stops. Both of these levels can be seen in the immediate vicinity. It is also important to take note of the trend line; although it is not always a fundamental component, several algorithms do monitor it anyway. If the daily close goes below 1900, the Bulls might find themselves in a precarious situation, as the Bears could start to gain an edge.</li><li>The analysis also mentions a revent candlestick pattern. When looking at the weekly timeframe as shown in the video above, consolidation is indicated when an inner bar is shown on a lower time frame. This is because the inner bar’s body as well as its low and high are contained within the bar that came before it. The fact that the closing price did not fall below the opening price of the preceding candle is positive information for the bulls, especially after many of them got kinda scared that we are going to crash down, following the bearish price action on Wed and Thurs, 1st and 2nd of Feb.</li><li>When trading the Russell 2000, keeping an eye on these technical indicators can help you obtain a better understanding of the market trend and make decisions that are more informed. Pay close attention to the 20-period exponential moving average, trend lines, and candlestick patterns, in addition to the bull flag and important support levels. The closest and key price level to watch is the 1900 round number. Bulls want to see that a weekly candle does not close below it. Those that seek earlier information (but at a higher risk of being faked out) will want to see that a daily candle does not close below 1900.</li><li>Trade the Russell at your own risk and do return to <a target=“_blank“ href=“www.forexlive.com“>ForexLive.com</a> for additional updates and views.</li></ul><p>BTW, here are 10 interesting facts that you may or may have not known about the famous Russell 2000:</p><ol><li>The Russell 2000 Index tracks the financial results of 2,000 of the largest U.S. small and mid-cap corporations.</li><li>Originally developed by Frank Russell Company in 1984, the index is currently managed by FTSE Russell.</li><li>The Russell 2000 is frequently used by investors and financial experts as a measurement of small-cap performance.</li><li>The index is a decent depiction of the small-cap portion of the U.S. stock market since it is made up of businesses with market capitalizations between $300 million and $2 billion.</li><li>The Russell 2000 is often regarded as a proxy for small-cap market performance, economic growth, and investor mood.</li><li>The Russell 2000 includes varied organizations from many different industries, such as IT, healthcare, consumer products, and finance.</li><li>Because it comprises smaller and less well-known firms, the Russell 2000 is seen as a more representative indicator of the U.S. stock market than the more widely followed S&P 500.</li><li>To maintain its relevance as a barometer of the small-cap market, the Russell 2000 undergoes yearly reconstitution.</li><li>Larger, more established firms are less susceptible to economic and market shifts than the index, which is notoriously volatile.</li><li>Interest rates, economic growth, and political events are just a few of the outside variables that might affect the Russell 2000’s performance. Thus, both retail and institutional investors use it as a resource when making financial choices.</li></ol>

This article was written by Itai Levitan at www.forexlive.com.

<p>I’ve been writing about anecdotal reports that US home and auto sales suddenly picked up in the past few weeks. They’re the most interest-rate-sensitive part of the economy so they’ve been hit hard by Fed moves. However with rates ebbing early in the new year, a torrent of pent-up demand emerged.</p><p>I think it’s telling.</p><p>It shows that consumer still have money to spend and still want those houses and cars. Vehicle production was curtailed by the pandemic and still hasn’t caught up. Covid-19 also inspired many people to buy homes and start families; many were initially priced out but that demand is still there.</p><p>He notes that some of it is seasonal but that can’t explain it. Earlier this week, Manheim reported that its used vehicle index rose 0.8% m/m and that caught many off guard. </p><p>Before that data, many analysts were expecting auto sales to round trip.</p><p>Today Morgan Stanley is out with a note looking deeper and finding the same thing but still without explanations.</p><p>They spoke with a Ford dealer who said:</p><p>“We’re just blown away by how strong January was… the best used car month we’ve had in three years.“Here’s the explanation: The consumer is still flush and the Fed has more work to do. That’s precisely what was <a target=“_blank“ href=“https://www.forexlive.com/news/4-trading-themes-for-2023-1-never-underestimate-the-spending-power-of-the-us-consumer-20230101/“ target=“_blank“ rel=“follow“>my #1 theme</a> at the start of the year when everyone else was saying a recession was coming.</p><p>The knock-on investment here is simple: Homes and cars. The risk is that the Fed hikes to something so painful (6%? 7%?) that it truly ends the party. The second thing is that pent-up pandemic savings will eventually run out, likely at the end of 2023 so next year could be double-trouble if the Fed hikes further and the money runs out.</p>

This article was written by Adam Button at www.forexlive.com.

<ul><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/feds-harker-january-jobs-report-didnt-change-the-outlook-for-monetary-policy-20230210/“>Fed’s Harker: January jobs report didn’t change the outlook for monetary policy</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/usdjpy-limps-towards-an-unchanged-day-as-boj-speculation-swirls-20230210/“>USD/JPY limps towards an unchanged day as BOJ speculation swirls</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/technical-analysis/wti-crude-future-settle-at-7972-20230210/“>WTI crude futures settle at $79.72</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/mastercard-data-is-another-sign-that-the-consumer-remains-healthy-20230210/“>MasterCard data is another sign that the consumer remains healthy</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/us-january-federal-budget-deficit-390-billion-vs-63-billion-expected-20230210/“>US January federal budget deficit $39.0 billion vs $63 billion expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/bakers-hughes-oil-rig-count-up-10-in-the-week-to-609-versus-599-last-week-20230210/“>Bakers Hughes oil rig count up 10 in the week to 609 versus 599 last week</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/feds-harker-get-rates-above-5-and-then-pause-20230210/“>Fed’s Harker: Get rates above 5% and then pause</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/european-equity-close-a-soft-finish-to-ensure-a-negative-week-20230210/“>European equity close: A soft finish to ensure a negative week</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/Cryptocurrency/bitcoin-continues-to-send-worrisome-signals-for-the-risk-trade-20230210/“>Bitcoin continues to send worrisome signals for the risk trade</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/russia-plans-to-fix-urals-crude-differential-at-20-to-brent-report-20230210/“>Russia plans to fix Urals crude differential at -$20 to brent – report</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/umich-december-us-prelim-consumer-sentiment-664-vs-650-expected-20230210/“>UMich December US prelim consumer sentiment 66.4 vs 65.0 expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/technical-analysis/videothe-canada-job-release-surprises-what-next-for-the-usdcad-and-other-currency-pairs-20230210/“>VIDEO:The Canada job release surprises. What next for the USDCAD and other currency pairs.</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/ecbs-schnabel-further-rate-hikes-will-help-bring-inflation-back-to-our-target-20230210/“>ECB’s Schnabel: Further rate hikes will help bring inflation back to our target</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/us-december-cpi-revised-to-01-mm-from-01-20230210/“>US December CPI revised to +0.1% m/m from -0.1%</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/canada-january-employment-1500k-vs-150k-expected-20230210/“>Canada January employment +150.0K vs +15.0K expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/technical-analysis/the-jpy-is-that-the-strongest-while-the-eur-is-the-weakest-as-na-trading-begins-20230210/“>The JPY is that the strongest while the EUR is the weakest as NA trading begins</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/oil-in-focus-as-russia-cuts-supplies-20230210/“>Oil in focus as Russia cuts supplies</a></li></ul><p>Last week, the „WOW“ came from the US jobs report. </p><p>Recall the US added 517K new jobs, much higher than the 185K estimate. </p><p>Today, „WOW II“ came via the Canada jobs report which added 150K. That gain came after a sharp rise of 69K last month which was revised lower from 104K previously reported, but still quite strong. The two month gain of 219K is quite impressive. </p><p>To put the gain in perspective, the Canada population is 38.5M. The US population is 332M (roughly) or between 9 and 10 times larger. The US job add was 517K vs 150K for Canada. You can do the math. 69K is solid. 150K at this point of the post pandemic time period is very strong. Pre-pandemic, the high water marks for job growth going back to early 2000s was about 108K. </p><p>The unemployment rate at 5% was only bettered by 4.9% in May and June of last year when it reached 4.9% (going back to 2006).</p><p>The data propelled the CAD to the top of the standings for the strongest to the weakest. The GBP and the EUR are the weakest.</p><p>The USD was marginally higher today with gains vs the EUR, GBP, AUD, NZD and CHF. The dollar fell vs the CAD and marginally vs the JPY. </p><p>The USD was much lower vs the JPY at the start of the trading day as traders reacted to the reports that Masayoshi Amamiya – a dove – turned down the potential nomination. </p><p>The nominee – to be officially nominated next week – will be academic Kazuo Ueda. Ueda and economist educated at MIT, was a former board member and expected to still be supportive of ultraloose BOJ policy. He is just less known vs Amamiya. </p><p>So how did the dollar perform this week, one week after the „WOW I“ US jobs report? Recall, the US was the strongest currency at the end of the week last week.</p><p>Versus the major currencies, the USD was mixed this week with gains vs the EUR, JPY, AUD and NZD and declines vs the CHF and CAD. The green back was unchanged vs the GBP this week :</p><ul><li>Up 1.08 vs the EUR</li><li>Up 0.19% vs the JPY</li><li>Unchanged vs the GBP </li><li>Down -0.22% vs the CHF</li><li>Down -0.41% vs the CAD</li><li>Up 0.04% vs the AUD</li><li>Up 0.25% vs the NZD</li></ul><p>US stocks this week were lower with the Nasdaq falling for the first time in 5 weeks:</p><ul><li>Dow fell -0.17%</li><li>S&P fell -1.11%</li><li>Nasdaq fell -2.41%</li><li>Russell 2000 fell -3.36%.</li></ul><p>The S&P index closed the week back below the December highs near 4100 at 4090 tilting the bias a little more to the downside. </p><p>In the US debt market this week, yields continued their moves to the upside:</p><ul><li>2 year yield up 24 basis points to 4.525%</li><li>5 year yield up 27 basis points to 3.93%</li><li>10 year yield up 22.5 basis points to 3.745%</li><li>30 year yield up 22 basis points to 3.83%. </li></ul><p>In other markets:</p><ul><li>Crude oil moved up close to $7 or 8.75% helped by China reopening, US economy not going into a recession and Russia announcing 5% production cuts in retaliation for western sanctions. </li><li>Gold is ending the week virtually unchanged on the day. </li><li>Bitcoin last Friday closed at $23434. The current price is at $21577 as risk off sentiment pushed the price back down. The high on the rebound off the recent low reached up to $24258 on February 2. </li></ul><p>This weekend is the Super Bowl in my home town of Phoenix. My mind says Eagles, but got a hunch it will be the Chiefs. </p><p>In addition, the Phoenix Open golf tournament (The Greatest Show on Grass) with SOLD OUT crowds of 300,000 on Friday and Saturday (the Sunday crowd is traditionally lower as hangovers and the Super Bowl ease the numbers a bit) will take place just 5 miles from our house and pack restaurants and bars each evening. The tournament is home to the famous 16th Stadium Hole where „QUIET PLEASE“ is not part of the equation.</p><p>This is what they build every year, and then take down after the tournament. </p><p>Recession? What recession? </p><p>Have a SUPER weekend!</p>

This article was written by Greg Michalowski at www.forexlive.com.

<p>Daily changes:</p><ul><li>S&P 500 +0.2%</li><li>Nasdaq Comp -0.6%</li><li>DJIA +0.5%</li><li>Russell 2000 +0.2%</li><li>Toronto TSX +0.1%</li></ul><p>Weekly changes:</p><ul><li>S&P 500 -1.1%</li><li>Nasdaq Comp -2.4%</li><li>Russell 2000 -3.4%</li><li>Toronto TSX -0.7</li></ul><p>The Nasdaq consistently underperformed this week but that was after weeks of outperformance. in fact, this was the first weekly loss of the year for the Nasdaq. Even with that, it was an inside week, which doesn’t raise any technical red flags. The week ahead will be all about the CPI report and retail sales.</p>

This article was written by Adam Button at www.forexlive.com.

<p>The market was caught off guard in Tokyo trade on a report that Amamiya had turned down the role as BOJ Governor and that 71-year-old Kazuo Ueda was going to get the job.</p><p>Ueda wasn’t even on the long list of names people were speculating about, he wasn’t even a dark horse.</p><p>The immediate reaction was a hawkish one with USD/JPY tumbling. Since then, the market appears to have concluded that it doesn’t really know much about Ueda. That sentiment was hardened when he <a target=“_blank“ href=“https://www.forexlive.com/centralbank/ueda-says-boj-monetary-policy-is-appropriate-need-to-continue-easy-policy-20230210/“ target=“_blank“ rel=“follow“>said </a>today that BOJ policy is appropriate and that easy policy needs to continue.</p><p>Justin earlier wrote a great post on what he’s <a target=“_blank“ href=“https://www.forexlive.com/news/what-to-know-about-kazuo-ueda-the-man-set-to-take-over-as-the-next-boj-governor-20230210/“ target=“_blank“ rel=“follow“>said </a>in the past. There’s also this:</p><p>“From here on, with the restarting of economic activity post-Covid, there are expectations that there’ll be a stronger demand-inducing effect from the weaker yen. On the other hand, globally there’s likely to be a slowdown of inflation and economic growth. We should view the path toward achieving sustainable 2% inflation in Japan as still a long one.” </p><p>At some point the BOJ will have to exit YCC but naming Ueda as BOJ Governor isn’t a clear cut signal that it’s coming. That’s why USD/JPY has completed the round trip today.</p>

This article was written by Adam Button at www.forexlive.com.