Fundamental Analysis

by | Nov 30, 2022 | Forex Analysis, Forex Education

Fundamental
Hi everyone,
We would like to give the credits for this post to our member James (iamjacka). His fundamental and technical analyses have been very good and we didn’t want the post to go unnoticed. He posted this in the forum so for the ones who don’t go in there often I would suggest to use it more. It is part of your membership and there are many other traders participating and posting their analysis.
Make use of it, it doesn’t cost your anything extra.
Here is James in his own words.
************************************

Happy Sunday everyone,

Here’s my view on the week ahead and the trades/areas I’ll be watching. I’ll also be looking at seasonality and researching how institutions hedge especially in what has been a year where trading with the USD trend has worked very well resulting in a lot of people net long USD. End-of-year hedging (for bonuses and performance) could see large funds selling dollars to get flat going into year-end to book some profits. This could cause dollar weakness – but I haven’t done much research into this it seems to have a little bit of logic behind it [at least my logic which may be fatally flawed]

Weekly Outlook:

Macro Outlook:
China is struggling with COVID – reporting record case numbers – insistence on zero covid policy has a lot of cities on lockdown. It is causing relatively widespread civil unrest which is unusual in China. This will put a reduced demand on goods due to decreased uptake and activity – this could impact NZD as a food exporter to China and a beneficiary of an open Chinese tourism economy/policy.
China has also said that they are making loans available to support the real estate sector – this could potentially be bullish for raw materials if the loans are to be used in construction – AUD bullish?

Fed announced a preference to slow rate hikes- however, said that inflation is still well above target and risks still remain to the upside. Dec 14th is the next rate announcement where 50bps is seen as the early consensus. If employment remains strong (NFPs this week) and Core PCE prints high – I don’t see the reason to reduce given that the Fed has said previously that they are prepared to act to bring inflation down to its target.

Eurozone – War in Ukraine has potentially quietened – Winter may slow the on-the-ground action and battles – Gas storage in the eurozone also seems less of an issue – currently 90% full which is in line with previous years. There is also a reduced demand due to inflationary pressures on manufacturing. It would appear the risks are reduced for Eurozone in the short term (with regards to Russia and energy).
Seems to be a mixed outlook estimate on the EUR whether another 75bps increase will happen or a smaller hike on recessions fears. CPI for the 4 major EUR countries out this week.

JPY is a mixed bag, Recent announcement of intent to build their own semi-conductor industry and supporting supply chains could be interesting from an industrial demand point of view. Yield curve control is still the biggest factor for the JPY. Carry trades between low-yielding YEN and something with a relatively stable higher yield like the USD could cause another leg up, but any unwinding of a carry trade could drop the USDJPY lower. If that is coupled with any intervention or the abandoning of YCC then the JPY could have long-term bullish momentum from these levels

Wider Techs/correlations

DXY: Sitting at support level in the form of price S&R level and sitting on the Daily 200EMA. Next area of resistance would be 110.00 – this would be a previous resistance level and signify a gap clearance on the weekly chart.

S&P: Coming up to 3 of levels of resistance – previous S&R level at ~4150, descending trendline, weekly 55ema and daily 200ema.

Oil: sitting at a clear previous support level.

Copper: Broken a descending trendline, currently retesting – my bias is bullish in the medium term, but the 3.500 area could be a nice place for a long.

SZSE1000 is a bit choppy – no clear direction and will likely depend much much more on geo-pol’s rather than technicals.

VIX is decreasing and is currently at a strong level where it has reacted 3 times in the past year – Risk on sentiment seems unlikely but could line up with a Fed easing or perceived pivot.

Starting views:
USD potential strength – but any weakness in data release could result in bearish action
CAD weakness
EUR strength
GBP unsure
AUD potential Strength
NZD potential weakness
CHF unsure
JPY mixed

Trades to watch
AUDCAD Long @ 0.8840. A second potential area is 0.8700
AUDUSD Short @ 0.6829 (but macro view doesn’t really support this)
EURCAD Long @ 1.3625
EURUSD Long @ 1.0050. Second area is 0.9800
GBPUSD Long @ 1.1600 (macro view doesn’t line up but GBP is a mixed bag)
USDCAD Long @ 1.3100

Have a good week!

James

As always, remember correlation!

We are NOT a “tipping service” our aim is to teach you how to trade for yourself.

Related posts:

Fundamental Analysis: The Eagle Turns Dovish? Fundamental & Technical Analysis 125 Pips Aud Win Fundamental Week in Review – Big Brexit Week, again! Why Use Fundamental Analysis (Part 2)

None of the Forex Mentor Pro team nor its owners (expressly including but not limited to Marc Walton), officers, directors, employees, subsidiaries, affiliates, licensors, service providers, content providers and agents (all collectively hereinafter referred to as “Forex Mentor Pro ”) are financial advisers and nothing contained herein is intended to be or to be construed as financial advice

Forex Mentor Pro is not an investment advisory service, is not an investment adviser, and does not provide personalized financial advice or act as a financial advisor.

Forex Mentor Pro exists for educational purposes only, and the materials and information contained herein are for general informational purposes only. None of the information provided in the website is intended as investment, tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement, recommendation or sponsorship of any company, security, or fund. The information on the website should not be relied upon for purposes of transacting securities or other investments.

You hereby understand and agree that Forex Mentor Pro, does not offer or provide tax, legal or investment advice and that you are responsible for consulting tax, legal, or financial professionals before acting on any information provided herein. “This report is not intended as a promotion of any particular products or investments and neither Forex Mentor Pro group nor any of its officers, directors, employees or representatives, in any way recommends or endorses any company, product, investment or opportunity which may be discussed herein.

The education and information presented herein is intended for a general audience and does not purport to be, nor should it be construed as, specific advice tailored to any individual. You are encouraged to discuss any opportunities with your attorney, accountant, financial professional or other advisor.

Your use of the information contained herein is at your own risk. The content is provided ‘as is’ and without warranties of any kind, either expressed or implied. Forex Mentor Pro disclaims all warranties, including, but not limited to, any implied warranties of merchantability, fitness for a particular purpose, title, or non-infringement. Forex Mentor Pro does not promise or guarantee any income or particular result from your use of the information contained herein. Forex Mentor Pro.com assumes no liability or responsibility for errors or omissions in the information contained herein.

Under no circumstances will Forex Mentor Pro be liable for any loss or damage caused by your reliance on the information contained herein. It is your responsibility to evaluate the accuracy, completeness or usefulness of any information, opinion, advice or other content contained herein. Please seek the advice of professionals, as appropriate, regarding the evaluation of any specific information, opinion, advice or other content.

Marc Walton, owner of Forex Mentor Pro, communicates content and editorials on this site. Statements regarding his, or other contributors’ “commitment” to share their personal investing strategies should not be construed or interpreted to require the disclosure of investments and strategies that are personal in nature, part of their estate or tax planning or immaterial to the scope and nature of the Forex Mentor Pro philosophy.

All reasonable care has been taken that information published on Forex Mentor Pro website is correct at the time of publishing. However, Forex Mentor Pro does not guarantee the accuracy of the information published on its website nor can it be held responsible for any errors or omissions.