Geopolitics, G20 meetings, Fed speakers, and a smattering of scheduled news will once again have the markets moving on headline news today. Going by the London open and the risk-on forex heatmap we may get some upside relief rallies in the equities and commodities, but I wouldn’t recommend trading today. Just wait for more market information and some price action to indicate where we may be heading.
Retail sales volumes rose by 1.9% in January 2022 following a fall of 4.0% in December 2021 (revised down from a fall of 3.7%); sales volumes were 3.6% above their pre-coronavirus (COVID-19) February 2020 levels and beat market expectations of a 1.0% rise.
The GBPUSD weekly chart looks very bullish as we come to the end of this week’s trading. Price action is above the EMAs showing good momentum, as does the bullish MACD. The stochastic and RSI indicators also show there is an upward momentum and that based on the previous close, still some way to go before overbought conditions can be put into consideration. A close above 1.37485 would indicate a new trading range to the upside as we once again attempt to travel back to the 1.4242 double top formed in 2021.
According to a report released on Friday by the Statistics Bureau of Japan, consumer prices in Japan rose less than analysts expected in January, with the headline index rising 0.5% on a yearly basis to stand at 100.3. It is a decrease from the 0.8% CPI recorded in December.
On a yearly basis, the CPI excluding fresh food and energy fell 1.1%, while the same index excluding only fresh food increased 0.2%.
The weekly USDJPY chart is signaling a divergence in price to the RSI and stochastic oscillators, so traders will be looking for this 3-drive pattern to roll over. The MACD is already showing the lack of momentum to the upside, but price action is maintaining a bullish trend as we can see in the EMAs. Last week’s high didn’t manage to get above the January high, so there is a chance that the flows into the yen due to geopolitics is the catalyst to get USDJPY to drop into the dynamic support of the 20, 50, or possibly 200-period EMAs.
Later today we have Canadian Retail Sales which are expected to come in lower for December. A beat of expectations would be good for the CAD and looking at the forex heatmap we could be in for a bullish Canadian dollar anyway.
Just after the London open the news reports from Ukraine started to come through, with the Ukraine Defence Minister saying that he estimates the probability of a large-scale escalation as being low. This along with lines of dialogue still open has eased market fears.
Gold has been one of the winners during this period of geopolitical uncertainty. Momentum is bullish, price action is bullish, and the RSI is not overbought. However, the precious metals markets have more than just a tendency to suck people into buying more, only to use that new buying pressure to swap their un-allocated gold in the futures market for spot deliverable gold. $1800 is by far the most traded level and there are no guarantees the gold bugs win big until we get out of the sub-$2k /oz range.