Market analysis of KrakenTech 2023.1.11 - Navi+ - GogoJungle | Auto Trading - Market Analysis

January 11, 2023

【Last week market trends】

U.S. indicators showed mixed results; until the 5th, the dollar gradually strengthened, while U.S. stocks (the three major indices) moved flat to slightly weaker, resulting in a lack of clear direction.

However, the December unemployment rate released on the 6th came in below expectations. Although it showed strong employment, the average hourly earnings underperformed forecasts, causing the dollar to fall and U.S. stocks to rise toward the weekend.

Also, the short cross-yen strategy predicted in the previous market analysis failed, and the yen weakened.

Last week, the yen had been weakening in the first place, and with reports that “the Bank of Japan will not rush to revise YCC”, the yen weakened further.

【This week's market outlook】

First, regarding cross currencies as forecast previously, retail investors began taking more short positions around the end of last week, so it would be prudent not to join them in a short strategy. This week, it may be safest to refrain from shorting cross currencies. That said, it’s also wise to avoid long positions in major currencies other than the U.S. dollar. For now, cross-yen should be left on the sidelines.

Next, about the dollar and U.S. stocks: this week the U.S. CPI will be released. The outcome may largely determine this month's trend. If the CPI comes in below expectations, the dollar will likely fall and U.S. stocks will rise. If it comes in above expectations, the dollar could rise and stocks may fall considerably.

Rather than positioning now based on CPI predictions, it would be prudent to react after seeing the results and follow the direction of the movement.

However, if you are trading with mid-to-long-term positions, I believe the dollar is a currency you would want to long.

This is because, although inflation is said to have peaked, it remains at a high level, and the FED must avoid prolonging this state, which is also why they have stated so.

The market is underestimating the Fed's message, selling the dollar and buying stocks, but in the writer's view, the market appears to be pricing in rate cuts too eagerly.

If tomorrow's CPI comes in below expectations, the dollar will likely fall in the short term and U.S. stocks will rise. However, it is unlikely that this trend will continue for long at present.

※This article is not intended to prompt investment decisions. Please make your own final investment decisions. We assume no responsibility for any damages arising from this article.