Market analysis of クランテック 2023.2.27
February 27, 2023
【Market Trends from Last Week】
Last week, the dollar and the three major U.S. stock indices (the U.S. stocks below) had little movement on the 20th due to a market holiday in the United States, but on the 21st US PMI reached its highest level in eight months, causing the dollar to rise and U.S. stocks to fall sharply. On the 24th, with the Bank of Japan Governor’s testimony attracting market attention, Ueda’s dovish remarks throughout the session pushed the dollar/yen higher, and dollar crosses such as euro/dollar, which move inversely to the dollar, declined due to the dollar’s strength. Then, the consumer spending data for January released that day exceeded expectations, causing the dollar to surge further and the dollar/yen to test a fresh year-to-date high, rising toward the mid-136s before the weekend closed. The euro/dollar fell below $1.06, closing around the mid-$1.05s. U.S. stocks declined substantially, forming a sizable bearish candlestick for the week.
For the yen and the Nikkei 225 (CFD), through the 23rd the cross-yen moves were not significant, and the Nikkei 225 (CFD) trended lower with resistance at higher levels. On the 24th, as noted above, the cross-yen rose slightly on the BoJ Governor’s testimony, and the Nikkei 225 (CFD) rebounded. Later, in response to the U.S. January personal consumption expenditures data, cross-yen rose further. Conversely, the Nikkei 225 (CFD) fell about half of its earlier gains as U.S. stocks declined. The Nikkei 225 (CFD) rebounded on the 24th, but the weekly candlestick closed as a bearish one.
【Forecast for This Week】
This week is a turn-of-month week, so the previously strong dollar may see some consolidation. On the 3rd, the U.S. February ISM Non-Manufacturing Index will be released. This coming week is expected to be quite active in the markets. That said, there may not be many factors pushing the dollar down before the U.S. indicators on the 3rd. If there is a decline today or tomorrow, it could be an excellent buying opportunity for the dollar. We hope for a pullback. The forex strategy for this week is to go long on the dollar/yen and short on dollar crosses (euro, pound, Aussie) for cross-yen movements. Consider going long on the dollar/yen near the 135 area, and target shorts on dollar crosses when entering the dollar/yen long position.
Following this, the outlook for U.S. stocks and the Nikkei 225 (CFD) remains to be a selling rally from the previous week. The Nikkei 225 (CFD), aided by the weaker yen, appears to have some support on the downside, but it did not break through last week’s highs and closed lower. The upside is expected to stay quite heavy. We anticipate downward movement that is led by declines in U.S. stocks.
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