Weekly data events and outlook 23-27 Jan 2023. Copper prices could consolidate before next any move.
Last week had a mixed trade for entire market. From the currency front USD/INR spot drop by 0.28% and settled at 80.9625 as compared to previous week close of 81.25. It had hit eight-week low after dollar fell below June 2022 low against to its major counterparts.
U.S. dollar edged lower sharply after the Bank of Japan maintained its accommodative stance, bucking expectations for a hawkish policy shift. The BOJ also said it will maintain the range of fluctuation in 10-year bond yields at between 0.5% and negative 0.5%, confounding expectations for a further adjustment in the rate, after the central bank unexpectedly widened the range in December.
Adding to this, US dollar and bond yields were tumbled in anticipation the Fed will execute its smallest rate hike in eight months at the February 1, 2023 conclusion of its next policy meeting, versus a stream of aggressive increases it pulled off in 2022. US Consumer Price Index, or CPI, rose by 6.5% in the 12 months to December. It was the slowest annual advance for the CPI since October 2021.
On the other hand, Bullions continued its recent bullish trend and hitting a multi week high settled with more than half percent gains as falling dollar helped in recent gains of yellow metals last week. MCX GOLD Future settled at 56658, gained 0.59%. Comex Gold Future $1928.20, up 0.354%. However, after struggling in between gains and losses, MCX SILVER Future settled down by 1.27% at 68547, while Comex Silver Future at $23.9350, down 1.79%.
Crude Oil extended its recent gain and MCX Future prices settled with a gain of 2%, at 6620.
Nymex Crude Future settled up by 1.51% at $ 81.64. MCX Natural gas dropped more than 10% and settled at 262.6, while Nymex GAS future settled down by 7.17% at $ 3.174.00
Base metals remained somewhat positive, where Copper future gained 0.53% in MCX and settled at 776.10, Comex Copper gained 0.84% and settled at $ 4.2515. MCX Aluminum Future settled with 0.68% gain at 220.60. ZINC future gained 2.48% and settled at 295.70, while Lead prices retreated from the weekly high and settle down by 0.68% at 189.05.
This week, U.S. debt ceiling looks likely to loom large over financial markets as earnings season continues.
Markets will react on U.S. fourth quarter growth which is expected to remain favorable despite more recent signs of a slowdown. The Euro zone is to release PMI data while inflation data from Japan will also be closely watched. Here’s what you need to know to start your week. While from domestic front, Union budget will unveil on 1 February 2023 and hope for more infrastructure spending bill to support domestic economy , whichwill drive market.
U.S. economic data for next week
The U.S. is to publish a first estimate of fourth quarter gross domestic product on Thursday with forecast to have expanded by an annualized 2.6%, after 3.2% in the third quarter.
The economic calendar also includes data on initial jobless claims, durable goods orders and new home sales on Thursday and the personal consumption price index on Friday.
Eurozone economic data for next week
Several European Central Bank officials are due to make appearances before policymakers enter their traditional pre-policy meeting blackout period on Thursday. The ECB’s next policy meeting is on February 2.
ECB President Christine Lagarde, who last week pushed back against market bets that it would slow the pace of rate hikes given recent falls in inflation, is scheduled to make two appearances.
Meanwhile, Eurozone data may give further indications of the health of the economy.
The bloc is to release flash PMI data on Tuesday that is expected to tick higher, while the closely watched German Ifo business climate index on Wednesday is expected to improve for a second month.
Japan economic data for next week
Japan is to release consumer price inflation data for the Tokyo region Friday that will be closely watched after the Bank of Japan last week defied market expectations for a more hawkish policy shift when it maintained the rate of yield curve control.
Japanese inflation is running at a four-decade high and is double the BOJ’s 2% target but the BOJ is pushing back against market bets that the end of its long-standing, ultra-loose monetary policy is near.
CANADA economic data for next week
Canada is to release monetary policy on Wednesday may create volatile momentum for dollar and metal prices.
UK economic data for next week
UK is to release Flash Manufacturing PMI and Flash Services PMI on Thursday which will drive the Pound momentum.
Meanwhile, Australia and New Zealand are both due to release inflation data on Wednesday as the Reserve Bank of Australia contemplates whether it’s time to pause rate hikes and the Reserve Bank of New Zealand considers how much more to tighten monetary policy.
China will remain on holiday all next week, while Hong Kong and Singapore also for around half of it. China is the world’s second-largest economy and their absence will expect reduce somewhat volatility in metal prices.
Copper Outlook
MCX Copper was able to gain 0.53% and settled at 776.10 as compared to previous week close of 772.0. A slightly positive sign in Chinese retail sales, inflation, and industrial production released last week was helped to bring some optimism over an economic recovery which boosted prices of metals prices. Further, weakness in the US dollar also helped in recent gains in metal prices.
Since November 2022, commodity prices surged from low of 641.15 and recently made a high 787.70 on MCX.
Some favorable new from China boosted demand for world major commodity prices. Where, Beijing’s lifting of lockdowns and other COVID measures will, over time, help the Chinese economy normalize. But in the short term, there could be very high levels of new infections from the virus in the world’s largest population, with the spikes coming at a time when the economy is still vulnerable China’s economy closed last year in a major slump. Factory activity in the country contracted in December at the fastest pace in nearly three years. The official manufacturing purchasing managers’ index (PMI) slumped to 47 last month from 48 in November, according to the National Bureau of Statistics. It was the biggest drop since February 2020 and also marked the third straight month of contraction for the index.
China’s non-manufacturing PMI, which measures activity in the services sector, plunged to 41.6 last month from 46.7 in November. It also marked the lowest level in nearly three years. And although the government has stepped up its support for the property market, the effects are still slow to take effect – home sales fell again in December.
On the other hand, US exports of recycled copper and copper alloys also increased 2.5% year over year through November, rising to 862,000 metric tons, said the report. It attributed the growth to higher demand from various global sources, beginning with China, which saw a 26% hike in demand; India, where demand grew by 66%; and Thailand, which saw an increase in demand of 45%. Those increases offset a 57% drop in recycled copper shipments to Malaysia, ISRI state
Technically, Weekly price action resulted in formation of high wave candle stick which creating probability for indecisiveness. Near term trend expect to remain volatile to positive as copper prices is yet trading above its 100 SMA on weekly chart.
It’s expected that any temporary correction towards 770-768 could attract buying activities for target 776-782. On the downside, crucial support is seen at 760.50 and break below only Copper Future may retreat towards 755-745. Further, global recession jitters and India Union Budget exceptions may hold volatile momentum.
Silver expect to shine again
Technical View- since 26 December 2022, MCX Silver Future is consolidating above 67500 levels and struggling to break resistance of 70100 levels. However, Silver future is still trading above 100 SMA which is creating a probability for a pullback from every dip, unless prices give a closing below 67350.
In case prices break above 69020 levels, then we could expect a bullish rally towards the next resistance of 69750-70050. Else, any dip towards 67500-67450 could attract short term buying activities with stop loss below 66750.00
On the downside, Crucial support is seen at 66750 and a break below only could expect to test next support 65850-65500.
Dollar/Rupee
USD/INR spot plunged from the weekly high 81.8825 and settled at 80.9620, down 0.35%. Pair took steep fall, as US dollar and bond yields tumbled in anticipation the Fed will execute its smallest rate hike in eight months at the February 1, 2023 conclusion of its next policy meeting, versus a stream of aggressive increases it pulled off in 2022. US Consumer Price Index, or CPI, rose by 6.5% in the 12 months to December. It was the slowest annual advance for the CPI since October 2021. Adding to this, pair extended its fall as U.S. dollar edged lower sharply after the Bank of Japan maintained its accommodative stance, bucking expectations for a hawkish policy shift.
Technically, USD/INR is trading on verge of crucial support of Symmetrical triangle on weekly chart. Near term momentum will turn bearish following the above formation and it’s expected that a break below 80.60 will extend recent fall and USD/INR could test next support 80.30-79.65. Alternatively, failure of a break could create probability for a pullback towards immediate resistance 81.55-81.90.