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  • Weekly Focus: Fed, ECB, BoE, Non-Farm Payrolls, OPEC+, and Big Tech Reporting

Weekly Focus: Fed, ECB, BoE, Non-Farm Payrolls, OPEC+, and Big Tech Reporting

This super week started on a negative note as the S&P 500 broad market index went down by 0.8% to 4036 points. This looks quite unusual but some market participant may be aware of the unexpected decisions and events that are seen to be happening behind the scenes, away from the crowd’s eye. This week is one of the tensest in 2023 so far, and certainly most important, in recent months. So, investors are seen to form rather cautious outlooks for further perspectives.

Major events will start on Wednesday when the Federal Reserve (Fed) will announce its long awaited interest rate decision. Investors expect the Fed to raise its interest rates by 25 basis points, but nobody has a concrete idea certain about the rhetoric of the monetary watchdog for its future intensions. So, investors have increased their short positions in short-term Treasuries to record highs that may signal they are afraid of the Fed’s strong hawkish rhetoric.

The corporate earning reporting season is close to its zenith as tech giants Amazon.com (AMZN), Apple (AAPL), Alphabet (GOOG), and Meta Platforms (META) are about to present their Q4 2022 financial results. Many companies have missed analysts’ expectations this season, so we may expect that some of the Big Techs to disappoint investors.

The European Central Bank (ECB) and the Bank of England (BoE) will make their interest rate decisions on Thursday. The ECB is expected to raise its rates by 50 basis points, but the rhetoric may signal a slowdown of further interest rate hikes. In this situation investors may be faced with a more hawkish Fed. This may dramatically affect the Euro.

The closing of the week will be highlighted by the Non-Farm Payrolls report for January. This data may certainly generate elevated volatility. Technically, the S&P 500 index is within the upside formation with the primary target at 4100-4200 points. But it has now entered the reversal opportunity window which is expected to remain open until the Fed’s meeting next week. The index went into a technical correction after reaching the resistance level at 4080-4100 points. The nearest support is at 3980-4000 points, the next resistance is at 4180-4200 points.

The oil market is another story. Brent crude prices retreated after a vain assault on the resistance level at $87-89 per barrel. The meeting of the Organisation of Petroleum Exporting Countries and its allies (OPEC+) on February 1 may push prices in either direction. Technically, Brent prices are likely to be headed on their way down, but OPEC+ has surprised markets many times before so it is better to be prepared for any developments. Besides, the military conflict over Iran may bring with it some surprises in the case of further escalation.

Gold prices are moving inside the mid-term, upside formation with targets at $2000-2100 per troy ounce by the middle of 2023. Prices have largely exceeded the upper margin of $1880-1900 per ounce, hovering around $1948 per ounce. Odd price growth over the last week may suggest a further price rally to $1970-1990 per ounce without any stopovers, but may also signal to a possible swift change of a trend to the downside during elevated volatility to rewrite last year’s lows. The realization of either scenario may happen this week.

The money market is ready for the strengthening of the U.S. Dollar even though it has ignored any upside signals for the American currency. Considering the high volatility in the market, it is better to place orders that are attached to longer perspectives. Short trades for EURUSD opened at 1.06700-1.07200 with a downside target at 5000 points below the opening level and the same 5000 points for a stop-loss order should be considered very attractive.