Daily Analysis

Enter the world of investing today!
Get Started

Fundamentals

20.05.2022

Europe

In the European session, the focus was on the minutes of the Central Bank's third monetary policy meeting (ECB) on April 13 and 14. In the April meeting, in line with market expectations, the Bank left the refinancing operations rate at 0.0 percent, the deposit rate at minus 0.50 percent, and the marginal refinancing rate at 0.25 percent, while the monthly net purchases under the APP amounted to 40 billion euros on April, 30 billion euros in May and 20 percent in June. He gave the information that it will be billions of euros. The minutes of the meeting state that while the members of the Governing Council expressed concern about inflation, they also stressed that price pressures are widespread and that there are factors that could make the outlook for inflation rates more durable, contrary to expectations. The report noted that many members generally believed that net asset purchases should end sooner, rather than in the third quarter, and indicated that the possibility of an interest rate increase should be explored soon. German Chancellor Olaf Scholz said ahead of the EU summit that Ukraine's goal of joining the EU will not be accelerated even though the country is occupied by Russia, adding that the Union must find a "quick and pragmatic" way to help Kyiv. On the other hand, the EU High Representative for Foreign Affairs and Security Policy, Josep Borrell, will announce the EU, the Gulf Cooperation Council (GCC), with energy, environment, migration, climate change, trade, and economic diversity, regional stability, and global security issues as a "strategic partnership" with the scope of work. In the macroeconomic calendar; according to data from ECB, the region's current account recorded a deficit of 1.6 billion euros in March for the first time since 2012.

US

In the U.S., which is at the center of global markets, the tightening messages from members of the Federal Reserve (FED) regarding asset pricing are closely followed. While the chairman of the Minneapolis FED, Neel Kashkari, stated that the bank will bring the interest rate to a neutral level by the end of 2022, the president of the Chicago Fed, Charles Evans, indicated that he expects a 50 basis point rate hike at the next meeting and stated that he expects the economy to cool down if the bank tightens policy. The New York branch of FED then pointed out that pressure on the global supply chain intensified in April due to quarantine measures in China, the war between Russia and Ukraine, and rising air transportation costs between the U.S. and Asia, while recent developments in geopolitics and the coronavirus epidemic affected global supply chains. He said that could add to the pressure. On the other hand, the annual meeting of the World Economic Forum (WEF), which has not been held for 2 years because of the coronavirus pandemic, is just days away, May 22-26, in Davos, Switzerland. Rebuilding societal trust, use, and effectiveness of sanctions, and perspectives on energy; 50 heads of state, 300 government officials, and about 2,500 global business representatives are expected to attend the forum, which will feature panels on such topics as overcoming the crisis and preventing the global food crisis. In foreign policy, it was reported that while tensions were high in the Russia-Ukraine war, the Biden government was considering preventing Russia's bond payments. In addition, President Biden is expected to sign the 40 billion dollar aid bill to Ukraine, which was approved by the US Senate with 86 votes to 11. In the macroeconomic calendar; According to data from the U.S. Department of Labor, applications for unemployment benefits totaled 218,000 in the week ended April 13, beating market expectations of 200,000. In addition, according to data from the FED, Philadelphia manufacturing index was 2.6 points in May, below the expectations of 16.0 points. Finally, according to the data from the National Association of Realtors (NAR), existing house sales in April decreased by 2.4 percent to 5.61 million.

Britain

In the UK session, the government's announcement of the new sanctions package against Russia was at the forefront. The government announced that new sanctions have been imposed on Russia's airline industry and that these sanctions will prevent Russia from benefiting from first-class aviation and transportation industries. Foreign Minister Lizz Truss also emphasized that each economic sanction reinforces the clear message they gave to Russian President Vladimir Putin and pointed out that they will continue to impose sanctions on Russia until Ukraine win the war. On the other hand, after the consumer inflation data (CPI) in the UK reached a peak of 40 years with 9.0 percent, below the market expectations of 9.1 percent on an annual basis, in April, British Finance Minister Rishi Sunak pointed out that they will take more than action regarding high inflation.

Asia

In China, which is the locomotive economy of Asia, coronavirus-based news flows are closely followed. According to the statement made by the National Health Commission, 1 411 cases of coronavirus were recorded in the last 24 hours in mainland China. However, it was very important to end the curfew in low-risk areas where approximately 12 million people live in Shanghai, the city known as the financial center, in the country where the Zero Covid policy was implemented the day we left behind. On the other hand, relations between the United States and China continue to deteriorate. While the Chinese Foreign Ministry warned Washington not to interfere in the country's internal affairs, it was noteworthy that the US would take drastic precautions if it continued to play the "Taiwan card". On the other hand, the Prime Minister of Japan, one of the leading countries of the region, Fumio Kishida, pointed out that Ukraine's financial situation deteriorated after the attacks of Russia, and stated that they received a call from Ukraine to support short-term funds and that his country would provide another 300 million dollars in financial aid. Thus, Japan's financial aid will amount to 600 million dollars in total. Subsequently, the Japanese government reportedly plans to lift the entry restriction for tourists to the country this month, as part of the coronavirus precautions.


Indicators

Volatility Indices

Volatilityindices
Volatility IndicesDownload Image

Volatility indices are calculated based on the buy-sell difference of option contracts, in which stocks are the underlying asset. If the index value is below 10 points, optimism is dominant in the markets and investors are willing to take risks, although the calculation between 10 and 30 is considered the normal range, the stress begins to increase and if it is above 30 points, it is interpreted as pessimism is valid and there will be fluctuations in asset pricing.


US Index

USIndex

In the pricing of assets in international markets, the expectation that the US Federal Reserve (FED) will become aggressive in tightening the monetary policy against inflation pressures continues to be the main story. At this point, Fed Chairman Jerome Powell's message that they would continue to tighten their monetary policy until inflation fell clearly and convincingly was quite effective. As a matter of fact, it is quite clear in the outlook of the dollar index that the dollar, which is in demand with interest rate expectations, weakens the currencies of developed countries. As long as 102.40, which plays a strong support role below, is maintained, the momentum in favor of the dollar is likely to continue. From this point of view, 103.60 and 104.00 resistances can be followed by overcoming the 103.20 resistance above.

Support102.40102.00101.60
Resistance103.20103.60104.00

Parities

EURUSD

While the markets are almost certain that the European Central Bank (ECB) will raise interest rates for the first time in more than 10 years, next July, recovery efforts are seen in the euro. However, aside from the fact that the ECB lagged behind the FED, the current account deficit for the first time since 2012 due to the effects of the war on the European economy has put a strong pressure on the pair. Technically, as long as the above 1.0620 resistance is not exceeded, the decline will continue in the third wave, and 1.0530, 1.0485 and 1.0445 supports remain important.

Support1.05301.04851.0445
Resistance1.06201.06601.0700

GBPUSD

While the decreasing possibilities for the continuation of interest rate hikes from the Bank of England (BoE) limited the gains of the pair, the recession concerns on the table for the British economy weigh on the pound. From a technical point of view, a meaningful recovery is not likely unless a permanent transition to the 30-period weighted moving average is achieved in the pair. However, the level of 1.2375, which was tested during the day we left behind, will be decisive for the continuity of sales. With the break of 1.2375, the sales may consolidate and 1.2300, which will be the 1-week low, may come to the fore behind 1.2300.

Support1.23751.23001.2220
Resistance1.25201.26001.2680

USDJPY

The pair could not participate in the interim uptrend, which it ended on May 11, as it failed to gain volume in the trials it carried out throughout the week. Confirming the end of the uptrend with its stay below the psychological 130.00 level, the pair stretched below the 200-period weighted moving average after a short-term narrow-band movement. However, in the parity, where the correction path is opened, the 126.75 level, which was last traded on April 18, should be watched closely. A move below 126.75 is 125.85 followed by Fibonacci 38.2 percent rejection. The slack may continue until the level of 125.00, which is crossed by the line.

Support126.75125.85125.00
Resistance128.65129.50130.35

Commodities

XAUUSD

In the absence of macro data, which will create a significant market movement in the world's largest economies, the appearance of the dollar and bond yields continue to be the main factor in the difficulty of finding demand for ounce of gold. In its technical view, as long as the 1856 level is defended above as a resistance, the yellow metal can break down to the 1810 support behind 1826, with the sales potential to be preserved in its contracts. In the transition to 1856, 1871 and 1885 resistances can be followed on the way to recovery.

Support182618101795
Resistance185618711885

USOIL

Oil stocks are decreasing in the world's largest economy. According to the data announced by the Energy Information Administration (EIA), in the week ending May 14 in the USA, stocks showed the biggest decrease in a month at the level of 3.39 million, despite the markets' expectations for an increase of 1.38 million, we see that supply-side concerns dominate the pricing. On the other hand, the lifting of the curfew for the population of 12 million in Shanghai, the largest city in China, has a demand-side contribution. As a matter of fact, pricing continues to rise in its technical outlook in the third wave. As long as the Fibonacci 61.8% fan line is preserved, upside momentum in the 3rd region can be focused on 110.85 followed by 113.30 resistance. If the Fibonacci is below 61.8 percent, the 103.00 – 100.30 range can work as a power gathering zone.

Support105.55103.00100.30
Resistance110.85113.30116.00

XAGUSD

Silver maintains the reactions from its 2-year low on May 13 at 20.45. The commodity finished yesterday's trading with a gain of over 2 percent, ended its descending channel movement and headed towards the correction path. If 22.25 resistance can be overcome at the first level above, the losses can be taken back up to the Fibonacci 38.2 percent rejection line, which marks the 22.65 level last May 5. In possible retracements, 21.50 and 21.15 supports can be followed.

Support21.5021.1520.80
Resistance22.2522.6523.00

Indices

DAX40

In the minutes of the European Central Bank's (ECB) monetary policy dated 13-14 April, its members evaluated that their net asset purchases should end earlier than the third quarter and the possibility of a rate hike soon after, while German 10-year bonds climbed to 1.09 percent levels, while DAX40 weakening is observed. As long as the 14 320 level is defended as a resistance above, the selling pressure index, which will be active in his contracts, may force a decrease to 13 670 behind 13 835. If it is over 14 325, 14 325 – 14 500 will serve as the balancing range.

Support13 83513 67013 510
Resistance14 16514 32514 500

S&P500

The data released by the FED the day we left behind revealed that manufacturing growth in the Philadelphia region has slowed sharply due to the impact of war and high costs. The SP500, which is currently under pressure from the aggressive interest rate hikes expected from the FED, continued to decline with the sales in industrial stocks after the Philadelphia data. In the technical view, it is very clear that the index is highly dependent on the descending channel movement. If the support of 3 860, which will determine the continuation of the selling movements below, can be broken, the last bearish movement may continue to 3 795, which will be the lowest of more than 1 year.

Support3 8603 7953 730
Resistance4 0004 0704 145

Cryptos

BTCUSD

When Russian Industry and Trade Minister Manturov pointed out that cryptocurrencies could be legalized in the country, Bitcoin faced limited reactions. However, Bitcoin is struggling to find demand against the dollar, triggered by the aggressive rate hikes expected from the Fed. 28 670 and 27 230 below are the first support zones in the leading cryptocurrency, where the outlook will remain bearish if the above 32 980 resistance is not crossed. If it is above 32 980, 34 425 resistance can be followed.

Support28 67027 23025 800
Resistance31 49032 98034 425

Do you have more questions?

Schedule a call and get the answers from one of our agents.
Book A Call

Before you go, book a
free call with our agent

Ask all of your trading questions and get answers right away.