Fundamental Analysis Monday 30 January 2023

Author: Sifu Steve


This week will be a fairly exciting to monitor as Interest Rate announcement and Non-Farm  Payroll data will be release. Two heavy hitting news that is very key to understanding further trends in the markets, especially on DXY.

Through entire January 2023, DXY is consolidating steadily and holding ground around 101.500 area. Could this week’s high impact news finally get DXY out of consolidation? We shall see. However, we know that Federal Reserve will be raising rates again by 25 basis points, which mainstream news outlets seem to be mentioning. With this data, theoretically, if rates go up, it is bullish for the currency and vice versa.

Another thing to consider is that, Japan and China are still dumping US Treasuries/Bonds and many other countries are attempting to de-dollarize. Further add to the fuel is US’s national debt ceiling that has been breached last week. These 2 scenarios are very bad for the US economy. How much of bullishness will 25 basis point increase bring about? So far, from the last two, Federal Fund Rate announcement (Nov & Dec 2022), we see that DXY declined even with 50 basis points hike. Could history repeat again? Perhaps DXY can reclaim 102.500 – 103.000 but I do not think whole-heartedly that it will give 105.000 a go.


With China’s re-opening, there is definitely positivity circling the global markets. China’s GDP growth was reported up by 3% for the year 2022, higher than expected rate of 2.8% but yet still fell short of March’s target of 5.5%. The sign of growth, though little, is still a sign of improvement. Considering after months’ long Zero Covid policy and geopolitical tension with the West, problematic real estate sector, this slight improvement definitely have greater volume to it than just the number.

We cannot take our eyes away from the long term end goal of China, which is to be the next reserve currency of the world. Collaboration with some powerful nations e.g. Saudi Arabia, Brazil, South Africa, Indonesia, India etc via BRICS+ bloc, brings Xi Jin Ping’s path to dominance one step closer day by day. Recently, Saudi Arabia also made public about their consideration of non-US Dollar for Oil trade. Gold continues to be horded by China, as well as Russia and major central banks of the world, just goes to prove the level skepticism towards the greenback.