A1 Trading Company

March 16, 2023

EdgeFinder Report

Frank Cabibi

Coming to the end of a heavy news week, majors are all over the place. Between banking collapse fears, mixed inflation news between CPI and PPI, and jobless claims, uncertainty spiked. Here is a brief snapshot of this week's news summary and upcoming news tomorrow in our EdgeFinder report:

USD/CAD

USDCAD is the strongest buy on the EdgeFinder. All categories point toward dollar bullishness except inflation. Comparatively, it's more favorable to at least have some GDP growth with slightly higher inflation. Retail is strongly bearish although historically, price has gained in the month of March. The fact that the trend reading is still pointing higher despite the recent pullback indicates a healthy long setup.

SPX500

Equities are a strong sell after retail shifts to majority long. Technicals are point towards a more bearish market although inflation is coming down. Investors hope that rate hikes are done due to the banking scare. That with the combination of lower inflation could be a sign of potential bullishness in the market, but it is still up to the Fed to decide what will happen in the next couple rate decisions.

Gold

Gold is a buy due to technicals mostly. The most recent spike was fueled by the SVB crisis which has investors thinking that interest rate hikes are coming to an end. The crowd is majority short this metal despite its historical performance and current uptrend.

Seasonality Study

NZDCHF is an interesting seasonality study because of how the 10 and 5 year averages are different for the month of March. This opposite move in most recent years could start to shift the 10 year average over time. March has been a unique month as no other month is like this. The pair has to move over 3% higher to get back match the 10 year average.

Bank Signals

The banks tend to be more neutral to bearish on gold. We can probably assume that institutions think the metal will likely move sideways into the summer months. The most bullish projections come from UOB Group who's quarterly price target is at $2,000.

Unemployment

Unemployment seems to be coming down on a global scale with Switzerland at the lowest. Slightly lower UE rates could be a sign that federal governments can ease up on any stimulus or even encouraging the rate hikes in US, Euro-area, UK and Canada.

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