2023 Predictions: Mid-year Scorecard

<p><strong>By <a href="http://investmacro.com/contributors/contributor-profile-forextime/">ForexTime</a> </strong></p>
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<h2>What an eventful first half it’s been.</h2>
<p>Coming into 2023, no one would’ve expected a <strong>banking crisis </strong>on either side of the Atlantic (recall how SVB and Credit Suisse collapsed), nor being a whisker away from a <strong>civil war in Russia.</strong></p>
<p>But traders and investors have taken things in stride, weathering bouts of volatility and uncertainty.</p>
<p>&nbsp;</p>
<h3>Back on January 4th, I wrote this article: “<a href="https://www.forextime.com/market-analysis/3-potential-winners-2023">3 potential winners in 2023</a>”.</h3>
<p>Here’s a mid-year report card on those 3 assets:</p>
<p>&nbsp;</p>
<h2><strong>1) Gold to hit $2000?</strong></h2>
<blockquote>
<h3><em>Yes. $2k target hit on March 20th.</em></h3>
</blockquote>
<p>Of course, spot gold needed the help of an <strong>unexpected banking crisis</strong> in the US and Europe to send investors scurrying towards the<strong> safe haven</strong> asset.</p>
<p>But after coming to within 0.57% or about $12 away from its record high ($2074.87 on 7th August 2020), gold has crumbled since May.</p>
<p><img decoding="async" loading="lazy" class=" lazyloaded" src="https://www.forextime.com/s3-static/users/user16/XAUUSDDaily_14.png" alt="" width="1024" height="768" data-entity-type="file" data-entity-uuid="843e4ee7-54bb-4d98-ae8c-35824de63a28" data-src="/s3-static/users/user16/XAUUSDDaily_14.png" /></p>
<h3><strong>Why has gold fallen since May?</strong></h3>
<p>This is because markets have pushed back expectations for a Fed rate CUT.</p>
<ul>
<li>Back in <strong>early May</strong>, markets had expected the Fed to LOWER its benchmark rates by <strong>September 2023.</strong></li>
<li>However, US <strong>inflation has since proven stubborn</strong> and the Fed appears willing to trigger <strong>more rate hikes</strong> than previously expected.</li>
<li>Today (June 29th), markets expect a <strong>70% chance</strong> that the Fed will <strong>CUT rates</strong> only in <strong>May 2024!</strong></li>
</ul>
<p>Hence, given that investors are not paid to hold on to gold (a zero-yielding asset), markets have since dumped the precious metal in favour of other asset classes.</p>
<p><a href="https://www.forextime.com/market-analysis/3-potential-winners-2023"><em>As written back in January, the “What could go wrong” section on gold has indeed been playing out in recent months</em></a>.</p>
<p>&nbsp;</p>
<p>Though to be clear, despite recent declines …</p>
<blockquote>
<h3><em>Gold remains the second best-performing <strong>traditional </strong>asset class so far this year.</em></h3>
</blockquote>
<h5><em>(excluding cryptos such as Bitcoin which has soared by more than 85% over the same period).</em></h5>
<ul>
<li>First place in 1H23 goes to <strong>global stocks</strong> (measured by MSCI ACWI Index) which climbed by<strong> 11.4%</strong>.</li>
<li><strong>Second-placed bullion </strong>has a year-to-date gain of about <strong>4.4% </strong>at the time of writing.</li>
</ul>
<p>&nbsp;</p>
<p>&nbsp;</p>
<h2><strong>2) USDJPY back down to 125?</strong></h2>
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<h3><em>No, but it came close.</em></h3>
</blockquote>
<p>USDJPY initially appeared destined to claim the 125 target, reaching <strong>as low as 127.224 by mid-January.</strong></p>
<p>Since then, USDJPY <strong>broke out of its downtrend</strong> to recently form a <strong>golden cross</strong> (when 50-day moving average crosses above 200-day moving average – a technical signal that often implies further gains ahead)<strong>.</strong></p>
<p>This major FX pair is now trading around its <strong>highest levels since November 2022</strong>.</p>
<p><img decoding="async" loading="lazy" class=" lazyloaded" src="https://www.forextime.com/s3-static/users/user16/USDJPYDaily_15.png" alt="" width="1024" height="768" data-entity-type="file" data-entity-uuid="31714af7-54b6-4b1f-9600-2b0879016b51" data-src="/s3-static/users/user16/USDJPYDaily_15.png" /></p>
<h3><strong>What went wrong?</strong></h3>
<p>As stated in the USDJPY section of my <a href="https://www.forextime.com/market-analysis/3-potential-winners-2023">January 4th article</a>:</p>
<blockquote><p><em><strong>Still-dovish BoJ: </strong>the incoming BoJ Governor keeps Japan’s benchmark rate mired in negative territory on signs that inflation is not as sticky as hoped.</em></p>
<p><em>This scenario would be made worse if the Fed stays hawkish and keeps sending US interest rates much higher than the currently forecasted peak of around 5%.</em></p></blockquote>
<p>The “wrong” scenario cited above has instead been the case so far this year.</p>
<p>The Bank of Japan (BoJ) apparently isn’t yet budging from its negative interest rates regime, while the Fed now projects US rates to peak around 5.6%.</p>
<blockquote><p><em>Hence, Yen bulls (those hoping the Yen will strengthen) have given up for now.</em></p></blockquote>
<p>However, note that markets are <strong>still predicting a greater-than-even chance (55%) of a BoJ rate hike by Dec 2023.</strong></p>
<blockquote>
<h3><em>Should those odds firm up, that may yet restore hope for a Yen recovery and a lower USDJPY eventually.</em></h3>
</blockquote>
<p>&nbsp;</p>
<p>&nbsp;</p>
<h2>3) <strong>FTSE China A50 Index back above 14,000?</strong></h2>
<blockquote>
<h3><em>Yes. 14k line was breached on January 14th.</em></h3>
</blockquote>
<p>To be honest, when I saw that the psychologically-important 14,000 mark had been surpassed a mere 10 days after my January 4th article, I initially chided myself, thinking I should have been more bullish in my predictions.</p>
<blockquote>
<h3><em>Instead, this turned out to be a rather PRUDENT forecast.</em></h3>
</blockquote>
<p><img decoding="async" loading="lazy" class=" lazyloaded" src="https://www.forextime.com/s3-static/users/user16/CHNA50_mDaily_1.png" alt="" width="1024" height="768" data-entity-type="file" data-entity-uuid="6873733e-e268-4ef5-b603-695a277d3bb8" data-src="/s3-static/users/user16/CHNA50_mDaily_1.png" /></p>
<p><strong>Since peaking at 14,420 in late January, </strong>which was a further 3% beyond the 14k mark, this stocks index (which tracks the 50 largest A-share Chinese companies) has embarked on a <strong>downtrend </strong>(a series of lower highs and lower lows).</p>
<p>In other words …</p>
<blockquote>
<h3><em>The 14k mark was just about <strong>as good as it got </strong>for the CHNA50_m index so far in 2023.</em></h3>
</blockquote>
<p>This is because<strong> China’s much-hyped recovery has fizzled out.</strong></p>
<p>The economic momentum has clearly struggled post lockdowns, to the point that the <strong>People’s Bank of China</strong> (PBOC – China’s central bank) has pivoted to a s<strong>upportive policy stance.</strong></p>
<p>The PBOC’s support policy stance is in <strong>stark contrast</strong> to that at other major central banks (Fed, ECB, BOE, etc.) who are still busy hiking interest rates.</p>
<blockquote><p><em>Until China’s economic recovery can find a more solid footing, <strong>Chinese assets</strong> ranging from its stock markets to the Yuan are set to find it <strong>difficult to stage a meaningful recovery.</strong></em></p></blockquote>
<p>Same goes for other assets that are reliant on the Chinese economy, including the likes of the <strong>Australian dollar (AUDUSD)</strong> as well as <strong>oil </strong>prices.</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<h2><strong>So there you have it.</strong></h2>
<p>Surely, it has been an eventful first half.</p>
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<h3><em>If the 2nd half of 2023 proves to be as eventful, that may herald more trading opportunities across global financial markets.</em></h3>
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<p>And we’ll be keeping you up-to-date via our <a href="https://www.forextime.com/market-analysis">Daily Market Analysis</a>.</p>
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<p>&nbsp;</p>
<p><em>And in case you missed it …</em></p>
<p>Here are our<strong> top-5 most-read articles </strong>(out of the 128 articles, excluding this one) that have been published on the FXTM website so far this year:</p>
<ol>
<li>(MAY 1st) <strong><a href="https://www.forextime.com/market-analysis/trade-week-return-2k-gold">Trade of the Week: The return of $2k gold?</a></strong></li>
<li>(JUNE 5th) <strong><a href="https://www.forextime.com/market-analysis/trade-week-time-usdcad-breakout">Trade Of The Week: Time For USDCAD To Breakout?</a></strong></li>
<li>(APRIL 3rd) <strong><a href="https://www.forextime.com/market-analysis/trade-week-more-volatility-audnzd-after-opec-shocker">Trade Of The Week: More Volatility For AUDNZD After OPEC+ Shocker?</a></strong></li>
<li>(JANUARY 3rd) <strong><a href="https://www.forextime.com/market-analysis/2023-outlook-worst-behind-us">2023 Outlook: Is the worst behind us?</a></strong></li>
<li>(MARCH 3rd) <strong><a href="https://www.forextime.com/market-analysis/week-ahead-watch-these-3-major-fx-pairs">Week Ahead: Watch these 3 major FX pairs</a></strong></li>
</ol>
<p><strong>NOTE</strong>:</p>
<ul>
<li><em>FXTM’s <strong>“Trade of the Week” </strong>articles are published on the website and emailed every <strong>Monday </strong>(except holidays)</em></li>
<li><em>FXTM’s <strong>“Week Ahead” </strong>articles are published on the website and emailed to clients every <strong>Friday </strong>(except holidays)</em></li>
</ul>
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<p><img decoding="async" loading="lazy" class="size-full wp-image-54242 alignleft" src="https://www.investmacro.com/articles-analysis/wp-content/uploads/2014/07/Forex-Time-Logo.png" alt="Forex-Time-Logo" width="262" height="90" /><strong>Article by <span><a href="https://www.investmacro.com/contributors/contributor-profile-forextime/">ForexTime</a></span></strong></p>
<p><strong>ForexTime Ltd (FXTM)</strong> is an award winning international online forex broker regulated by CySEC 185/12 <a href="http://www.forextime.com" target="_blank" rel="noopener">www.forextime.com</a></p>