Inflation Stays in Focus – Netflix to Report Earnings

Netflix  => The stock trades at a 5-month low

EUR/USD   => The euro rises for a second straight day

Gold  => The commodity eases from a 2-month high

Netflix Q4 earnings preview

Netflix is due to report Q4 earnings after the closing bell today. Netflix was a clear winner at the start of COVID when lockdown restrictions were imposed, and people were stuck at home bored. Since the economy reopened, conditions have been less favorable. Expectations are for 8.5 million new subscribers, which would mark its strongest growth in a year. Profitability and margins are likely to be hurt by the ramp-up in spending on content as competitions increases from the likes of Disney+, Apple TV, and Amazon. Expectations are for EPS of $0.84 on revenue of $7.71 billion.


What’s next for Netflix’s share price?

Netflix’s share price has been trending lower since reaching an all-time high of $700 in December. The price trades below its multi-month falling trendline and has fallen below its 50 & 200 sma. The RSI is deeply in oversold territory, so there could be some consolidation at the level, or even a move higher, before the downtrend resumes. Sellers will need to break below horizontal support at $505 (August low) in order to head towards $482 (June low). On the flip side, buyers could look for a move over $565 the 200 sma to negate the near-term downtrend ahead of $578 the rising trend line support.

Could inflation data help EUR/USD towards $1.1350?

The EUR/USD is rising for a second straight day after three days of declines. The pair pushed higher yesterday following a rise in German inflation, as measured by the consumer price index (CPI). German CPI rose to 5.3%, its highest level since 1993. Today the focus remains on inflation with the release of German wholesale inflation numbers, along with eurozone CPI. Despite high and rising inflation ECB policymakers remain relatively dovish, insisting that inflation will fall back towards the ECB 2% target next year. The minutes from the latest ECB meeting are also due to be released and could shed more light on the possible next steps from the central bank. The US Dollar has been supported this week by expectations of a more hawkish Fed. U.S jobless claims will be watched closely. An improving jobs market could lift the greenback.

Ger. CPI Inflation YoY Dec

Ger. PPI Inflation YoY Dec 

EU CPI Inflation YoY Dec

Actual: 5.3% (0.1%)

Expected: 19.4% (0.3%)

Expected: 5% (0.1%)

Previous: 5.2%

Previous: 19.2%

Previous: 4.9%


Gold to push higher?

Gold, which is considered to be a hedge against inflation, surged higher in the previous session breaking above a key resistance at $1830 and reaching a two-month high of $1845. Persistent fears over inflation, combined with a weaker USD, lifted the price of the precious metal to a level last seen in November last year. 

Last week U.S. inflation came in at 7% a 40 year high. Yesterday German and UK inflation for December printed at almost 30-year highs. Gold traders will be waiting for the US Federal Reserve monetary policy meeting next week. Whilst Gold is a hedge against inflation, it is also non-yielding, which means that it loses its shine as interest rates rise. Today, Eurozone inflation data and US jobless claims could influence gold prices.

US Jobless claims

Eurozone Inflation YoY Dec 

Expected: 220k (21.8)

Expected: 5.3% (0.1%)

Previous: 230k

Previous: 5.2%

can be found at 1829.9 (early January high) and 1817.50 (December high).           

Resistance can be seen at 1844 (yesterday’s high) and 1876 (November high).


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