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$DJI $NDX $SPX $RUT all pumping but giving back, what now?DJ:DJI is having hard time here, again. The RSI is much lower, negative divergence, steam running out? NASDAQ:NDX is higher but also losing steam, RSI lower. SP:SPX AMEX:RSP & AMEX:IWM all put higher highs but they're also giving back. All the #indices have low volume. Kind of normal for this time of year. TVC:VIX is lower....... Sell on news? Lots of GAINS over past few months. Hmmm, let's see what transpires by end of day. #stocks
DJ:DJI
by ROYAL_OAK_INC
Daily Market Analysis - WEDNESDAY JULY 12, 2023Greetings, traders! Welcome back to our daily Market Analysis. Today, we have gathered the top news and interesting fundamental analysis for your consideration. Let's dive in and stay informed! Key events: New Zealand - RBNZ Interest Rate Decision USA - Core CPI (MoM) (Jun) USA - CPI (YoY) (Jun) USA - CPI (MoM) (Jun) Canada - BoC Interest Rate Decision USA - Crude Oil Inventories The energy and large technology sectors were the primary contributors to Tuesday's gains in the stock market, while investors awaited the forthcoming inflation reports with bated breath. The rise in value of the Dow Jones Industrial Average was 317 points, or 0.9%, while the rise in value of the S&P 500 was 0.7% and the rise in value of the Nasdaq was 0.6%. DJI indice daily chart SPX500 indice daily chart As a result of an improved demand outlook, oil prices skyrocketed, which provided a boost to the energy sector. There is a growing expectation that the oil market will tighten in the second half of this year. This expectation is supported by falling crude production as well as Saudi Arabia's commitment to cutting output by one million barrels per day beginning in July. The sentiment surrounding energy stocks was further buoyed by reports of potential stimulus measures in China, which is the largest importer of energy in the world. The stock of 3M Company (NYSE: MMM), which was upgraded by Bank of America to Neutral from Underperform, increased by almost 5% as a result of the upgrade. It is anticipated that the manufacturer of industrial and consumer products will benefit from the conclusion of legal issues, which is anticipated to enhance the performance of the company. A settlement agreement was reached between 3M and the government last month to resolve allegations that the company contaminated public water systems with PFAS, which are also known as forever chemicals. MMM stock daily chart After receiving an upgrade from Hold to Buy from Jefferies, JPMorgan (NYSE: JPM) led the banking sector higher just as earnings season was about to begin on Friday. As justifications for the upgrade, Jefferies pointed to the robustness of JPMorgan's balance sheet as well as the company's potential for earnings. Gains were also seen by regional banks, which have come under increased scrutiny ever since the banking crisis that began earlier this year. After Bank of America reaffirmed its recommendation to buy the company's stock, US Bancorp (NYSE: USB) saw its share price rise by more than 3.5%. US Bancorp is well-prepared to handle sector headwinds, according to Bank of America, and is expected to achieve superior earnings growth and stock performance, according to the statement. JPM stock daily chart Amazon (NASDAQ: AMZN), which benefited from its two-day prime day sales event, stood out as one of the few stocks in the technology sector that was trading in the positive territory. During this time, Microsoft (NASDAQ: MSFT) struggled to make gains, despite the growing optimism surrounding the impending acquisition of Activision by Microsoft for $69 billion. Activision is the company that makes the Call of Duty video game. The attempt by US regulators to temporarily block the deal due to antitrust concerns was rejected by a federal judge in a ruling earlier today. The forthcoming publication of US CPI (Consumer Price Index) data has become the sole focal point of attention for stock futures trading in both the United States and Europe. The majority of speculators are expected to be surprised by the US inflation data, which analysts strongly anticipate will exceed their expectations. AMAZON stock daily chart The change in the Consumer Price Index (CPI) for the United States is expected to be 0.3% month-over-month (m/m), while the change in the CPI year-over-year (y/y), which is the most significant change, is expected to be 3.1%, compared to the previous reading of 4.0%. If the actual number comes close to or matches the forecasted 3.1%, it will be seen as positive news for the market because the inflation target set by the Federal Reserve is 2%. On the other hand, market participants are likely to rejoice if the reading falls below 3.1% because this indicates a significant shift in the trend of inflation. Nevertheless, it is essential to pay close attention to the trajectory that the reading of inflation will take in the future. Although the data that are released today will show a significant drop, which will be driven by tighter monetary policy, an economic slowdown, and lower oil prices, these factors will have less of an influence on the inflation number going forward. As a consequence of this, the gap between the Fed's target and the actual reading might not expand by an additional factor of two from its previous magnitude. GOLD daily chart It is anticipated that the price of gold will be volatile throughout the course of the day. Even though the support level at $1,900 is strong, it may be put to a significant test if the inflation data continues to show no signs of easing. Gold prices would be supported by a sizeable decline in the reading of inflation, which could potentially lead to an attempt to test the $1,950 level. On the other hand, if the reading indicates that inflationary pressures will continue for some time, the price of gold may go up even further. As a result, there is a greater chance that the Federal Reserve will raise interest rates, potentially on more than one occasion.
by FOREXN1
14
$DJI $NDX $SPX $RUT Long & Short term viewsBringing indices up again, Let's look at the SHORT TERM first. (Unfortunately can only show 1 chart, see profile for more info) DJ:DJI longer term still showing an ascending triangle, current pattern is sideways channel, there's some negative divergence. NASDAQ:NDX maintains the uptrend, HOWEVER - we're seeing SEVERE negative divergence. SP:SPX also in current sideways channel, and also showing SEVERE negative divergence. TVC:RUT completes the bunch with a sideways channel and some neg divergence. ---------------------------------------------------- Longer term #indices are interesting. Using weekly. DJ:DJI showing slight negative divergence, needs to break out FAST NASDAQ:NDX Extremely overbought, last 3 times; 2 corrections, 1 major drop. SP:SPX Nothing out of the ordinary, lil overbought, see #NDX notes. TVC:RUT Severe underperformer and it looks like it wants to catch up to the others. #stocks
DJ:DJI
by ROYAL_OAK_INC
MACRO UPDATE - History is no longer reality since debasement Take some time to focus on the information and macro movement here and compare it with my notes. Why are leading economists and leading institutions fumbling? imagine comparing history prior to 2008 where Quantitative Easing did not exist. No standard macro indicator will be accurate due to the debasement of money that happen during the GFC, compare the SPY to money supply we see that we barely have reached post 2001 levels, 2007 highs. Jerome Powell will not admit this because the system has basically been debased hence the over compensation for rate rises why did he do it? because the debt situation is worse than it seems. This is a very unique situation where retail is still majority short on options/futures while money market funds are still in trillions of cash. If this does play out and you're an institution do you wait for the final bubble to melt up? or do you allocate now and try to capitalize or risk missing the market, either way, something interesting is about to happen. Reminder NO economic indicator can be trusted prior to 2008, its like using map plans for Atlantis you will quickly find out all your indicators are defected. T10Y2 | Is the indicator the federal reserve uses to find recessions. USM2 | M2 US money supply USINTR | USA Interest Rates WALCL | Federal Reserve balance sheet SPY/M2SL | SPY adjusted for the debasement Blue line | Global (major) central bank balances
SP:SPX
by FederalXBT
Daily Market Analysis - FRIDAY JULY 07, 2023Key News: USA - Average Hourly Earnings (MoM) (Jun) USA - Nonfarm Payrolls (Jun) USA - Unemployment Rate (Jun) During Thursday's trading session, the Dow Jones Industrial Average recorded a decline as robust job market data sparked expectations of further interest rate hikes by the Federal Reserve. This development subsequently led to a surge in Treasury yields, which raised concerns among market participants. The Dow Jones Industrial Average experienced a notable decrease of 1.1%, resulting in a loss of 366 points. Similarly, the Nasdaq and the S&P 500 also faced declines of 0.8% and 0.8% respectively. NASDAQ, SPX, and DJI indices daily charts Amidst the broader market decline, Microsoft Corporation (NASDAQ: MSFT) bucked the trend and achieved a gain of nearly 1% driven by optimism surrounding its advancements in artificial intelligence (AI). Morgan Stanley, a prominent financial institution, expressed confidence in Microsoft's position within the software industry, particularly in relation to the projected $90 billion growth opportunity in generative AI by fiscal 2025. In light of this positive outlook, Morgan Stanley increased its price target on Microsoft from $355 to $415, indicating a favorable investment potential for the company. Microsoft stock daily chart Despite the launch of its Twitter competitor app called Threads and the announcement by Meta CEO Mark Zuckerberg that it had garnered over 30 million sign-ups since its recent introduction, Meta (formerly known as Facebook) faced a reversal of its early-day gains. The company's stock failed to maintain its upward momentum, and the gains dissipated as the trading session progressed. The market response to Threads and Meta's overall performance suggests that investors and traders may have reacted differently to the news, leading to the subsequent decline in the stock price. Meta Platforms stock daily chart In the Eurozone, inflation expectations for the medium term experienced a decrease in May. The gauge measuring the 12-month expectation dipped from 4.1% to 3.9%. Despite this decline, the long-term (three-year) inflation expectations, which hold greater significance for the European Central Bank (ECB), remained unchanged at 2.5%. This level is notably higher than the ECB's target inflation rate of 2%. The latest flash core Consumer Price Index (CPI) estimates for June further strengthen the argument for proponents of tighter monetary policies within the ECB. These estimates provide substantial justification for those who advocate for a more stringent approach to monetary policy, given that inflationary pressures persist in the Eurozone. The ECB, as the central bank responsible for maintaining price stability, closely monitors inflation expectations and aims to keep them in line with its target. The fact that long-term inflation expectations remain above the ECB's target suggests that there may be a need for increased vigilance and potential policy adjustments to curb inflationary pressures. The divergence between medium-term and long-term inflation expectations underscores the complexity of managing inflationary dynamics in the Eurozone. The ECB will need to carefully assess economic data, including CPI estimates, to make informed decisions regarding monetary policy and strike a balance between supporting economic growth and maintaining price stability. EUR/USD daily chart Today, the economic calendar in the Eurozone is relatively light, implying that the movement of the EUR/USD exchange rate will primarily be influenced by the market's reaction to data releases from the United States. The market's response to US data is of particular significance, as it has a notable impact on shaping the direction of the EUR/USD exchange rate. Positive data releases from the US could strengthen the US Dollar and potentially lead to a decline in the EUR/USD pair, while weaker-than-expected data could exert downward pressure on the US Dollar, potentially favoring an upward movement in the EUR/USD pair. Additionally, the market remains highly sensitive to price-related developments. In this context, there is ongoing concern regarding the Bank of England's aggressive tightening expectations. Speculation suggests that the BoE could implement a significant 140 basis point increase in interest rates by January 2024. This projection, if realized, raises the possibility of a reassessment in the market. If investors revise their expectations and perceive the tightening as too aggressive or potentially detrimental to economic growth, it could pose downside risks for the British Pound. Consequently, the GBP/USD exchange rate could experience downward pressure. GBP/USD daily chart The EUR/GBP pair has witnessed a decline over the past two sessions; however, it may find support at its current levels and potentially make a move towards the 0.8600 mark once again. This shift in the pair's direction could be driven by the potential threat of a repricing of the previously overbought British Pound, influenced by the actions of the Bank of England. The recent weakening of the EUR/GBP pair suggests that the Pound has gained strength against the Euro. However, the current levels may act as a support zone, potentially leading to a reversal in the pair's direction. If the support holds, it could provide an opportunity for the EUR/GBP pair to regain some ground and move towards the 0.8600 level. The potential repricing of the Pound is a significant factor that could influence the pair's movement. If market participants perceive that the British Pound had become overbought or overvalued in relation to its fundamentals, they may adjust their positions accordingly, leading to a corrective move in the currency. This adjustment could contribute to a potential reversal in the EUR/GBP pair, benefiting the Euro and causing the pair to move higher towards the 0.8600 mark. EUR/GBP daily chart Yesterday's market sell-off was primarily triggered by the release of the minutes from the Federal Reserve, which revealed a greater inclination for further tightening of monetary policy than previously anticipated. This direction gained further momentum with the release of strong employment-related data, namely the ADP payrolls and ISM services reports, which indicated that the US labor market remains robust and is expected to continue performing well. The ADP payrolls report for June showcased an impressive addition of 497,000 new jobs. However, it is important to note that a significant portion of these positions were in lower-paid service roles, which could have implications for wage growth and overall economic recovery. In addition to the employment data, the prices paid component of the ISM services report indicated a slowdown, reaching its lowest level in three years. This decline in price pressures suggests that inflationary pressures might be easing, potentially influencing the Federal Reserve's decision-making process regarding future monetary policy actions. The combination of the Federal Reserve minutes highlighting a stronger inclination for tightening, along with positive employment data and easing price pressures, contributed to the market sell-off observed. Investors and traders reacted to these factors, reassessing their positions and adjusting their expectations accordingly. US Employment Change The resilience of the labor market presents a challenge for the Federal Reserve in its pursuit of achieving its target inflation rate. Despite the possibility of a potential decrease in headline Consumer Price Index (CPI) to 3% in June, the task of returning inflation to the desired level becomes increasingly difficult. Today's release of the US nonfarm payrolls report for June has the potential to further reinforce optimism about the US economy. A strong jobs report would provide evidence of a robust labor market, indicating economic strength and potential future growth. However, there is also a concern that such a positive report could lead the Federal Reserve to overestimate the economy's resilience and prompt them to raise interest rates more aggressively than necessary. The market has already priced in these expectations, as reflected by the recent rise in yields. The anticipation of a stronger economy and the possibility of more aggressive rate hikes by the Federal Reserve have contributed to an increase in yields. This pricing-in of expectations suggests that there is a level of caution in the market regarding the potential actions of the central bank and the impact they may have on various sectors. Balancing the need to support the labor market with the goal of achieving the desired inflation rate remains a challenge for the Federal Reserve. The nonfarm payrolls report for June will be closely watched by market participants and policymakers alike, as it has the potential to shape future monetary policy decisions and market expectations. As always, it is important to monitor economic data releases, central bank statements, and market sentiment to gain a comprehensive understanding of the current landscape and make informed decisions regarding investments and trading strategies.
by FOREXN1
9
DOW JONES: pulling back to the 1D MA50 again.Dow Jones has had a technical HH rejection at the top of the dotted Channel Up and just as quickly, the price is approaching the 1D MA50, which offered support on the June 26th rebound. The 1D technicals are neutral (RSI = 48.089, MACD = 156.460, ADX = 28.256) indicating that the 1D MA50 is now the pivot level: as long as it holds, expect the price to bounce on it again, so we will buy and target the R2 (TP = 34,95) but if it closes a 1D candle under it, sell and target the bottom of the dotted Channel Up (TP = 33.000). The strongest buy opportunity on a four month basis is when the RSI hits its HL trendline. ## If you like our free content follow our profile to get more daily ideas. ## ## Comments and likes are greatly appreciated. ##
CAPITALCOM:US30
by InvestingScope
8
Daily Market Analysis - THURSDAY JULY 06, 2023Key News: USA - ADP Nonfarm Employment Change (Jun) USA - Initial Jobless Claims USA - Services PMI (Jun) USA - ISM Non-Manufacturing PMI (Jun) USA - JOLTs Job Openings (May) USA - Crude Oil Inventories During Wednesday's trading session, the Dow Jones Industrial Average concluded the day with a decline, driven by the release of the Federal Reserve's meeting minutes for June. The minutes indicated a growing interest among policymakers in resuming interest rate hikes. However, in the tech sector, major players showcased mostly positive performance. Notably, Meta (formerly known as Facebook) soared to a 52-week high as anticipation mounted for its upcoming Twitter competitor. Specifically, the Dow Jones Industrial Average recorded a decrease of 0.38%, translating to a decline of 129 points. Similarly, both the Nasdaq and the S&P 500 experienced a modest 0.2% decrease during the trading session. Dow Jones Industrial Average Index daily chart The release of the Federal Reserve's meeting minutes from June, which occurred on Wednesday, shed light on the members' sentiment regarding future rate hikes. The minutes revealed that a significant majority of the members, described as "almost all," expressed support for the notion of resuming rate hikes. This position was motivated by concerns about persistently high inflation levels, which were deemed "unacceptably high." Furthermore, the minutes indicated a hawkish stance among some members, with a preference for raising rates rather than pausing during the June meeting. These members highlighted their worries about a tight labor market, recognizing that such conditions could potentially drive up wages and inflation even further. However, while the discussion expressed a general inclination towards resuming rate hikes, the decision to implement such actions in July will largely depend on upcoming data. Pantheon Macroeconomics suggests that the forthcoming data expected to be released this week and next will play a crucial role in shaping the Fed's decision-making process. It is worth noting that approximately 90% of traders, as indicated by the Fed Rate Monitor Tool, anticipate that the Federal Reserve will indeed resume rate hikes in July. Effective Fed Funds Rate Investor concerns regarding a potential global economic slowdown were heightened due to underwhelming services data from China. However, the impact of these concerns on the broader market was somewhat mitigated by the strong performance of prominent technology companies. Notably, Meta (previously known as Facebook) experienced a significant surge of over 3%, reaching 52-week highs. This impressive performance came ahead of the launch of Meta's rival Twitter app, Threads, scheduled for Thursday. It is noteworthy that Twitter had recently announced its decision to temporarily restrict the number of posts users can read on its platform. Meta Platforms stocks daily chart Despite Apple's 0.6% decline, the company's market capitalization remains above $3 trillion, demonstrating its significant value in the market. In contrast, Microsoft experienced a slight increase in its stock price. Wedbush, a prominent research firm, predicts that Microsoft will also join the exclusive $3 trillion club alongside Apple by early 2024. This projection is based on the belief that advancements in artificial intelligence (AI) will be a major driver of Microsoft's growth and valuation. Wedbush noted in a statement on Wednesday that, considering the potential of AI and through a sum-of-the-parts valuation, Microsoft's overall value should propel it to the esteemed $3 trillion club within the next few years. Microsoft stock daily chart During the US Independence Day holiday, major currencies displayed a noticeable trend of trading within narrow ranges in relation to the US dollar. Among the G10 currencies, the New Zealand dollar (NZD) emerged as the top performer. This could be attributed to the unwinding of long positions in the Australian dollar/New Zealand dollar (AUD/NZD) pair, which likely contributed to the NZD's relative strength in the market. AUD/NZD daily chart Throughout this week, European markets have faced consistent declines, with yesterday's losses being notably significant. The downward trend in the markets is expected to persist today. The market weakness witnessed yesterday was primarily fueled by concerns surrounding disappointing services Purchasing Managers' Index (PMI) data from both China and Europe. These underwhelming data releases have heightened worries about a potential global economic slowdown. Furthermore, the increasing risks related to interest rates have contributed to weakness in sectors such as basic resources, energy, and financials, amplifying the overall market downturn. These negative sentiments have had a spill-over effect on Asian markets as well, reflecting the widespread concerns about the global economic landscape. Employed Usually Works Full time Chart US Employed Persons status Today's highly anticipated release of the ADP payrolls report is expected to show a robust figure of 225,000, slightly lower than the previous month's 278,000. Despite this slight decrease, it is important to note that the current level of job vacancies suggests that we are unlikely to see a weak jobs report in the upcoming months. Consequently, it is less probable that the labor market will serve as the catalyst for the Federal Reserve to signal a pause in its policies in the near future. US Purchasing Managers Index (ISM) The Federal Reserve has expressed concerns regarding the persistence of services inflation, highlighting its potential impact on the economy. Today's ISM services report is anticipated to reveal a modest uptick in headline activity, reaching around 51.3. However, special attention will be given to the prices paid component, which experienced a decline to 56.2 in May, marking a three-year low. This data will provide insights into the pricing pressures faced by service providers. As for Independence Day, please note that trading hours may be affected due to the holiday in the United States. The Unemployment Rate is a key economic indicator that measures the percentage of the labor force that is unemployed and actively seeking employment. It provides insights into the health of the labor market and is closely monitored by economists, policymakers, and market participants.
by FOREXN1
15
DOW JONES Take profit soon. Pull back expected.Dow Jones is almost on Resistance (1) at 34530 with the top of the dotted Channel Up just over it at 34700. That is a level where the buy profits from the MA50 (1d) buys should be realized and then wait for a break out or pull back in order to continue buying. Trading Plan: 1. Sell within 34600 - 34700. 2. Buy if the (1d) candle closes over 34700. 3. Buy on the MA200 (1d) at 33500. Targets: 1. 33500 (MA200 1d). 2. 35400 (near the top of the yellow long term Channel Up). 3. 34900 (Resistance 2). Tips: 1. The RSI (1d) is posting a sequence similar to the February top. That started a significant medium term correction. Please like, follow and comment!! Notes: Past trading plan:
CAPITALCOM:US30
by TradingBrokersView
7
DOW JONES: Bullish as long as 1D MA50 holds. Bearish if broken.Dow Jones turned flat following the rebound on the 1D MA50 three days ago with both the 4H and 1D technicals neutral (RSI = 53.777, MACD = 111.180, ADX = 25.084). As long as the 1D candles closes over the 1D MA50, stay bullish and target the R2 (TP = 34,950). A crossing under the 1D MA50 will most likely target the 1D MA200 and possibly even lower at the bottom of the diverging Channel Up, aiming to complete a -5% decline (TP = 33,000). That can be an excellent long term buy entry. However if the RSI rebounds on its HL trendline, then enter the buy earlier regardless of a 1D MA200 hit or not. Prior idea: ## If you like our free content follow our profile to get more daily ideas. ## ## Comments and likes are greatly appreciated. ##
CAPITALCOM:US30Long
by InvestingScope
1
Dow Jones globally will fall due to the north node cycleTVC:DJI globally will fall, because the Gann square of 20, built for the New York Stock Exchange indicates the date 2023 (reversal), and since on the monthly chart is now flat, and the market is at high prices, then a fall is more than likely. In 2024, a global strongest crisis is expected in another astrological cycle. There was already a similar crisis in 2008, and then the same cycle worked. The fall may begin both now and by the second half of 2024, as they can still pump money, or at least say everywhere that there is no stronger economy in the world than the American one, and this will delay the fall for some time. It will be possible to speak about the end of the crisis no earlier than the beginning of 2028.
DJ:DJIShort
by Super_Profit_Trade
What is the $VIX showing us?Good Morning SMALL THREAD While we did call the NASDAQ:NDX weakness & top, at that time we didn't think it would be as bad as it got, at least I didn't. Last year we really thought TVC:VIX would break out & the markets would collapse. Our original expectations didn't pan out but we, mostly I, changed as more data came in. We called a bunch of bounces & tops, ALL DOCUMENTED, BUT our best call was becoming BULLISH in late September on DJ:DJI & Bullish on NASDAQ:NDX in October. Since then we've been cautious Bull with a few bearish calls but ultimately, we were/are still bullish. During this time the TVC:VIX was forming a HUGE Symmetrical Triangle that we posted on countless times. We were biased and thought the TVC:VIX would break out and #stocks would be cremated. Obviously, were bullish after Sept 2022 but we thought there would be an eventual harsh crash that made 2022 like a walk in the park. When #VIX broke down we were SHOCKED! That's when we knew that the can was being kicked further down the road. There's a lot more at play that we've been discussing on occasion. SP:SPX has been on a tear but it is currently in a consolidation phase as seen on a daily chart. However, as you can see, RSI can remain overbought on a weekly for long periods of time. TVC:VIX is slowly closing in on a major support level. While it can break through, IMO, don't think it will do it the 1st time. #VIX will likely get a nice bounce. This bounce will likely be strong and could mean possible weakness for #stocks, soon.
CBOE:VIX
by ROYAL_OAK_INC
Dirty BusinessYesterday I threw away all the indicators I have been using. A lot of dirt has cluttered my screen for too long. I have also made many custom ones, I threw them out too. But I kept just one, a moving average. Every* indicator refers to price after all. In the end, price discounts everything. No price indicator can tell us something price doesn't tell. The sayings of price are hard to understand. That is why most of us use indicators to clear the picture. *Well there are indicators that measure stuff that is not directly embedded into price action like volume, inflation etc. RSI is the most used indicator for like, ever... The same story, told by different indicators. I have heard that the best analysts use very few indicators on their charts. Volume and candle pattern/trend analysis is hardcore. These are some of the very few instruments of an experienced analyst. Indicators are there to help us get some perspective on how prices work. Many of them must be thrown away when an analyst is experienced enough. Clear information is power. But all of that, I didn't know all of this time. After abandoning RSI I sought other methods of analysis. Stochastic RSI and KST prove powerful methods of momentum analysis. In the end, most indicators refer closely to the original price action. It is just the perspective that changes. So what does trend analysis tell us about equities right now? I am purposefully hiding price action. Annoyingly simple. Final chart, Bitcoin: I will keep using a Keltner-ish Channel since it provides a pure, automatic way to get a feel of how far above or below trend we are. Clean up.
SP:SPX
by akikostas
12
Daily Market Analysis - WEDNESDAY JUNE 28, 2023US Stocks Rebound As A Result Of Positive Economic Data Key News: USA – Fed Chair Powell Speaks USA – Crude Oil Inventories Tuesday witnessed a notable recovery in US stock indices, signaling a turnaround from a recent string of losses. The resurgence was spurred by positive economic data, easing investor concerns regarding a potential recession triggered by the Federal Reserve's aggressive interest rate hikes. The Dow Jones Industrial Average, comprising esteemed blue-chip stocks, halted its six-day losing streak on Tuesday. Simultaneously, the Nasdaq Composite, predominantly representing technology-related firms, appeared poised to achieve its strongest first-half performance in forty years. Furthermore, the S&P 500 rebounded after enduring declines in five out of the past six trading sessions. DJI indice daily chart NASDAQ indice daily chart SPX indice daily chart In a surprising turn, recent reports unveiled unforeseen growth in new orders for crucial US-manufactured capital goods in May. Furthermore, the month witnessed a substantial surge in sales of new single-family homes, alongside a nearly 1-1/2 year high in US consumer confidence in June. These encouraging economic indicators provided investors with a compelling incentive to reengage in the stock market, following a significant correction in previous sessions. Mark Luschini, the chief investment strategist at Janney Montgomery Scott in Philadelphia, described the recent correction as a "pretty vicious" one. EUR/USD daily chart Yesterday, the euro demonstrated a robust performance in response to the hawkish stance adopted by European Central Bank (ECB) President Christine Lagarde and several other members of the ECB governing council regarding future interest rate increases. This indicates that the central bank has now made a commitment to implement another rate hike in July, with the possibility of a further increase in September. Lagarde has also dismissed the likelihood of a rapid decrease in rates, although her previous reversals on such matters have not been forgotten. A notable example was her statement at the end of 2021, when she declared a low probability of rate hikes in 2022. GBP/USD daily chart The pound has shown a gradual increase in value as traders intensify their expectations for a potential rate hike by the Bank of England. Speculation is mounting that the central bank may consider raising interest rates to a level above 6%, which has sparked renewed interest and confidence in the currency. The market sentiment surrounding the pound has shifted in favor of a more hawkish stance, driven by factors such as improving economic indicators and a belief that the Bank of England may take a proactive approach to control inflationary pressures. As a result, traders are adjusting their positions and positioning themselves to take advantage of a potential rate hike, leading to increased demand for the pound. However, it's important to note that these expectations are based on market speculation, and the actual decision by the Bank of England remains uncertain. USD/JPY daily chart The Japanese yen continues to face significant downward pressure, resulting in a decline against the US dollar, with the exchange rate reaching 144.00. Additionally, the yen has reached an 8-year low against the pound, reflecting the persistent weakness in the currency. The yen's depreciation can be attributed to a combination of factors, including the diverging monetary policies between the Bank of Japan and other major central banks, as well as a general risk-on sentiment in the markets, which has led to increased demand for higher-yielding assets. In contrast, the Canadian dollar (CAD) has displayed remarkable strength among G10 currencies over the past month, and it has managed to maintain most of its gains leading up to the release of the Consumer Price Index (CPI) data today. During the overnight session, the USD/CAD pair reached its lowest level since September 2022, indicating the Canadian dollar's resilience. Although there has been a slight upward correction during European trading, the overall downward trend observed in June remains intact. Market participants are now eagerly awaiting the release of May CPI data in Canada, as it will provide further insights into the country's inflationary pressures. Positive CPI figures could potentially bolster the Canadian dollar further, reaffirming its strength in the forex market. Conversely, weaker-than-expected CPI data may dampen the currency's recent performance. Overall, the Japanese yen faces continued downward pressure, while the Canadian dollar remains strong and closely monitored ahead of the CPI data release, which could have a significant impact on its future trajectory. USD/CAD daily chart According to HSBC economists, there is an expectation of a 0.5% month-on-month increase in price pressures, surpassing the consensus estimate of 0.4%. This anticipated rise in inflation is driven by persistent upward pressure on mortgage interest costs and a seasonal uptick in food prices. If the actual price pressures exceed expectations on the upside, it could reinforce the likelihood of a quarter-point interest rate hike at the Bank of Canada's July meeting. Such a move would further bolster the strength of the Canadian dollar due to the impact of higher interest rates. Currently, swap markets are pricing in a 15-basis point increase in rates. However, it is important to note that the year-on-year inflation rates for both headline and core measures are projected to slow down compared to the levels seen in April. This deceleration is attributed to the increasing influence of base effects, where the comparison is made against higher inflation rates from the previous year. In addition to the upcoming inflation data, market participants are also anticipating other economic indicators and events this week. Of particular importance is a crucial inflation indicator, which will provide further insights into the state of inflationary pressures. Furthermore, a speech by Fed Chair Jerome Powell at the European Central Bank Forum in Sintra, Portugal, is expected to shed light on the future direction of interest rates and the monetary policy outlook. These upcoming events and data releases are likely to play a significant role in shaping market expectations regarding interest rates and could have implications for currency movements, including the Canadian dollar. Traders and investors will closely analyze the outcomes and statements to make informed decisions in response to the evolving economic landscape.
by FOREXN1
11