Jump to content

US CPI as the key risk event this week: S&P 500, USD/CNH, USD/JPY


Recommended Posts

Posted

The third straight session of gains in Wall Street has allowed the S&P 500 to reclaim both its 50-day and 100-day MA, but all eyes will be on the US CPI as the key risk event ahead.

USSource: Bloomberg
 
 Yeap Jun Rong | Market Strategist, Singapore | Publication date: Monday 12 September 2022 

Market Recap

The third straight session of gains in Wall Street has allowed the S&P 500 to reclaim both its 50-day and 100-day moving average (MA), as the US dollar took a breather after hitting its highest level since 2002 despite Treasury yields ticking higher to end the week. The recent upside does not seem to be underpinned by a strong fundamental reason, considering that the probability of a 75 basis-point (bp) hike in the September Federal Open Market Committee (FOMC) meeting saw a further build-up to 90% compared to 57% a week ago, while indications of a Federal Reserve (Fed)’s dovish pivot are still off the table. But after the heavy sell-off of close to 10% for the S&P 500 since mid-August, markets could be hoping to tap on the absence of hawkish Fed comments from its blackout period for some relief, until further cue is provided by the US Consumer Price Index (CPI) data release tomorrow. The Fed’s policy stance seems firm for further tightening thus far, but a series of cooler-than-expected reports will be looked upon to justify a quicker policy pivot and potentially sway the Fed’s views. July CPI release has marked the first step, with the upcoming August reading on watch for any downside surprise to provide further justification.

With its recent rally, the S&P 500 is hovering at a previous support-turned-resistance around the 4,087 level, where a key 38.2% retracement level stands in place. Some wait-and-see could potentially play out to kickstart the new week, with the CPI data being a key driver of volatility up ahead. Longer-term, the ongoing convergence of two opposing trendlines (one connecting lower highs, one connecting higher lows) seems to suggest that the S&P 500 has to come to a decision in determining its trend ahead, with one to watch for any break of either trendlines to indicate either buyers or sellers gaining control.

 

S&P 500Source: IG charts

 

Asia Open

Asian stocks look set for a positive open, with Nikkei +1.31% and ASX +0.80% at the time of writing. With China, Hong Kong and South Korea markets off-trading due to holidays, along with a quiet economic calendar in Asia, market moves throughout the day could be somewhat limited. Some sentiments could also be on hold in the lead-up to the key US CPI data tomorrow. This week will bring China in focus, with its one-year medium term lending facility rate on watch, along with its slew of August economic data release. A cut to its one-year lending facility rate is not widely expected, but any surprise move on that front may drive a knee-jerk upside reaction for risk assets.

The upcoming economic data (industrial production, fixed asset investment, retail sales) later this week may also not be reflective of the impact from renewed virus restrictions in China, but could still provide some clarity on underlying economic conditions. Any outperformance could still seem to draw some reservations, as there could be some understanding that renewed restrictions are back in place to crimp economic activities and data are set to undergo further moderation over the coming months. All in all, the lower-for-longer growth picture remains the theme for China.

Recent US dollar weakness has driven the USD/CNH to break below an ascending channel pattern on its four-hour chart. A recent retest of its 50-day MA was met with a bearish rejection. Failure to reclaim the 6.933 level of resistance over the coming days could draw further downside to the 6.891 level next, where a key 38.2% Fibonacci retracement level stands in place.

 

USD/CNHSource: IG charts

 

On the watchlist: USD/JPY moderating from its 1998 high

A recent retest of its 145.00 level was met with some moderation for the USD/JPY, as the level marked its previous peak in 1998 when the Bank of Japan (BoJ) intervened to curb its weak yen. Reaching that level once again last week has led to renewed jawboning from government officials. That said, previous warnings have been heard before and as with past instances, any failure to follow through with concrete action may lead to some shrugging off eventually and just expressing words of concerns may have little effect in reversing the USD/JPY trend. The Deputy Chief Cabinet Secretary, Seiji Kihara, also expressed that the yen’s decline may work most effectively in attracting inbound tourism, which may suggest that some reservations on intervention could still linger until tourism rules are relaxed, potentially in October. Thus far, the USD/JPY remains on an upward trend, with further retracement placing the 140.00 level on watch for any formation of a new higher low.

 

USD/JPYSource: IG charts

 

Friday: DJIA +1.19%; S&P 500 +1.53%; Nasdaq +2.11%, DAX +1.43%, FTSE +1.23%

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • image.png

  • Posts

    • TASI Index Elliott Wave Analysis Trading Lounge Day Chart TASI Index Elliott Wave Technical Analysis Function: Bullish Trend Mode: Impulsive Structure: Gray wave 3 Position: Orange wave 3 Direction Next Lower Degrees: Gray wave 4 Details: Gray wave 2 is complete. Gray wave 3 is now active. Wave Cancel Invalid Level: 11324.751 The Elliott Wave analysis for the TASI Index daily chart from Trading Lounge highlights a bullish trend, with the current movement following an impulsive wave pattern. Gray wave 3 is identified as the primary wave in progress, indicating strong upward momentum. Positioned within orange wave 3, this structure aligns with a broader bullish perspective, reflecting continued positive sentiment in the TASI Index. The completion of gray wave 2 has paved the way for gray wave 3 to develop. Wave 3 is typically characterized by the strongest and most sustained momentum in the Elliott Wave cycle. The current position of gray wave 3 within orange wave 3 further supports the bullish outlook, with expectations for continued price increases as gray wave 3 unfolds. A critical invalidation level is set at 11324.751, serving as a key reference point for the wave structure. If the TASI Index drops to or below this level, the current Elliott Wave analysis would be invalidated, indicating that the bullish trend may not persist. This could suggest a shift in market direction or the beginning of a corrective phase, necessitating a re-evaluation of the wave structure. Summary The analysis supports a bullish outlook for the TASI Index, with gray wave 3 actively driving the upward trend within the framework of orange wave 3. Traders should closely watch movements near the invalidation level at 11324.751, as a break below this point could challenge the bullish trend, signaling a potential reversal or correction. This level is a critical benchmark for assessing the integrity of the ongoing bullish structure.   TASI Index Elliott Wave Analysis Trading Lounge Weekly Chart TASI Index Elliott Wave Technical Analysis Function: Bullish Trend Mode: Impulsive Structure: Orange wave 3 Position: Navy blue wave 3 Direction Next Lower Degrees: Orange wave 4 Details: Orange wave 2 is complete. Orange wave 3 is now active. Wave Cancel Invalid Level: 11324.751 The Elliott Wave analysis for the TASI Index weekly chart from Trading Lounge reflects a bullish trend, driven by an impulsive wave structure. Orange wave 3 is currently developing within the broader navy blue wave 3 framework, signaling strong upward momentum. The impulsive nature of this wave structure supports a sustained positive outlook, with potential for additional gains as orange wave 3 progresses. The completion of orange wave 2 has set the stage for the advancement of orange wave 3, which is a critical phase within the Elliott Wave cycle. Wave 3 typically represents the strongest and most dynamic movement in the trend, often characterized by significant upward price action. The alignment within navy blue wave 3 further reinforces the bullish outlook, suggesting continued positive momentum. A vital invalidation level is set at 11324.751, acting as a key point of reference for this analysis. Should the index fall to or below this level, the current wave structure would be invalidated, potentially indicating a trend shift or the start of a corrective phase. This level serves as a benchmark for traders to evaluate the strength and sustainability of the current bullish trend. Summary This analysis indicates a bullish trajectory for the TASI Index, with orange wave 3 driving the upward trend as part of the larger navy blue wave 3 structure. Traders are advised to observe the index closely concerning the invalidation level at 11324.751. A decline below this threshold could signal a possible reversal or a need to reassess the trend structure. This level is critical for validating the continuation and strength of the ongoing bullish movement. Technical Analyst : Malik Awais Source : Tradinglounge.com get trial here!  
    • GBPUSD Elliott Wave Analysis Trading Lounge British Pound/U.S. Dollar (GBPUSD) Day Chart GBPUSD Elliott Wave Technical Analysis Function: Bearish Trend Mode: Impulsive Structure: Navy blue wave 1 Position: Gray wave 1 Direction Next Higher Degrees: Navy blue wave 2 Details: Navy blue wave 1 remains active. Wave Cancel Invalid Level: 1.34351 The Elliott Wave analysis for the GBPUSD daily chart from Trading Lounge highlights a bearish trend in the currency pair, driven by an impulsive wave structure. The current analysis identifies navy blue wave 1 as ongoing, signaling a continuation of the downward momentum within the broader bearish framework. Currently positioned in gray wave 1, this impulsive movement suggests further price declines as the wave structure develops. The unfolding of navy blue wave 1 underscores the likelihood of sustained bearish pressure on GBPUSD, consistent with the broader trend direction. The impulsive nature of the wave structure indicates strong, directional moves, supporting expectations for additional downside. An invalidation level is set at 1.34351, representing a crucial point in the analysis. A price movement to or above this level would invalidate the current wave structure, signaling a potential reversal or the start of a corrective phase. Such an event would prompt a re-evaluation of the Elliott Wave analysis. Summary This analysis reinforces a bearish perspective for GBPUSD as navy blue wave 1 progresses within the impulsive structure of gray wave 1. Traders should closely monitor price action near the invalidation level of 1.34351. A break above this threshold may indicate a reversal or necessitate a reassessment of the wave structure, deviating from the current bearish trend outlook.   British Pound/U.S. Dollar (GBPUSD) 4 Hour Chart GBPUSD Elliott Wave Technical Analysis Function: Bearish Trend Mode: Impulsive Structure: Orange wave 5 Position: Navy blue wave 1 Direction Next Higher Degrees: Navy blue wave 2 Details: Orange wave 4 appears completed. Orange wave 5 of navy blue wave 1 is active. Wave Cancel Invalid Level: 1.30099 The GBPUSD Elliott Wave analysis for the 4-hour chart from Trading Lounge identifies a bearish trend in the currency pair, marked by an impulsive wave pattern. Orange wave 5 is currently unfolding as part of the larger navy blue wave 1, signaling continued downward movement. Following the apparent completion of orange wave 4, orange wave 5 has commenced within the impulsive framework of navy blue wave 1. Typically, wave 5 represents the final phase of an impulsive trend, reinforcing the bearish momentum and increasing the probability of further downside in GBPUSD. The analysis highlights a critical invalidation level at 1.30099. If the price moves to or above this point, the current wave structure would be invalidated, indicating a potential trend reversal or the start of a corrective phase. This invalidation level is a vital reference for confirming the bearish trend. A breach of this level could challenge the current analysis, necessitating a reassessment of the wave structure. Summary This analysis supports a bearish outlook for GBPUSD, driven by orange wave 5 within navy blue wave 1. Traders should closely monitor price movements near the invalidation level at 1.30099. Any rise above this threshold may suggest a reversal or a shift in the wave structure, impacting the overall bearish trend projection. Technical Analyst : Malik Awais Source : Tradinglounge.com get trial here!  
    • ASX: SCENTRE GROUP – SCG Elliott Elliott Wave Technical Analysis TradingLounge Greetings, Our Elliott Wave analysis today updates the Australian Stock Exchange (ASX) with SCENTRE GROUP – SCG. We are seeing a potential bull market with wave 3-grey of SCG.ASX, but it needs a little more time. ASX: SCENTRE GROUP – SCG 1D Chart (Semilog Scale) Analysis Function: Major trend (Intermediate degree, orange) Mode: Motive Structure: Impulse Position: Wave 2-grey of Wave (3)-orange Details: Wave 1-grey just finished, and wave 2-grey is unfolding to push lower, it could target around 3.40 – 3.28. If the 2-grey wave continues to push lower than the 3.14 level, it will call for a re-evaluation of the entire situation. Conversely, when the price pushes higher than the end of the ((b))-navy wave, it will suggest that the 3-grey wave is unfolding. Invalidation point: 3.14 ASX: SCENTRE GROUP – SCG 4-Hour Chart Analysis Function: Major trend (Minute degree, navy) Mode: Motive Structure: Impulse Position: Wave ((c))-navy of Wave 2-grey Details: Wave 1-grey has ended, and wave 2-grey is unfolding as a Zigzag labeled ((a))((b))((c))-navy. Now wave ((c))-navy is continuing its work to push lower, if price breaks 3.28 it will show that the Bear market weight is increasing, and I will review the situation then. Pushing above the end of wave ((B))-navy shows that wave 3-grey is ready to unfold. Invalidation point: 3.14 Conclusion: Our analysis, forecast of contextual trends, and short-term outlook for ASX: SCENTRE GROUP – SCG aim to provide readers with insights into the current market trends and how to capitalize on them effectively. We offer specific price points that act as validation or invalidation signals for our wave count, enhancing the confidence in our perspective. By combining these factors, we strive to offer readers the most objective and professional perspective on market trends. Technical Analyst: Hua (Shane) Cuong, CEWA-M (Master’s Designation). Source : Tradinglounge.com get trial here! #SCG #TradingLounge #ASXStocks #Stocks #ElliottWave  
×
×
  • Create New...
us