S&P 500 at 23-month lows ahead of CPI data

[MongiIG]

Today’s US consumer price inflation (CPI) data has the potential to steer markets. IGTV’s Jeremy Naylor looks at the S&P 500 and the EUR/USD as two areas that will react to the data when it passes.

 

 

 Jeremy Naylor | Writer, London | Publication date: Thursday 13 October 2022 

US CPI

One of the big trades on this Thursday is going to be the US inflation data.

Ahead of that we've seen the S&P 500 close at levels last night not seen since November 2020, late in that COVID year when we saw those big declines and the volatility.

Since the record highs we've seen on the S&P 500 going back the 3rd of January this year we've seen a 25.94% drop. Now, yesterday we didn't quite get as low intraday since we were back on Tuesday this week, but the markets closed at those low levels. And indeed you can see already today early doors on the IG platform, we are once again knocking on the door of those lows that we've seen this week with more pressure being applied ahead of the consumer price inflation (CPI) data which is out later on today - a 1:30 p.m. UK time release of the consumer price data in the Unites States.

CPI is expected to rise by 8.1% in September year-on-year (YoY). Now that will be down from the 8.3% we've seen in August. That's the main headline rate. But if you dig deeper and take out the food and energy component parts of that, the core CPI, it's expected to accelerate to 6.5% from 6.3% in August.

EUR/USD

Now, some economists are suggesting that we could well see an upside surprise to this. And if we do see an upside surprise, the way to trade this would be on the EUR/USDEUR/USD trade. And if we see an upside surprise, it's likely to see strength of the dollar, in which case we'll see a lower trade here on the EUR/USD.

If you are short on this going into the numbers, your stock would go above the 98 level. We're currently trading at 97 and I think this area down here is a threat at 9536.

If, however, there is a downside surprise to the numbers we could well see weakening in the dollar in which case we'll approach this line of resistance at 9864.

So certainly all to play for at 1:30 p.m. today UK time for the equity indices and also for the foreign exchange markets.

[CJ-TradingFloor]

2 hours ago, MongiIG said:

US consumer price inflation (CPI) data

S&P500 dropped when the CPI data was released. Technically I was looking at the descending triangle pattern.

What is a Descending Triangle?
A descending triangle is a bearish chart pattern used in technical analysis that is created by drawing one trend line that connects a series of lower highs and a second horizontal trend line that connects a series of lows.