Jump to content

Dow 30: steady ahead of US CPI tomorrow


Recommended Posts

An ongoing bullish technical overview in both time frames ahead of the fundamental event.

 

original-size.webpSource: Bloomberg

 

Written by: Monte Safieddine | Market analyst, Dubai
 
Publication date: 

CPI revisions, Fed members speaking, and the S&P’s 5,000 breach

There were a few items to digest late last week, including the revisions from the Bureau of Labor Statistics (BLS) for the Consumer Price Index (CPI), which was slightly higher for October and November but lower for December. More Federal Reserve (Fed) members speak, with Logan discussing the “tremendous progress” in bringing down inflation but “not seeing any urgency to make any additional adjustments at this time” and to “take time here to continue to look at the data”. Prior to that, Barkin also favored patience, relying on the buffer of “robust demand and a historically strong labor market”, giving “time to build that confidence before we begin the process of toggling rates down”.

Key US equity indices finished higher again for the week, and this time around, small-cap also enjoyed gains, though it was the S&P 500 taking most of the attention with the breach of its 5,000 level. Over in the bond market, Treasury yields finished the week higher and, on the further end, reversing losses from the week before that, in real terms averaging closer to 2% for the 5Y through 30Y, and market pricing (CME’s FedWatch) anticipating the first rate cut out of the US central bank in May via an unhealthy majority.

Week ahead: CPI, retail sales, PPI, and more earnings

As for the week ahead, it starts off very light with little to get excited about later today aside from more Fed members speaking, but picks up tomorrow with a heavyweight as we get January’s CPI readings. Expectations are for year-on-year (y/y) growth to drop from 3.4% headline to 3%, month-on-month (m/m) to rise by 0.2%, and when excluding food and energy, to see increases of 3.8% and 0.3%, respectively (Cleveland Fed’s ‘nowcasts’ at 2.94%, 0.13%, 3.81%, and 0.32%).

Trade pricing data will be released on Thursday, where you can expect the attention to be on retail sales, already enjoying six consecutive beats, but forecasts are for a slight drop this time around. Producer prices for the same month will be on Friday, an ongoing story of sub-2% headline and core readings y/y, and forecasts are for m/m growth of just 0.1% for both. Consumer inflation expectations out of UoM (University of Michigan) have been trending in the right direction and not too far off pre-pandemic averages, and while consumer sentiment rising has been an added plus, it still requires a climb to touch 100 as it did in early 2020. The preliminary readings will also be released on Friday, preceded by a couple of items out of the housing market.

For those trading energy, the weekly API, EIA, and Baker Hughes figures will be on offer on their respective days, but add to it OPEC’s monthly report tomorrow and IEA’s on Thursday, and whether the gap in demand forecasts for this year between the two will remain wide. It’ll be relatively quieter on the US earnings front and includes Coca-Cola on Tuesday, Cisco on Wednesday, and Coinbase on Thursday.

Dow technical analysis, overview, strategies, and levels

The intraweek highs and lows were within its previous weekly 1st levels, lacking a play for conformist and contrarian strategies, but where key technical indicators and its overview remain unchanged in this time frame. As for the daily time frame late last week, Thursday's 1st Resistance held on Friday, causing conformist buy-breakout strategies to fail and lacking a trigger for contrarian sell-after-reversals, though nowhere near derailing the ‘bull average’ technical overview there.

 

 

 

 

 

 

 

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

 

 

Link to comment

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

    • What is Foreign Exchange? Foreign exchange (Forex or FX) is the conversion of one currency into another at a specific rate known as the foreign exchange rate. The conversion rates for almost all currencies are constantly floating as they are driven by the market forces of supply and demand. The most traded currencies in the world are the United States dollar, Euro, Japanese yen, British pound, and Australian dollar. The US dollar remains the key currency, accounting for more than 87% of total daily value traded.Factors that Affect Foreign Exchange Rates Many factors can potentially influence the market forces behind foreign exchange rates. The factors include various economic, political, and even psychological conditions. The economic factors include a government’s economic policies, trade balances, inflation, and economic growth outlook. Political conditions also exert a significant impact on the forex rate, as events such as political instability and political conflicts may negatively affect the strength of a currency. The psychology of forex market participants can also influence exchange rates. The Foreign Exchange Market The foreign exchange market is a decentralized and over-the-counter market where all currency exchange trades occur. It is the largest (in terms of trading volume) and the most liquid market in the world. On average, the daily volume of transactions on the forex market totals $5.1 trillion, according to the Bank of International Settlements’ Triennial Central Bank Survey (2016). The forex market major trading centers are located in major financial hubs around the world, including New York, London, Frankfurt, Tokyo, Hong Kong, and Sydney. Due to this reason, foreign exchange transactions are executed 24 hours, five days a week (except weekends). Despite the decentralized nature of forex markets, the exchange rates offered in the market are the same among its participants, as arbitrage opportunities can arise otherwise. The foreign exchange market is probably one of the most accessible financial markets. Market participants range from tourists and amateur traders to large financial institutions (including central banks) and multinational corporations. Also, the forex market does not only involve a simple conversion of one currency into another. Many large transactions in the market involve the application of a wide variety of financial instruments, including forwards, swaps, options, etc. Foreign currency exchange (forex) A foreign currency exchange rate is a price that represents how much it costs to buy the currency of one country using the currency of another country. Currency traders buy and sell currencies through forex transactions based on how they expect currency exchange rates will fluctuate. When the value of one currency rises relative to another, traders will earn profits if they purchased the appreciating currency, or suffer losses if they sold the appreciating currency.  
    • Totally agree, the growth of Bitget Wallet will have a positive impact on $BWB. The potential for both seems exciting. Good luck to you too, and hopefully everyone can benefit from these earning opportunities.
    • Sounds like Mystiko Network is making some serious waves in the interoperability space. Seamless compatibility across multiple blockchains is a game changer, especially with the ZK SDK for secure and private dApps. Big backing from Samsung and Coinlist adds credibility too. I will keep an eye on that Bitget listing, it could be a major boost for $XZK
×
×
  • Create New...
us