Data releases to drive market volatility this week

Traders will be keeping a close eye on several key data releases this week, including the consumer price index and producer price index today and Thursday, respectively. The retail sales data, due Friday, is also expected to keep traders alert. These events are expected to create additional volatility in the market, presenting opportunities for intraday traders to capitalize on short-term price swings.

Ahead of today’s US CPI data release, shares of smaller companies and those in cyclical industries such as materials and energy gained yesterday more than the wide market indices. These stocks are less sensitive to interest rates and performed better than the S&P 500 which finished the day practically unchanged. Shares of smaller companies outperformed those of larger firms for the second day in a row. The Russell 2000 index gained 0.8%. The T-bond prices decreased, taking the yield on 10-year Treasury notes to 3.433% from 3.414% on Monday.

The highly-anticipated US CPI report and the consequent market reaction are likely to show whether inflation concerns will resurface or if there will be a revival of talks about a potential economic slowdown. This is expected to drive the Fed policy in the future too. Federal Reserve speakers Harker and Kashkari adhered to the Fed's existing script of persistent inflation and extended periods of higher rates. Gold and silver have been gaining as those assets are considered, not only, inflation hedges but also safe-haven assets.

With the Fed's meeting on May 3 approaching, traders and money managers are following the bond markets closely. Bonds are a key indicator of what investors believe the Fed is likely to do. Higher rates drive the bond prices lower as old issues lose value when new bonds with higher coupon payments are issued after interest rates rise. According to CME Group, following last week's robust labour market data, traders are increasingly betting that the central bank will raise rates by another quarter of a percentage point.

UK 100

FTSE 100 is bullish above 7726. Below the level, the market probably trades down to 7672 or so. This is where the 38.2% retracement level and the SMA(50) coincide. The nearest major resistance level is at 7852.

EURUSD

EURUSD is bullish above 1.0830. Below the level, the market is likely to trade down to 1.0760 or so. The nearest key resistance level is the latest swing high at 1.0973. Beyond that, look for a move to 1.1020 or so.

GBPUSD

GBPUSD is bullish above 1.2344. Below the level, the market probably moves to 1.2290. Above the level, the nearest challenge for the bulls is the swing high at 1.2525. If the level is penetrated decisively, the 1.2650 level could be in play.

Silver

Silver remains bullish above 24.56. Below the level, the market could move down to 23.80 or so. The 26.20 - 26.50 level seems likely provided that the market doesn’t start making lower highs and doesn’t violate the key support levels. Silver being an industrial metal works as an indicator of the global economy but the increased tensions around Taiwan have also driven safe-haven flows into this market.

The Next Main Risk Events

• USD CPI
• GBP BOE Gov Bailey Speaks
• CAD BOC Monetary Policy Report
• CAD BOC Rate Statement
• CAD Overnight Rate
• CAD BOC Press Conference
• USD 10-y Bond Auction
• USD FOMC Meeting Minutes
• GBP BOE Gov Bailey Speaks
• AUD Employment Change
• AUD Unemployment Rate
• GBP GDP m/m
• USD Core PPI m/m
• USD PPI m/m
• USD Unemployment Claims
• CAD BOC Gov Macklem Speaks
• USD 30-y Bond Auction
• USD Core Retail Sales m/m
• USD Retail Sales m/m
• USD Prelim UoM Consumer Sentiment
• USD Prelim UoM Inflation Expectations

For more information and details see the TIOmarkets economic calendar.

Trade Safe!

Janne Muta
Chief Market Analyst
TIOmarkets

DISCLAIMER: TIOmarkets offers exclusively consultancy-free service. The views expressed in this blog are our opinions only and made available purely for educational and marketing purposes and do NOT constitute advice or investment recommendation (and should not be considered as such) and do not in any way constitute an invitation to acquire any financial instrument or product. TIOmarkets and its affiliates and consultants are not liable for any damages that may be caused by individual comments or statements by TIOmarkets analysis and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his/her investment decisions. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances, or needs. The content has not been prepared in accordance with any legal requirements for financial analysis and must, therefore, be viewed by the reader as marketing information. TIOmarkets prohibits duplication or publication without explicit approval.

Janne Muta

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