Traders focus on US inflation release

On Friday, the equity markets rallied strongly following the release of a strong jobs report. This led to a decrease in recession fears and boosted positive risk sentiment among investors. The DJ (+1.71%), NAS (+2.06%), and DAX (+1.46%) all performed well, with gains seen across a range of sectors. All 11 S&P 500 sectors finished the day higher, with the energy sector performing particularly well with a gain of 2.71%. The technology and finance sectors also gained, with increases of 2.51% and 2.47%, respectively. Safe utility stocks, on the other hand, gained only 0.64%.

Positive risk sentiment helped USOIL (+3.97%) and commodity currencies on Friday. Safe-haven markets, gold and silver traded lower, with declines of 1.63% and 1.48%, respectively. The declines came despite an increase in the benchmark 10-year treasury yield. Since the release of the Non-Farm Payrolls (NFP) data, the AUD and CHF have been the strongest currencies among the major USD counterparts. The AUD has gained 1.20%, and the CHF has gained 0.95%.

The next key risk event is the US CPI release on Wednesday. Until then the financial calendar is fairly empty. Now that we know the employment market is still strong the focus will be on inflation as it’s the main target on Fed’s radar this year. The Fed is likely to pause its interest-rate hikes at its June policy meeting, and some traders expect rate cuts in the second half of the year. The Fed, however, has stated it remains data-dependent. Therefore, oil price is going to be on their radar. USOIL rallied almost 4% on Friday.

UK 100

FTSE is trying to turn bullish above last week's low of 7688. The market is currently trading near a resistance area (7811-7818) and this makes it vulnerable to profit-taking. A higher swing low above last week’s low would help the green team quite a bit. If the market corrects down to the 7750 - 7764 area, see if the bulls step in or whether they let the market slip further. The next key support is at 7717. If there's a decisive break above 7818, the market is likely to trade to 7857.

Nasdaq

NAS is bullish above 12 936 but trades currently at a key resistance level (13 288). The higher low (12 936) put in on Thursday indicates higher prices. Above 12 936 isn't violated the market is likely to move to 13 680. Below 12 936, the market could move to 12 860.

EURUSD

EURUSD remains bullish above 1.0942 and probably tests the 1.1090 resistance again soon. Below the 1.0942 level, the market probably moves to 1.0905 or so.

NATGAS

Natgas is bullish above 2.134 and likely to trade to 2.40 first and then possibly to 2.80 if bullishness continues. Below 2.134, look for a move to 2.08.

The Next Main Risk Events

• USD CPI & Core CPI
• CHF SNB Chairman Jordan Speaks
• USD 10-y Bond Auction
• GBP BOE Monetary Policy Report
• GBP MPC Official Bank Rate Votes
• GBP Monetary Policy Summary
• GBP Official Bank Rate
• GBP BOE Gov Bailey Speaks
• USD Core PPI
• USD PPI
• USD Unemployment Claims
• USD FOMC Member Waller Speaks
• USD 30-y Bond Auction
• NZD Inflation Expectations q/q
• GBP GDP
• GBP Prelim GDP
• 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 MutaChief Market Analyst

Janne Muta holds an M.Sc in finance and has over 20 years experience in analysing and trading the financial markets.

Related Posts

Analysis

Gold technical analysis | Can XAUUSD maintain current Price levels?

Gold Technical Analysis - Dollar weakness, spurred by likely dovish shift in Fed policy, has bolstered gold prices. However, it's noteworthy that when gold has rallied to levels it is trading...

Analysis

USDJPY Technical Analysis | USD under pressure as stable PCE hints at Fed shift

USDJPY Technical Analysis - The latest PCE report from the U.S. Commerce Department signals positive trends in inflation and consumer spending. A key highlight is the core Personal Consumptio...

Analysis

Dow Jones Technical Analysis | Rallying DJIA hits new yearly high

Dow Jones Technical Analysis – Dow Jones technical analysis - The market has rallied over 11% in just 5 weeks, moving well beyond the July High of 35,679. This rally, marking the strongest 5-...

Analysis

Natural Gas Technical Analysis | Increased supply pressures Natgas prices

Natural gas technical analysis - Natural gas prices have been declining over the past two weeks due to a number of factors, including milder weather, increased renewable energy production, an...