A Bullish August Finale Amid Mixed Economic Data
31 August 2023
Hello traders, and welcome to Thursday, the final trading day of August. The macroeconomic calendar is rather sparse today, yet holds a few key data points that could influence market sentiment. China's manufacturing PMIs started us off on a positive note, exceeding expectations at 49.7. Meanwhile, the Eurozone is awaiting flash estimates for inflation, expected to dip from 5.3% to 5.1%. The day will conclude with the core PCE price index from the U.S., forecasted to come in at 0.2%.
In a somewhat counterintuitive response to yesterday's disappointing U.S. data, American stock indexes logged their fourth consecutive bullish day. The ADP non-farm employment change and preliminary GDP both missed their marks, coming in at 177,000 (below expectations) and 2.1% (compared to an expected 2.4%), respectively. Nonetheless, the S&P 500 surged to its highest levels since August 10th, and the Dow Jones continued its V-shaped recovery, bouncing off a long-term uptrend line. Nasdaq, not to be outdone, reached its loftiest levels since August 4th, breaking a mid-term downtrend line in the process.
On the currency front, yesterday's biggest gainers were the British Pound and the Euro, while the losers were safe-haven currencies like the Japanese Yen, New Zealand Dollar, American Dollar, and the Swiss Franc. The market seemed to be in a risk-on mood, evident by the strength in currencies from Australia, Japan, and New Zealand—nations on the eastern hemisphere. The currency charts today indicate a continuation of the American Dollar's drop against the Japanese Yen, as well as a bounce in the British Pound against the Swiss Franc—signaling a potential reversal from the lower line of its sideways trend.
As for commodities, Gold and Silver are currently challenging their mid-term downtrend lines. Although the initial tests have favored sellers, a breakout could switch the signals to bullish. And let's not overlook the Oil market; WTI and Brent Crude are subtly but steadily targeting higher resistance levels at $83 and $88 per barrel, respectively.