A Tale of Two Days: How Thursday's Market Highs are Shaping Friday's Predicted Pullbacks
14 July 2023
In the whirlwind of financial market activities, yesterday, Thursday, proved to be a day of significant movements and it appears that Friday is shaping up to mirror a similar trend with corrective measures taking place.
On Thursday, we saw some pivotal events unfold. The U.S. PPI (Producer Price Index) came out lower than expected at just 0.1%. This plays a crucial role in evaluating inflation trends and certainly had a profound impact on market movements.
Friday's macroeconomic calendar doesn't hold too many heavyweights but it's certainly not void of potentially impactful data points. The primary focus will be on the Preliminary University of Michigan Consumer Sentiment in the United States, a vital indicator of financial confidence. The market expectation for this release stands at 65.5, and any deviation from this could stir up the markets.
Across the pond, U.S. indices were on the upswing. The S&P 500 and NASDAQ hit new long-term highs, signaling a robust market sentiment. Dow Jones, though not reaching a new high, still exhibited a sideways movement, suggesting a fairly optimistic outlook.
On the currency front, the USD weakened against its major counterparts, with USDJPY marking its sixth consecutive bearish day. USDCHF followed suit, also logging six bearish candles in a row.
Fast forward to Friday, the markets seem to be entering a phase of correction, which is typical after a week filled with vigorous movements. Both USDJPY and USDCHF are hinting at the formation of a hammer candle, indicating a potential bullish correction.
In the world of commodities, silver stood out on Thursday by breaking the resistance at $24.5 per ounce, thereby triggering a buy signal. Oil, too, created new local highs and continues to trade significantly higher.
However, as we navigate through Friday, commodities seem to be undergoing a bit of a pullback, with both gold and silver marking lower. But it's worth noting that the mid-term sentiment still remains positively skewed.