The week’s started out mainly with concerns about the state of China’s economy because its retail sales came in much below expectations (2,7% vs 5% expected).
The slowdown in China may not have a big impact on major indices or the Forex market but it’s definitely having an influence on the commodities.
Oil recorded the worst session in August, with WTI dropping further below pre-invasion levels. Gold also declined and thanks to that drop, we know that the area around the 1800 USD/oz will now be a crucial, mid-term resistance. As long as we stay below that level, the sentiment remains negative. Copper also declined and it seems that the metal is ready for another leg down.
Apart from data from China, the American dollar has been a big influence, coming back to a path of strength. The EURUSD recorded a very bearish session with the price breaking the mid-term up trendline. Technically that means that we’re ready to test parity again. The same drop could have been seen on the GBPUSD, which is currently flirting with August lows. The USDJPY is also pushing higher, potentially starting a new bullish wave. The USD is definitely one of the strongest currencies right now.
Today’s calendar is fairly quiet. Overnight we had meeting minutes from RBA. The Australian dollar reacted with some limited gains but we can’t say that the minutes were super dovish or hawkish. I would say that ‘neutral’ would be a more appropriate word here.
Still to come is inflation data from Canada. The previous number was 0.7% and the expectations for the current one is 0.1%, so a rise but not as significant as the previous one. Generally, some experts are seeing signs that global inflation is peaking and today’s number will have a chance to prove that point, let’s see what happens.
To wrap things up, let’s move to indices which are currently climbing higher. DAX is on a monthly high and SP500 is currently flirting with the tops from May. Sentiment on stocks is currently positive but many long-term bears warn that it’s just an enormous trap and those who are buying now will soon experience enormous pain. Well trading is always about finding balance between two opposite forces on the market.