Bears are back in caves
31 March 2023
Friday welcomes us with a pack of data from Asia and most of them is flashing green. Especially worth noticing is the non-manufacturing PMI from China which came at 58,2, making it one of the highest readings in a while. A really nice rise in retail sales in Japan (6.6%) is also quite interesting. Today, we will learn the Eurozone inflation, expected to come at 7.1%; as well as the GDP from Canada, where 0.4% is expected. The last important number for this week will be the Core PCE Price Index from the US, which is expected to come at 0.4%.
What is the sentiment on Friday? Ladies and gentlemen, it is extremely bullish. On indices, we have a proper knockout with S&P 500 and DAX aiming for monthly highs and Dow Jones trading comfortably above the 32500 resistance. It looks like sellers escaped to their hideouts and will stay there until Bloomberg mentions another bank in trouble.
On the currency market, we can still observe abandoning of the USD and other safe havens. The EURUSD is close to the monthly highs, while NZDUSD just made them. The USDCAD, on the other hand, started Friday by making the new monthly lows. Worth noticing is also the situation on the Yen who has been losing the entire week.
The combination of the weaker USD and risk ON mode comes as a great help for commodities, especially oil. WTI managed to climb back above the 72 USD/bbl resistance, which can be considered a buy signal. Brent, on the other hand, is currently fighting on the long-term down-trendline. Even gold is doing pretty well, considering the surge in risky assets. The weaker USD helps buyers maintain a flat correction and keep the changes for another attack on the 2000 USD/oz.
Friday is very often a correction day, where traders are closing profits for the weekend. It happens frequently that on Friday, we can see opposite moves to those that were present for the entire week. Keep that in mind, as today, we may get correction on indices, USD and Yen; but it will be hard to reverse the trend that started on Monday.