China's Inflation Surprise & NASDAQ's Unexpected Rebound
09 August 2023
On the trading floors this Wednesday, the calmness of a light calendar is juxtaposed against some sharp movements and surprises. As traders around the globe maneuver their strategies, several highlights emerge from the fray.
The day set in motion with an inflation data update from China that slightly outperformed expectations. While the projected figure was -0.4 percent, the actual data revealed a -0.3 percent. In contrast, New Zealand reported its inflation expectations at a modest 2.83 percent. With not much on the data front, traders' attention may veer towards the crude oil inventories later in the day. Memories of the previous week's stark 17 million barrels draw are still fresh, and any deviation from expectations might ripple across the market.
Earnings season, a significant event on every trader's calendar, is at its peak. While UPS's report of a dip in revenue raised eyebrows, the market is brimming with anticipation for figures from corporate giants Walt Disney and Sony. Their performance might set the tone for market sentiment in the sectors they represent.
In the realm of currencies, the dollar, after reigning supreme the previous day, has entered a phase of minor correction. The initial hours leading up to the European session observed the Euro and Swiss Franc flexing their muscles a bit. Technical analysts and chartists are sure to have their hands full as several currency pairs display noteworthy movements. The EURUSD is signaling bearish undertones as it continues its southward journey. On the other side of the spectrum, the USDJPY is showing bullish sentiment. Meanwhile, the USDCAD, in a move that's sure to excite triangle pattern enthusiasts, has retraced its trajectory back into a long-standing symmetric triangle. This shift points towards potential buying opportunities. The NZDUSD, however, isn't showing such optimism, continuing its slide after a breach of an uptrend line.
Equity indices had their share of drama too. NASDAQ displayed a resilience reminiscent of seasoned traders. After initially succumbing to bearish pressure and dipping below the 15,250 support, it made a remarkable U-turn. DAX, Germany's blue-chip index, echoed this sentiment by staunchly defending the 15,700 point mark.
Commodities, always a sector of intrigue, did not disappoint. While precious metals maintained their downward trajectory, oil gave traders quite a ride. Starting the session with a plunge, it seemed bearish sentiment would dominate. However, by the close, buyers had orchestrated an admirable rally, pushing the commodity close to its long-term peaks.
In the end, the undulating movements and the V-shaped recovery in oil serve as a testament to the market's unpredictable nature. Traders, armed with data and intuition, will continue to navigate these waters, hoping to decipher the market's next big move.