Commodity Weakness and PMI Releases: Key Market Trends to Watch

Commodity Weakness and PMI Releases: Key Market Trends to Watch
Thursday was a big day in terms of fundamental news. We had two key interest rate decisions from Switzerland and the UK, both of which resulted in hikes. The Swiss National Bank raised its benchmark rate by 25 basis points from 1.5% to 1.75%, while the Bank of England surprisingly increased its rate by 50 basis points, taking it to 5%.
Contrary to expectations, the British pound didn't gain strength after this hawkish move. Instead, we observed a very volatile reaction, with the GBP settling more or less where it was before the announcement.

Looking at the charts, specifically EURGBP, we saw a false breakout below the 0.857 support, which is considered bullish. After reclaiming this level, the price broke the midterm downtrend line signalling a positive sentiment. The current target is set at 0.873 or the long-term downtrend line.

As for today, Friday, the macroeconomic calendar is packed with manufacturing and services PMIs from major economies. Over the past few months, we've seen a pattern of manufacturing PMIs below 50, indicating a contraction, while service PMIs tend to be above 50, indicating expansion. These figures could influence market sentiment and we might see some volatility around their releases.

Turning to commodities, they are showing weakness this week. Gold set new midterm lows today, reaching its lowest level since March 16. Silver followed a similar pattern, reaching its lowest level since March 22. Meanwhile, oil saw a big correction with Brent oil price approaching the lower line of its sideways trend at $71.6 per barrel.

The indices are currently in a correction phase, with most of this week being bearish. However, yesterday saw a bullish correction. As we approach the end of the week, traders should keep an eye on these trends and adjust their strategies accordingly.
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