Correction of “Powell Rally”
09 February 2023
On Wednesday, most of the assets were a correction of the “Powell rally” from Tuesday. It was not a very eventful day and no major changes were introduced to the mid-term situation on the chart. Nevertheless, we can still find interesting occasions and patterns on the charts.
Number one is, of course, the situation on indices. The question of bullish sentiment remaining here is still there. Thursday’s futures give us a hint that buyers are indeed still winning. German DAX seems especially vigorous today, rising by 0.7% and aiming to yearly highs. An interesting thing is happening in Asia - the vast majority of indices are losing today, but not the ones from China. Hang Seng and Shanghai Composite Index are well above 1% or higher.
On commodities, we are witnessing a comeback of the Australian Dollar. It has had a really promising bullish week thanks to the hawkish stance from the RBA on Tuesday. Buyers took a break yesterday but on Thursday, the appetite for the AUD is back. On the other side of the spectrum today, we have the American Dollar who is slowly maturing to a correction. On the EURUSD, we saw 5 bearish days in a row and it seems that today, we will not get a sixth one.
On commodities, we have a bullish comeback on oil, erasing the losses from the first days of February. Yesterday’s higher-than-expected inventories data did not kill the mood and oil secured the third bullish day in a row. I would be careful with too much optimism, though, as the long-term sentiment remains negative.
Oil managed to cancel all the losses from February, but gold did not. The slide from the end of the last week was just too devastating and the current correction is just too small. It is just a correction as well, not a reversal. Gold still looks bearish and chances of a further slide are much greater.
In the calendar today, we already got the Prelim CPI from Germany that happened to be a bit higher than expected (1% vs 0.9%). The key data today is the Monetary Policy Report Hearings from the UK which will be published soon.
Let’s not forget about the earnings season. A positive surprise came yesterday from UBER who finally posted positive EPS (0.29 vs -0.15). The biggest players posting earnings today are AbbVie and PepsiCo.