Friday with short-term correction on major instruments
20 January 2023
Thursday was another day full of losses on the stock market. In some cases, it has been the fourth bearish day in a row and the situation seems rather serious. Friday, as is often the case, starts with a small correction of those moves. Short-term sellers are simply closing their positions before the weekend and reaping profits of a successful bearish week of trading.
Asian markets have mostly been on the rise today, pointing to a neutral opening in Europe. Everything is set and ready for a bullish correction to happen today. In the calendar, there are some speeches planned from central bankers like SNB’s Jordan or ECB’s Lagarde. We already got a few words from FOMC’s Member Williams that pretty much confirmed the FED talk from yesterday. Williams claims that the US inflation remains too high and the Fed has more work to do on rate hikes. He added that the Fed has to maintain its current policy until the inflation returns down to 2% - simply another hawkish comment in the basket.
We are not done with the calendar yet. We already saw retail sales data from the UK that came worse than expected, at -1% (vs 0.5% exp). In the middle of the European session, we will also see retail sales numbers from Canada expected to come negative.
Yesterday’s calendar brought a few surprises, such as the huge rise of 8.4M in crude oil inventories (where a drop of -2.1M was expected) or a larger-than-expected drop in natural gas storage. The latter should be positive for Nat Gas but this instrument just keeps dropping like a rock, which is pretty much welcome by everyone, apart from the gas exporting countries.
On the Forex market, the main volatility is happening on the pairs from the Antipodes - who were dropping sharply yesterday – finishing as the strongest ones today. Friday is negative for the British Pound and it may continue that way until the end, as the weak retail sales data may be driving traders away from this instrument.