Indices and Oil bounce off major resistances and reverse to the downside
19 January 2023
Wednesday was a crucial day for the mid-term situation on many instruments and there was no one, main cause for that to happen. We got a pack of data from the US but also a few important statements from the Central Bankers. In addition to that, the technical situation on many assets was promoting big moves.
First, let’s start with the calendar. Most of the numbers revealed yesterday from the US economy, were worse than expected. PPI came as -0.5%, which was much lower than the -0.1% anticipated by economists. In addition to that, we got a negative review of the number from the previous month. Retail Sales dropped significantly also crushing the estimates (-1.1% vs -0.8%). In this case, we also got a negative revision of the number from the previous month. Reaction? On Dollar, pretty mixed. Yesterday, USD lost, but nothing crazy and today USD is trading slightly higher.
Interestingly, the biggest problems have now the commodities currencies. AUD and NZD are the weakest currencies right now, while yesterday, the two worst currencies were AUD and CAD.
NZD is additionally weakened by a surprising announcement that New Zealand Prime Minister Jacinda Ardern is planning to step down no later than February 7th. AUD, on the other hand, is negatively affected by the job data from Australia, where the employment change data came negative! Also, the unemployment rate came higher than expected (3.5% vs 3.4%).
I think the biggest fireworks happened yesterday on the indices. American indices dropped sharply. SP500 bounced off a key-long term down trendline – I think the most watched resistance on the market right now. Dow Jones dropped 1.8%, which was even more than on Tuesday. 34400 proved to be a strong horizontal resistance here. Futures are also red today. I guess European indices will now digest what happened on the market after yesterday’s close.
A big thing happened yesterday with Oil. Everything was ready there for a big move to the upside. Price was climbing above major resistances with proper momentum. In the end, the bullish attack collapsed and the price reversed. Oil dropped around 1% and today is adding another 1% loss. With that, Brent confirmed a bounce off the long-term down trendline, which may start another bearish wave.