Indices Remain Bullish Despite Friday's Market Correction and US Retail Sales Disappointment
17 April 2023
It's common for Fridays to bring a correction to the moves seen throughout the week as traders close their positions before the weekend and capture profits. However, last Friday was different as this correction got out of hand and transformed into a rapid reversal, but only for the Dollar and Gold as indices remained bullish.
While Friday's calendar wasn't extremely busy, it was significant enough. The key data was the US retail sales, which were much worse than expected (-1% vs -0.4% exp). Even better, the preliminary UoM Consumer Sentiment (63.5 vs 62 exp) was not enough to initiate a recovery. This left a mark, with EURUSD coming back inside the rising wedge formation, and USDJPY establishing new monthly highs and comfortably above the 133.8 support. A huge reversal was also seen on AUDUSD and NZDUSD.
Gold was also hit by a stronger USD, with the price quickly moving from the upper to the lower boundary of the rising wedge formation. Currently, we see a small bounce, but the long-term uptrend on Gold is definitely threatened. Interestingly, the drop in oil was not as spectacular. Here, there is a chance for a false bullish breakout and a major sell signal, but the price is still relatively high and survived the volatile Dollar comeback without losing ground.
As we said at the beginning, indices are doing great. The SP500 is currently attacking the resistance at 4146 points, while the DAX is starting a new week one step from establishing new, long-term highs. Surprisingly, the Dollar rollercoaster had no influence on the indices this time.
Today's calendar is not packed, which is pretty common for a Monday. One key data point will be the Empire State Manufacturing Index, which will be published at the beginning of the American session. The expected number is -17.7, which would be a rise from the -24.6 reported a month ago.