Market Movement: US Inflation Data Triggers Volatility Across Indices, Forex and Commodities
11 May 2023
Wednesday finally brought some movement to the market thanks to the US inflation data, which was published before the start of the American session. CPI came in at 4.9%, slightly below the consensus of 5%. While the decline was not spectacular, it made a difference as the dollar dropped and indices recorded much more volatile moves, climbing significantly higher.
For example, the Nasdaq is currently at new long-term highs after breaking out from the rising wedge to the upside. The S&P 500 is also bullish, trading at a safe distance from the 4070 support. Eye-catching things are also happening on the European indices, where the French CAC is bouncing off a key horizontal support at 7360.
On the Forex market, we can see a proper slide on the EURUSD, which is currently at its lowest levels since the middle of April. Technically, this is a sell signal as the price broke out from the ascending triangle pattern to the downside. An important battle is also happening on the USDCAD, which is currently fighting on the lower line of the symmetric triangle pattern. A breakout could bring a scary sell signal, but so far, buyers are winning this battle.
In commodities, Wednesday brought an expected correction on oil, at least according to the author. Promising moves are currently happening on silver, which is dropping sharply in the first hours of the European session. The price is currently creating a double top formation, and a breakout of 24.5 USD/oz can activate this pattern with a legitimate sell signal. Let’s see how this bearish trip will end.
Today's calendar also had inflation on it. During the Asian session, we saw a CPI from China, which came in much lower than expected at 0.1% vs. 0.3% expected. This is another sign that the peak of global inflation is probably behind us. Later today, we should see a 25bp rate rise from the Bank of England. In addition to that, we will see the producer's inflation (PPI) from the US, which is expected to rise by 0.3%.