Risky assets are back on the menu, boys!
21 March 2023
The recent days have been a paradise for the short-term scalpers trading the increased intraday volatility with the price going in both directions. Yesterday, we experienced a great comeback to the risk ON mode on almost every asset on the market. No new bank collapsed or was bailed out, which is great news, right?
Indices reversed in a V-shape way, creating extremely bullish hammer candles. DAX did this on the 14800 support that is absolutely key in the long term. We are back above it, which means that the sentiment remains bullish. S&P 500 came back above the down-trendline, which is a promising start. Several more points to the upside and we will be able to claim the end of the bearish correction.
Risk ON mode means the correction on safe haven assets. Yesterday, gold climbed above the psychological level of 2000 USD/oz but was not able to hold above it for a long time. We are back below the level and it looks like a legitimate bearish correction has officially started. Risk ON also means that oil climbed higher. In a nutshell, avoiding deep recession means keeping the demand for oil at desirable levels. The bounce on oil is a very shy one, though, so I wouldn’t claim that we have hit the rock bottom. More pain for the bulls is probably yet to come.
On the forex market, we can see weakness in the AUD and NZD. This is caused by the meeting minutes from the RBA published overnight. Traders perceived them as dovish, and hence the reaction. The strongest currencies are currently the Euro and two currencies from Central Europe: CZK and HUF. Perceived as risky assets, they are enjoying the relief rally today.
The calendar today will bring us the inflation data from Canada, where a small decline in inflation is expected. The day will finish with the existing home sales number from the US, where traders are expecting a small increase compared to the number reported in the previous month.