Stock bulls in for enjoyable Monday
06 March 2023
I guess that stock bulls had a great sleep at the weekend, while sellers struggled a bit. The reason for that was the Friday session on indices which finished with a decisive bullish victory and sellers' run for their lives. The German DAX used the hammer candle on the key support and jumped above the mid-term down-trendline. S&P 500 also reversed sharply and came back above the mid-term up-trendline. Dow Jones had a third consecutive bullish day after bouncing off the horizontal support on the 32500. All this looks really promising for the buyers.
Indices were not the only group of instruments that rose rapidly on Friday. Commodities also outperformed - we saw gold climb the highest levels since February 15 and witnessed a proper rise in oil. WTI managed to escape from the symmetric triangle pattern, triggering a buy signal with the target of 82 USD/bbl. Brent oil broke the long-term down-trendline and is currently aiming the resistance at 89 USD/oz. The sentiment on commodities is really bullish. Can we blame the weaker dollar for that?
Not really, as the recent weakness of the USD is not extreme. The Dollar Index (DXY) has been trading in the same area of 105 since February 22 – no major changes there. The antipodes pairs are rather weak today, as the NZD and AUD are currently losing heavily against their peers. The strongest currency right now is the Swiss Franc. Why? Well, today we received the inflation data from Switzerland and the number came at 0.7%, which was a rise from the previously reported 0.6% and was also higher than expected (0.5%). Higher inflation is usually bullish for the currency and this is the case today, too.
The inflation from Switzerland was the key pack of data today. The calendar is quite empty but we will receive some interesting numbers. Trades should pay attention to the Construction PMI from the UK, retail sales from the Eurozone, and the Ivey PMI from Canada.