Welcome to Inflation Day: A Look at US Market Dynamics Ahead of CPI Data
13 June 2023
Welcome to Inflation Day in the United States! With the Consumer Price Index (CPI) data expected to drop from 4.9% to 4.1% on a year-on-year basis, it's no wonder we're seeing a notable strengthening of the American dollar and significant increases in indices. Let's delve into the details.
Starting with the indices, NASDAQ is particularly noteworthy, having kicked off the week with an almost parabolic climb. Currently, it's trading at the highest level since April 2022. Similarly, the S&P 500 is on the rise, gradually approaching the upper line of its upward channel. Meanwhile, the Dow Jones is attracting attention after breaking through the upper line of its symmetric triangle pattern and nearing the key horizontal resistance at 34,300 points. This breakout provides a reliable buy signal.
Turning to the currency market, we've seen the American dollar recover notably against the Swiss franc, bouncing back from last week's considerable losses. This resurgence is also evident against the Canadian dollar, where it bounced off the lower line of a symmetric triangle pattern, delaying or even potentially denying a breakout. A successful breakout here would be a solid buy signal.
Interestingly, the euro emerged as the strongest currency yesterday, with the British pound trailing as the weakest. Consequently, the EURGBP pair experienced a significant reversal, brought about by a bullish engulfing pattern on the key support level of 0.857. This bounce off support presents an excellent buy signal.
In the commodities market, precious metals like gold and silver are experiencing sideways movement. However, oil experienced a drastic drop, with Brent crude testing key horizontal support at $71.6 per barrel. This accurate test highlights an important support level, and a breakout here would usher in a powerful long-term sell signal. Currently, buyers are defending this support level, but it remains to be seen for how long.