Will Friday's Market Defy or Magnify Thursday's Surprises?
13 October 2023
As traders worldwide tune into their screens this Friday morning, the financial markets are buzzing with activities shaped by Thursday’s unfolding and the anticipation of what Friday holds.
Notably, Thursday brought a pivotal moment for markets with U.S. inflation numbers making a splash. The CPI, albeit slightly, exceeded expectations, recording a 0.4% monthly increase and an annual rate sitting steadfast at 3.7%. The implications were far-reaching, offering a jolt to the American dollar, which clenched onto a strengthening position, while indices recoiled, introducing bearish vibrations into the market.
The EURUSD pair echoed this sentiment profoundly, rebuffing the neckline of its inverse head and shoulders formation and subsequently, annulling its previous bullish narrative. Traders witnessed a stark shift from optimistic to pessimistic sentiment as it snaked back within its channel down formation, unearthing a potential for upcoming downswings.
On the fundamental front, Friday brings with it a cluster of potential market movers. The day began with China’s inflation number, coming in unexpectedly flat at 0.0%, juxtaposed against an anticipated 0.2% rise. Moving forward, traders will keenly set their sights on speeches from the Bank of England Governor Bailey, ECB President Lagarde, and FOMC member Harker. Moreover, eyes will also flicker towards the Prelim University of Michigan Consumer Sentiment from the U.S., projected to tick in at 67.2.
Navigating to the technical side, the American dollar to Swiss franc pair weaves an intriguing tapestry. After six consecutive bearish sessions, it carved a bullish path, reverberating off a mid-term uptrend line and presently challenging the crucial 0.91 resistance level. A puncture above this level will potentially usher in a solid buying signal, pivoting the narrative for USDCHF traders.
The GBPCHF, on the other hand, seems to be quietly slipping out of its long-term sideways trend, choosing a southward path. The prospect for a sell signal here is brewing, as it delicately sidesteps out of its previous stagnation.
Indices are showing fascinating stories as well. The S&P 500 reflects a tentative negative sentiment as it bounces off the neckline of its head and shoulders pattern. Nasdaq and DAX too tread cautiously, bouncing off the upper line of their respective patterns, and thereby sowing seeds for potential descents.
Commodities seem to be locked in a tug of war. Thursday witnessed a bearish stride for gold and silver, conjuring shooting stars in their wake. However, Friday morning has seen them aggressively push higher, indicating that the bullish pressure is firmly implanted.
Oil, albeit attempting to muster a reversal recently, still hangs close to its local lows, with Friday’s buyers making an ardent but as yet unsuccessful push upwards.