- Inflation expectations back to the summer 2021 level
- Fed expected ease so stocks rally
- Gold remains in uptrend above 1892
The Michigan survey on consumer inflation expectations showed the 12-month expectation fall to June 2021 levels (4%). This gave another reason for investors to believe the good times (The Fed not hiking the rates anymore) are getting closer and closer. This helped DJ, DAX gold and Cable rally further.
Price action in stocks last week was fairly typical for a bull market. Nasdaq was leading the pack as the market benefits the most from lower CPI and lower expectations for future financing costs. DJ moves to the upside have been slower as a result. Investment funds have allocated more money to technology stocks than Dow stocks as Nasdaq stocks were presented value in the new not-so-hot inflation and rates environment the markets are now discounting. The US bank holiday today means the markets are likely to be more quiet than usually.
Wedging in an uptrend
DJ – There’s some wedging going on in the 8h chart which is suggesting some hesitation from the green team and could lead to a correction but DJ still trends higher above 33 880. Below the level, the market could trade down to 33 690. The nearest key resistance level is at 34 396.
DAX trends higher
DAX – The uptrend in DAX stays in force above 14 948. Below the level, DAX probably trades down to 14 820 or so. The next key resistance level above the current market price can be found at 15 542.
Do we get a corrective move in gold now?
Gold uptrend stays in force above 1892. Below the level, the market could move down to 1870. The nearest key resistance level in gold is at 1998. Note that the market is currently trading fairly close to the channel high. This could lead to a corrective move inside the bull channel.
Cable remains bullish above 1.2150
GBPUSD has remained strong after it broke out of the triangle formation. The market remains bullish above 1.2150. Below the level, the market could trade down to 1.2090. The nearest key resistance level is the low of a minor market top formation from December (at 1.2341).
The Next Main Risk Events
- GBP BOE Gov Bailey Speaks
- CAD BOC Business Outlook Survey
- CNY GDP
- GBP Claimant Count Change
- GBP Average Earnings Index
- EUR German ZEW Economic Sentiment
- CAD CPI
- USD Empire State Manufacturing Index
- JPY BOJ Outlook Report
- JPY Monetary Policy Statement
- JPY BOJ Press Conference
- GBP CPI
- USD USD PPI and core PPI
- USD Retail Sales and core retail sales
For more information and details see the TIOmarkets economic calendar.
Chief Market Analyst
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