We said in yesterday’s analysis (here) that we might see strength coming into USD. In the US session stocks, crude oil and EUR started losing momentum. Bitcoin in which bids had been softer after claims that Tesla did not make a $1.5 billion investment in Bitcoin, lost some more ground. While small caps tend to have the best gains in stocks when the market rallies, they are more vulnerable to market corrections. Yesterday Russell 2000 (-0.72%) lost more than the other US indices. US headline CPI in line with expectations at 0.3%, Core CPI reported at 0.0% while analyst consensus was looking to see a 0.2% rise in Core inflation. Markets rallied on this release but then sold off as the US session got going. Such volatility could mean further weakness in stocks. We will follow the markets and keep you updated. There isn’t much going on today in terms of economic data releases. The only significant events scheduled for today are EU Economic Forecasts and the US Unemployment Claims. See our economic calendar for more information.  By reading further you agree with our disclaimer at the bottom of this page and acknowledge that we do not provide investment advice.

Crude oil inventories were much lower than analysts predicted (-6.6M vs. -0.9M expected) but with gasoline stocks quite high (+4259K vs +2100K expected) and with the USD strength seeping into the markets traders decided to take some profits off the table. The US gasoline inventories are at the highest level since June 2020.   Open a VIP Black account with us. There are no per trade execution or monthly fees on our VIP Black accounts. 

Cryptocurrencies are gaining more and more credibility and acceptance among traditional businesses. Mastercard said it will support selected cryptocurrencies in its network and Twitter has said they are considering adding bitcoin to the company’s balance sheet. There are however some concerns about increased volatility in stock prices if companies have exposure to bitcoin. Some analysts are suggesting that with Tesla, for instance, the sizeable bitcoin investment might have a negative impact on the company.

Daily shooting star in EURUSD
Now we have some evidence that traders are becoming more careful with their long entries. EURUSD formed a daily timeframe shooting star yesterday and is now trading inside yesterday’s range. The 50-period SMA and 50% Fibonacci retracement level are both above the current price and form a resistance at 1.2150. The next key support level is at 1.2053. The other key support and resistance levels are 1.1952, 1.2190 and 1.2350. More analysis on USD pairs here. Open a VIP Black account with us.There are no per trade execution or monthly fees on our VIP Black accounts.

S&P 500 losing momentum
The Fed chair Powell in his speech at the New York Economic Club failed to impress the markets. Powell’s comments were dovish and he emphasized that we have a long way to go before the economy returns to full employment. He also said that he sees inflation staying subdued and that the Fed will continue with their stimulus. This shows in the way risky assets traded in yesterday’s New York session. We suggested yesterday the markets could start to lose some steam. S&P 500 has been trading near to a rising resistance and hasn’t been able to close above it. Now yesterday’s price action was as weak as the day before. The rally is getting weaker so we might see a correction. There is some protective positioning visible with utilities and health care gaining relative to the S&P 500. The market is, however, trading fairly close to the high put in place in January. This support at 3870 could prevent traders from selling the market lower but if this happens the next technical confluence level is around 3770 where both 50-day SMA and 23.6% retracement levels coincide. Yesterday’s high at 3934 and February 1st low at 3664 are both key price points

Recent macroeconomic data releases

  • Canadian Employment Change -212.8K, -43.5K expected
  • Canadian Unemployment Rate 9.4%, 8.9% expected
  • US Average Hourly Earnings 0.2%, 0.3% expected
  • US Non-Farm Employment Change 49K, 85K expected
  • US Unemployment Rate 6.3%, 6.7% expected
  • Canadian Ivey PMI 48.4, 49.5 expected
  • New Zealand Inflation Expectations 1.89%, 1.59% expected
  • US CPI 0.3%, 0.3% expected
  • US Core CPI 0.0%, 0.2% expected
  • US Crude Oil Inventories -6.6M, -0.9M expected

Important macroeconomic data releases today

  • EU Economic Forecasts
  • US Unemployment Claims 755K expected

You may access the times and dates in the economic calendar here.

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Trade Safe!

Janne Muta
Chief Market Analyst
TIOmarkets.com

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