According to the FOMC meeting minutes released yesterday, the Fed officials discussed last month how to help the public to accept higher inflation. Reuters reports that they also focused on the need to “stay vigilant” should there be signs of market stress. Higher inflation pressures the bond prices and increases their yields which at some point will begin to attract investors that look for safer returns for their funds. Those living in Texas certainly have had their share of stress, although of a different kind. Oil and natural gas prices keep on climbing higher as the cold weather means millions of Texans have been without electricity for three days. Some are burning their furniture to survive. The governor of Texas has banned natural gas exports. At the time of writing this USOIL is trading at $61.68 and USNGAS at $3.029. By reading further you agree with our disclaimer at the bottom of this page and acknowledge that we do not provide investment advice.

Gamestop players explained their actions and roles to the US lawmakers yesterday. Hedge fund managers, Robinhood executives and Keith Gill, also known as Roaring Kitty gave their testimony to the lawmakers and said there was no unfair play or illegal activity when the so-called meme stocks rallied thousands of percents due to social media-fuelled buying. Vladimir Tenev, the CEO of online brokerage Robinhood insisted that they had to block trading in Gamestop and other stocks due to regulatory requirements related to collateral the company had to maintain at the clearinghouse while Gabriel Plotkin from Melvin Capital said they never pressured Robinhood to stop trading in stocks that Melvin Capital had short positions on.

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The Australian unemployment rate was slightly better than expected (6.4% vs. 6.5%) while the employment change was roughly in line with the consensus expectation. Yesterday the UK and Canadian inflation numbers were slightly better than analysts had hoped for. Sterling had an initial positive reaction to the news but the small rally was soon faded by the traders. CAD weakened against the USD first but has since then returned approximately to the levels it traded before the news. US retail sales were a pleasant surprise with the headline number coming in at 5.9% vs. 1.1% expected (core: 5.3% vs. 1.1% expected). The news turned USDJPY lower and soon after the news was out AUD and NZD started to rally against the dollar. In theory, the USD should benefit from such a good number but as we have often seen the markets don’t always follow the theories.  If good news can’t support the market then the big money knows something we don’t and it makes sense to follow the price action rather than hold on to the theories. Today’s main risk events are the Philly Fed Manufacturing Index and crude oil inventories releases. See our economic calendar for more information.

The price of Natural Gas (USNGAS) has moved strongly due to the cold weather in both Europe and the US. The price has appreciated over 10% in just a few days. USNGAS has cleared a resistance at 2.987 that coincided with the 61.8% retracement level. The next significant resistance level at 3.184 is a likely level to prompt profit-taking while the nearest confluence area can be found at 2.892 – 2.908. This is where we have the rising trendline and the latest minor swing lows. The next significant support area is the 2.71 – 2.74 zone (38.2% Fibonacci retracement and a major swing low from February 10th.

The rally in USOIL has been very strong. There was a definite escalation in the uptrend early in early February and since then the market has had only two or three down days. There is a significant resistance level (May 2020 high at 65.41) which is not that far anymore. The risk is that once the cold front in the US and Europe starts to loosen its grip oil market could start to become softer due to profit-taking. Especially if it trades near this important resistance. The nearest supports are at 58.78 and 60.77. Open a VIP Black account with us.There are no per trade execution or monthly fees on our VIP Black accounts.

Recent macroeconomic data releases

  • US Crude Oil Inventories -6.6M, -0.9M expected
  • US Unemployment Claims 793K, 755K expected
  • UK Preliminary GDP 1.0%, 0.5% expected
  • UK CPI 0.7%, 0.6% expected
  • Canadian CPI 0.6%, 0.5% expected
  • US Core Retail Sales 5.9%, 1.1% expected
  • US Retail Sales 5.3%, 1.1% expected
  • FOMC Meeting Minutes

Important macroeconomic data releases today

  • Australian Employment Change 29.1K, 30.2K expected
  • Australian Unemployment Rate 6.4%, 6.5% expected
  • Philly Fed Manufacturing Index 20.3 expected
  • Crude Oil Inventories -2.1M expected

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

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Janne Muta
Chief Market Analyst

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