We wrote yesterday about institutions focusing on the same price targets as we did in our Tuesday’s analysis report. Institutions started distributing their long positions right below our targets and continued selling through the Fed press conference. By reading further you agree with our disclaimer at the bottom of this page and acknowledge that we do not provide investment advice.

Our short-term targets for long trades in S&P and DJIA were 3420 and 28140 respectively and 11500 for Nasdaq. DJIA and Nasdaq targets were hit yesterday and the target for S&P futures was missed by 0.5 index points or 0.14%. It can therefore be said that price practically moved to our target. Yesterday our targets for short trades were also hit. We set targets at S&P and DJIA targets at 3336 and 27576 respectively. Both S&P 500 and DJIA targets were hit in today’s trading. Markets are approaching supports so the question obviously is: are the supports going to hold? While no one knows the future, we remain bearish until there are reasons to believe in rising prices in stocks. At the time of writing this, prices are moving lower.

Not even a good inflation number from the UK could help the Cable to move above the resistance (at 1.30). We predicted earlier that it’d be unlikely GBPUSD would be able move past this level. After the pair failed to penetrate the resistance it fell by 100 pips or so. While the UK CPI was confirmed at 0.2% (0.1% expected), the Core CPI came in at 0.9% instead of 0.7% expected by the analysts. At the time of writing this the Cable is bouncing higher from 1.2915 support. To take advantage of our analysis and ultra-low trading fees, register for an account and deposit here.

US retail sales and core retail sales fell short of expectations. While analyst consensus estimates were 1.1% (headline) and 1.0% (core), the numbers actually came in at 0.6% and 0.7% respectively. This together with the lack of new stimulus from the Fed meant the selling in stocks intensified and the index futures moved to our targets. The federal funds rate was confirmed at <0.25 as expected.

EURUSD had created a lower high earlier in the week and with the Fed being less dovish the USD strengthened bringing EURUSD once again to the 1.1754 support we’ve so often lately discussed. EURUSD is currently bouncing higher from the support but with a lower reactionary high at 1.1900 we now have mixed signals in the pair.

There was a slight positive surprise in today’s GDP release from New Zealand. The actual change in GDP growth was -12.2% vs. -12.5% expected. At the same time it was confirmed that the coronavirus lock down measures have led the country to its first recession in 11 years.

Australian employment change was way better than expected. The actual number confirmed that there was an increase of 111.0K jobs while analyst consensus had expected to see a drop of 40.0K in the number of jobs. Unemployment Rate was also a positive surprise at 6.8% vs. 7.7% expected.

Recent macroeconomic data releases

  • UK Claimant Count Change 73.7K (99.5K expected)
  • UK CPI, 0.2% (0.1% expected)
  • US Core Retail Sales, 0.7% (1.0% expected)
  • US Retail Sales, 0.6% (1.1% expected)
  • US Crude Oil Inventories, -4.4M (2.1M expected)
  • US Federal Funds Rate, <0.25, (<0.25 expected)
  • FOMC Press Conference

Macroeconomic data releases today

  • Australian Employment Change, 111K (-40K expected)
  • Australian Unemployment Rate, 6.8% (7.7% expected)
  • BOE MPC Official Bank Rate Votes, 0-0-9 expected
  • BOE Monetary Policy Summary,
  • BOE Official Bank Rate, 0.1% expected
  • MPC Asset Purchase Facility Votes, 0-0-9 expected
  • Canadian ADP Non-Farm Employment Change
  • US Philly Fed Manufacturing Index, 15K expected
  • US Unemployment Claims, 825K expected

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

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Trade Safe!

Janne Muta
Chief Market Analyst

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Janne Muta

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