Análisis de mercado diario

Has the market mood shifted too far? Last week, we were all fearful over the beginning of the end of emergency stimulus measures even though the world was having to contend with the increasing spread of the Delta variant. A Chinese regulatory crackdown also hit a variety of stock market sectors in the name of greater “social cohesion” in favour of corporate profits. This spooked Asian markets with the Hang Seng index moving into bear market territory, with “peak growth” lingering in the shadows.

This week, although the latter has been evident again in more disappointing economic data, markets are now hopeful that Chair Powell will deliver dovish comments in the vein of other FOMC officials like Kaplan’s more cautious approach to policy outlook due to the Delta variant. But China has apparently recorded zero cases of coronavirus for the first time in several months while the third busiest port in the world in China has just reopened. We are now getting to the stage when Chair Powell only has to be a bit more hawkish sounding than most expect in order to see some volatility.

FX markets quiet

That said, implied volatility measures of FX moves over the Jackson Hole meeting are not elevated. This points to very few hints being given about the policy outlook. Or at least not a great deal of new colour on the Fed’s gradual move towards tapering. The dollar is currently trading marginally below 93 on the DXY with EUR/USD trading around 1.1750.

Disappointing German business survey data released earlier today actually had the opposite effect on the single currency than what would normally be seen. EUR/USD moved higher from an intraday low with markets perhaps positioning for a worse print. The world’s most traded pair is still stuck in a down trend with trendline resistance from the June highs capping any upside. Last week’s new long-term low at 1.1663 is key.

Oil claws back losses

Today, Brent crude is building on its biggest two-day gain since November. Prices are now back to testing the 50% midpoint of the July move lower. Increased demand in India and Mexico’s oil platform fire are offsetting Delta worries on the fundamental side. Near-term support sits at $67.46 with bulls aiming to push black gold above $73 initially.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

Markets, and much of the UK no doubt, have woken up to the new week in a slumber, somewhat overwhelmed by recent events. The wait goes on for the English football team, but we have a hectic week on the risk event calendar with updated US inflation to kick things off tomorrow.

This data will tell us if we have now seen the peak in inflation in May, with consensus expecting the headline reading at 4.9% and the core at 4%. The latter would be the highest print since 1991. Labour supply issues and supply chain disruptions are seeing rising costs passed onto consumers amid buoyant demand. Any type of slowdown and potential peak in CPI may put a cap on the chances of Fed rate hikes in the near term and stem the dollar bid we have seen recently.

ECB meeting back in play

Over the weekend, a dovish ECB President Lagarde suggested there might be changes to monetary policy at next week’s meeting. New stimulus guidance and measures to provide support when the current round of QE finishes would come on the back of the ECB’s strategy review which was focused on the new inflation target, a symmetrical 2% that could be overshot.

Having touched a three-month low of 1.1781 last Wednesday, EUR/USD is trading currently above 1.18. Momentum indicators have turned higher on the daily charts with the MACD on the H4 timeframe in positive territory. But a move above 1.19 is needed to bolster sentiment.

EUR/GBP trapped in a range

This pair has been locked within an exceptionally narrow sideways range for over two months. Prices now sit at the bottom of this range with bears desperately hoping they can finally make some headway and retest the cycle low at 0.8472. Increased policy divergence between the dovish ECB and more optimistic Bank of England would certainly help! The August BOE meeting is probably the most important one for GBP.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

Monday kicked off on a mixed note as investors braced for a week filled with key economic releases, the European Central Bank meeting and highly anticipated US inflation report. 

The dollar found itself under renewed pressure on Monday afternoon as investors mulled over last Friday’s payroll report. Although the headline employment numbers disappointed, other figures from the monthly release illustrated a more complicated picture of labour market tightness.

On Tuesday, it became increasingly clear that markets were awaiting the next catalyst. The dollar experienced a minor rebound from the 90.00 support level while gold flirted around the $1900 psychological level.

In the United Kingdom, rising Covid-19 cases raised doubts over the planned easing of restrictions on June 21. Speculation started to grow over the date being pushed back by two weeks. 

The GBPUSD was stuck within a 100-pip range with support at 1.41 and resistance at 1.42. We will keep a close eye on this pair next week as a breakout could be on the horizon. 

Our trade of the week was the EURUSD which remained rangebound as markets awaited the ECB meeting and US inflation report. Given how the ECB was widely expected to leave interest rates and stimulus unchanged, we highlighted how the Euro was more likely to be influenced by the US CPI report. Looking at the technical picture, the EURUSD is under pressure with prices trading around the 1.2100 support level as of writing. 

Mid-week, stock markets remained near record highs as the Fed’s patient message soothed fears over the proverbial stimulus punch bowl being taken away sooner than expected. In another reminder of rising price pressures, China’s producer prices increased at their fastest pace in 13 years.

It was all about the ECB meeting and US inflation numbers on Thursday. 

As widely expected, the ECB kept its interest rates and stimulus program unchanged despite rising inflation across the bloc. All in all, the central bank expressed optimism over the Eurozone economy and saw broadly balanced risk and stable financial conditions. Despite the optimism expressed, the ECB maintained a safe distance from the ‘T’ word.

The major highlight this week was the red hot US inflation report. 

In May, the annual inflation rate for the United States rose at its fastest rate since 2008. Consumer prices jumped 5% year-on-year, up from 4.2% while core inflation rose 3.8% annually. Despite this super-hot release, Treasury yields tumbled, dragging the Dollar lower while US stocks rallied to fresh record highs.

Digging deeper into the report, CPI was boosted by hefty contributions in used car prices and airline ticket prices which analysts are seeing as short-term in nature. In other words, the spike in inflation was fuelled by “transitory” factors – something the Fed has repeatedly highlighted. 

On Friday, dollar bulls made a return thanks to upbeat consumer sentiment figures from the United States. The University of Michigan’s preliminary read for June improved more than expected, rising to 86.4 from 82.9 in May and higher than the 83.0 forecast. The Dollar Index is trading above 90.45 as of writing and could target 91.00 this month if a weekly close above this level is achieved.

In the commodities arena, gold failed to conquer the psychological level $1900 level this week while oil prices edged up to their highest in over two years.

Focusing on the technical picture, gold bulls have the potential to strike back if $1855 proves to be reliable support. However, a breakdown below this point could encourage a decline towards $1842 and possibly lower this month.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

Investors who have been craving for some volatility this afternoon had their wishes fulfilled following the May inflation report that showed prices rising in the United States at their fastest rate since 2008.

The consumer price index (CPI) jumped to 5% year-on-year, up from 4.2% in April and topping the 4.7% forecast. Core inflation, which strips out volatile items like food and energy rose 3.8% annually, its biggest increase since 1998. This report will most likely fuel concerns over rising inflationary pressures in the United States as the economy bounces back from the pandemic. While the hot inflation data may not be enough to force the Fed to make any policy moves anytime soon, it may prompt the central bank to think twice about their “transitory” mantra while fueling speculation over official taper discussions.

Looking at the reaction across markets, US Treasury yields spiked above 1.53%, US stocks opened higher while the dollar whipsawed.

In other news, US jobless claims fell to 376,000 last week which was above the median economist estimate but the lowest level since 13 March last year. Given how the Federal Reserve has made it clear to markets that employment is a key component in its mandate, the improving jobless claims could add to the growing list of factors that may bring more hawks to the policy discussion table.

Looking at the technical picture, the Dollar Index has found some support above the 90.00 level. A daily close above this point could open the doors towards 90.45. Alternatively, a decline back below 90.00 may inspire a move towards 89.52.

ECB leaves rates and stimulus unchanged

As widely expected, the European Central Bank kept its interest rates and stimulus program unchanged despite rising inflation across the bloc.

In its statement, the central bank said it would continue with its mammoth €1.85 trillion pandemic emergency purchase programme (PEPP) until at least March 2022 or until its judges that the Covid-19 crisis phase is over. The council stated that the pace of the PEPP purchases would be kept unchanged at a “significantly higher pace during the first months of the year”.

When it came to the staff projections and post-meeting press conference, Christine Lagarde sounded optimistic over the economic outlook. The growth forecasts for 2021 and 2022 were raised with GDP seen expanding 4.6% this year and 4.7% in 2022. In regard to inflation, the forecasts were increased to 1.9% in 2021 from 1.5% and 1.5% in 2022 from 1.2%. This means the ECB still sees current inflation as being temporary.

All in all, Lagarde struck an upbeat tone on economic growth and saw broadly balanced risks and stable financial conditions. Despite the rosier outlook, the ECB maintained a safe distance from any mention of taper talks. The euro has been choppy but has found a bid above 1.2180 since the end of the press conference.

Commodity spotlight – Gold

Gold was injected with volatility on Thursday after the US inflation data exceeded market expectations. The precious metal appreciated as further signs of inflationary pressures boosted appetite for the commodity which is seen as a hedge against inflation. However, upside gains may be capped if inflation fears send US Treasury yields climbing and boost the dollar.

Lagging indicators remain in favour of the bulls with the MACD trading above the zero level while the 50-day Simple Moving Average has crossed above the 100-day. Gold bugs remain in the driving seat above the $1855 support level with $1916 acting as the first level of interest if $1900 proves to be weak resistance. Beyond $1916, gold has the potential to test $1927 and the year-to-date high a t $1959.

Alternatively, sustained weakness below $1900 could trigger a decline back towards $1870, $1855 and $1842.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

We’ve written extensively about the key jobs data release later today which should influence both the next Fed meeting in less than two weeks and so where markets may go for the foreseeable future. Last month’s disappointing print set the trading tone for May and this report should be similar. Grab the popcorn (courtesy of AMC?) and get ready for a rollercoaster ride at 12.30pm GMT.

The “whisper number” for the headline number has now risen to 790k while the range of estimates among analysts is from 400k to one million job gains.

Labour market detail

What the job numbers will give us are fresh details about the severity of the supply-demand mismatch for workers and if the causes for last month’s miss remain valid. These include worker worries about catching Covid, continued home schooling and older workers who’ve decided not to return to the workplace.

Broader labour shortages stemming from the overly generous expanded benefits programme will also be a focus, with over 20 Republican states announcing an early scaling back of support of the unemployed ahead of the September expiry. This phasing out, vaccination progress and stimulus checks being spent might see labour shortages disappear quickly.

Buck moving off the lows

The greenback moved sharply higher yesterday and is also bid today, perhaps due to short covering ahead of the event, but also due to the weekly initial jobless claims falling below 400k for the first time since the pandemic began. The ADP number came in way above expectations too, but this is not a great predictor for the headline NFP.

This all means we may need a print above one million to lift the dollar some more, while anything in the range of the whisper number may see low volatility after the initial knee-jerk reactions by all the trading machines.

USD/JPY nearing highs

One currency major very closely tied with today’s data release will be USD/JPY as US bond yields are strongly (negatively) correlated with the yen. This means USD/JPY rises when Treasury yields rise as the yen weakens. This is exactly what we saw yesterday with the dollar gaining as US 10-year yields pushed above 1.60%.

USD/JPY is now currently trading above 110 and around last week’s high at 110.19. Bullish momentum has picked up and the next target is the year-to-date high at 110.96 while support sits at this week’s low at 109.33 and the 50-day SMA just below here.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.