Market Watch

Reminder

Always trade with caution and extra care on Fridays or during the last day of Market opening as it may not reflect the true directions of the market. Fridays are usually trap days to catch traders off guard for the next trading session. 

Market Overview

Unemployment claims yesterday showed a slowdown but not as low as expected. From last March‘s claims of 231k to yesterday’s 222k, there is still a significant decrease showing strength coming into the labor economy, benefiting the lower-than-expected CPI. 

Despite this, the FED remains with its stance to not change current monetary policy as they are still not confident if Inflation truly is on its way down. 

“The market is, of course, very sensitive to signs of inflation from wherever it may come, and the import price series that we got today was meaningfully stronger than expected,” said Brain Daingerfield, head of G10 FX strategy at NatWest Markets in Stamford, Connecticut.

“The Fed wants to see consistent progress in more than just one point. The number we got yesterday - the CPI - was not as bad as feared,” he said. “But I don't think it was enough to materially change the market's outlook for the Fed and that's reflected in the way that the dollar has bounced back today.”

The rise of the USD was caused by an increase in Import prices to 0.9% from last months 0.6%--the highest increase since two years ago, pushing the dollar higher. This rise in import prices will put pressure on consumers and may make the situation stickier as this may cause, depending on which sector the price increase was reflected, the cost of goods and services to rise. This possibility has raised inflation concerns and is proof that the FED still has a way to go about when it comes to controlling inflation. With this in mind, the Central banks may need to keep interest rates higher to combat the situation. 

However, it may also tell of a different scenario where the FED may be controlling the dollar supply in their country to combat inflation and control spending by issuing dollar demand in other countries by increasing the number of imports vs the number of exports. An increase in import prices also means an increased demand for imports, which pushes dollar demand up for other countries as they look to sell to the US. 

A deliberate raising of import prices by the FED to maintain the dollar's status as a global reserve currency and ensure its continued demand in international markets.

This may also be a move to combat de-dollarization or the inflationary bubble created by a lowering of demand for the U.S. currency. 

In summary, the rise in import prices is likely to put pressure on U.S. consumers and contribute to stickier inflation, but it could also be a deliberate move by the Fed to control the dollar supply, combat inflation, and maintain the dollar's dominance in international trade and finance.

As stated in the Market Insight last Wednesday, we will keep an eye on how the US will attempt to combat inflation through the use of their Exports and Imports.  

World markets are on the watch on how this will work around as the sustenance of the current world reserve currency and their confidence in it is at stake. We continue to keep a watchful eye on how this will turn out as GOLD prices continue to creep up with a slight retreat after yesterdays close. 

GOLD - This market has experienced a slight retreat after yesterday's close. However, we can see that the price is respecting the bullish structure, allowing us to see the volume and momentum coming into the market for the buyers.

SILVER -Silver closed with a slight retreat from the high but prices are stagnating and are finding comfort close to the high price, showing us great volume coming into the market for the buyers. We maintain our positioning in this market and call this a buy.

The price has bounced off 2392.470 but failed to reach 2365.443. We wait to see how today will progress. We call this market bullish.

DXY -As we expected from yesterday's analysis, we now see prices filling up the gap left by the CPI reading. The prices, however, were rejected aggressively by 104.607. We wait and see how prices will play out throughout the day while we maintain our position of selling the USD. 

GBPUSD -We can see the market drop to be corrective in nature as it has settled above the anchor point of the range at 1.26487 and is showing rejection when the price attempted to test said structure to go lower. We can tell that the volume and momentum for this market is coming in for the buyers and we maintain our position as bullish. 

We expect the price to test the upper boundary of the range at 1.27938. This is not a call for today as Friday is a closing market day. 

AUDUSD -Similar to yesterday's call, there are no significant structures that we take note of here that may stop AUD in its tracks. While the Unemployment rate has increased in their country, the Employment change has risen drastically, showing a potential increase in action in their labor market. Thus, we can see that the USD rebound has not really affected AUD all that much. However, it is still too early to call that and we may see a lower correction point to allow for a good price entry.

NZDUSD - The NZD has not shown significant changes in the price movement as it is showing comfort above 0.60847, and the drop is corrective in nature. We continue to call the market bullish.

EURUSD -The EUR is comfortable with the high price as seen in the market stalling the price above the daily down trendline. However, we continue to observe how the price will play out from here while still remaining in our call for a bullish market.

USDJPY - The Yen move has erased more than half of its recovery, increasing yet again the chances for a BoJ intervention. We continue to remain prudent of the currency as we wait for normalcy in the markets.

USDCHF - While the market has broken out at 0.90054, the corrective move has reached deeply back into the previous range created by small price movements. We continue to wait and see how these prices will play out but we remain our call for this market to be bullish.

USDCAD -The CAD is fending the USD strength well as we see in the market a slow upturn despite the DXY bounce. The price is respecting the bearish structure and the move up is corrective in nature. Thus, we remain bearish for this market.