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Anticipating Market Trends

Anticipating Market Trends Before UK CPI & Economic Data

Investors around the world breathed a collective sigh of relief as global equity markets experienced a healthy boost this week. The US Federal Reserve’s apparent easing up on its tightening cycle caused markets to surge; the MSCI All Country World Index rose a solid 1.3% and the US dollar index (DXY index) subsequently fell 0.5%.

This surge was reflected in equity markets across the board, with the S&P 500 and Nasdaq 100 index both rising, along with Germany’s DAX 40 and the UK’s FTSE 100 jumping an impressive 1.3% and 1.7% respectively. Japan’s Nikkei 225 put on a particularly strong showing, soaring up by 3.5%. All in all, it was a good week to be an investor.

The latest US CPI report revealed a surprising dip in prices, sparking a discussion about the future of the economy. To add insult to injury, the banking sector was predicted to experience significant stress, leading to a potential downturn.

As a result, many experts believe that the Fed’s initiative to tighten policies is on the verge of coming to an end. Overall, the US economy seems to be facing challenges that could impact the nation’s financial stability in the long run.

Notes from the March FOMC meeting revealed that some policymakers considered pausing interest rate increases, but ultimately chose to tackle the issue of high inflation head-on.

This sentiment was further supported by Richmond Fed President Thomas Barkin, who argued that weak price pressures have yet to be sufficiently addressed. San Francisco Fed President Mary Daly also chimed in, emphasizing that the Fed still has much work to be done in this area.

Finally, Fed Governor Christopher Waller underscored the need for higher rates given the central bank’s lack of progress in bringing down inflation. It is clear that the battle against rising inflation is ongoing, and policymakers are willing to take necessary measures to address this issue.

Index performance

The latest data release has revealed a surprise dip in US producer prices, indicating a cooling in overall price pressures. This adds to recent reports of a sluggish US Consumer Price Index and a dovish stance from the Federal Open Market Committee.

The news is raising hopes that the Fed is nearing the end of its tightening cycle, with interest rate markets predicting just a 78% chance of a rate hike at its May meeting. Could this be the end of the line for the Fed’s push towards higher rates?

The US earnings season is off to a roaring start, with FactSet reporting that many companies are crushing expectations. At present, only a small percentage of S&P 500 companies have released Q1 2023 results, but nearly all of them have exceeded their estimated earnings per share.

The excitement is set to ramp up in the coming days with some of the country’s biggest names – Goldman Sachs, Morgan Stanley, Bank of America, and Netflix – set to share their own highly-anticipated results. It’s shaping up to be a season full of surprises and bold moves.

Performance of Key Currency Pairs

Predictions

Get ready for an exciting week ahead in the world of currency exchange! The Euro and US Dollar are both in the spotlight, with EUR/USD poised to build a new base and reach even higher heights. 

Meanwhile, the Pound Sterling isn’t receiving much love so far, but all eyes are on the upcoming UK CPI data. As for the US Dollar, it looks like tough times may continue as traders focus on lingering inflation concerns, a dovish Federal Reserve, and unpredictable labor market trends. What’s next for the DXY? Stay tuned to find out!

Get ready for an insightful look into the Australian Dollar’s future, as bonds and CPI take center stage in the coming weeks. While the USD continues to weaken, there are still a few hurdles the AUD must jump over. Plus, with gold hitting new highs and reaffirming an upward trend, it’s time to consider whether caution should be exercised when it comes to XAU/USD.

Finally, the Investors kept a close eye on the S&P 500 and Nasdaq 100 last week as both indices saw a modest increase. However, the rise was subdued as interest rate expectations started to shift from their recent levels.

As a result, market momentum slowed compared to previous weeks. losing momentum and bears teasing a potential comeback, it’s crucial to stay informed and prepared.

This week, the stock market experienced a slight uptick with both the S&P 500 and Nasdaq 100 showing signs of upward momentum.

However, things began to slow down as interest rates expectations started to climb higher from their recent lows. Investors may be keeping a close eye on the market as it navigates uncertain waters.

Gold Forecast

As gold continues its ascent to a 13-month high, it looks like the precious metal may have hit a lucky streak. Investors are holding onto hopes that the US Federal Reserve is done with their tightening cycle, allowing gold to shine brighter than ever before.

But don’t think this journey is over just yet, as gold approaches one of the most challenging resistance levels it’s faced in a while. Buckle up, it’s going to be a wild ride.

Recent economic data in the US has been lackluster, and the Economic Surprise Index has plummeted since March. Last week’s unexpected drop in producer prices adds to the belief that price pressures are easing.

This comes after a subdued CPI report and the Fed’s dovish stance in March, leading to speculation that the rate-hiking cycle might be coming to a pause. 

The odds of a pause at the May meeting are currently at 34%, according to the CME’s FedWatch tool. It’s a wait-and-see game in the markets as investors anticipate what the Fed’s next move will be.

Recent economic data

Gold is shining strong as investors search for safe ground amidst banking instability and anticipation of a change in US policy rates.

With inflation hovering above the Fed’s 2% target, real rates may decrease, causing gold prices to rise even higher. This has led to a surge of speculation, as people look to get in on the valuable and lucrative gold rush.

Moving Average Convergence Divergence

Monthly analysis

Gold is heading towards its peak of 2069-2072 on technical charts, signaling a potential surge in value. Experts suggest that momentum on higher time frame charts has yet to catch up to the recent spike in gold prices, leaving plenty of room for growth.

As investors keep a close eye on the metal’s movements, excitement is building for what could be a lucrative opportunity.

Upcoming This Week

Next week is packed with exciting economic events! First up on Tuesday, China’s Q1 GDP will be released along with industrial production, retail sales, and fixed asset investment for March. We’ll also get a glimpse into the discussions from the RBA meeting, German ZEW economic sentiment for April, and Canada’s March inflation data.

Wednesday will bring Euro area inflation and UK inflation data for March. Keep an eye out for Thursday’s release of New Zealand inflation data for Q1, and the ECB monetary policy meeting accounts. Wrapping up the week on Friday, Japan’s inflation data for March is set to be revealed. Get ready for a week filled with financial insights!

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Disclaimer:

All information has been prepared by TraderFactor or partners. The information does not contain a record of TraderFactor or partner’s prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may read it. Past performance is not a reliable indicator of future performance. 

Author

  • Zahari Rangelov

    Zahari Rangelov is an experienced professional Forex trader and trading mentor with knowledge in technical and fundamental analysis, medium-term trading strategies, risk management and diversification. He has been involved in the foreign exchange markets since 2005, when he opened his first live account in 2007. Currently, Zahari is the Head of Sales & Business Development at TraderFactor's London branch. He provides lectures during webinars and seminars for traders on topics such as; Psychology of market participants’ moods, Investments & speculation with different financial instruments and Automated Expert Advisors & signal providers. Zahari’s success lies in his application of research-backed techniques and practices that have helped him become a successful forex trader, a mentor to many traders, and a respected authority figure within the trading community.

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