Risk disclaimer: 76% of retail investor accounts lose money when trading CFDs and Spreadbets with this provider. You should consider whether you understand how CFDs and Spreadbets work and whether you can afford to take the high risk of losing your money.
Stocks and precious metals soar on lower CPI
BY Janne Muta
|July 13, 2023Equity indices (DJ +0.36%, S&P 500 +0.84%, NAS +1.29%) rallied together with the major dollar counterparts as the lower inflation US numbers drove the bond yields and the dollar into a steep decline. Gold (+1.30%) and silver (+4.22%) rallied together with USOIL (+1.38%) providing trading opportunities across the board.
The US annual headline inflation rate slowed down to 3% (previous), marking the lowest level since March 2021 and falls slightly below the expected 3.1%. Traders place now an 80.5% probability on the Fed keeping the rates unchanged in September while the probability for a June hike (25 bp) remains at 92.4%.
The slowdown is partly attributed to the high base effect from the previous year. Then a jump in energy and food prices drove the headline inflation rate to its highest point since 1981 (9.1%). Compared to last year energy costs declined by 16.7%, The core inflation rate reached 4.8%, the lowest since October 2021.
Today’s GDP m/m release shows that the UK economy contracted by 0.1% in May (-0.3% expected). The decrease was primarily driven by a 0.6% drop in production. Construction fell by 0.2%, while services remained stagnant, with a decline in retail trade offsetting an increase in health and social work activities. Consumer-facing services saw a 0.2% decline.
Today’s main risk even is the US PPI release. This will be followed closely by the market participants as it gives us clues on the US inflation trends in the future.
DAX
Dax is bullish above 15 908 and could move to 16 180. Below 15 912, a move to 15 850 would be likely.
FTSE
FTSE rallied nicely yesterday after the market pushed through the 7306 resistance level and remains bullish above 7400. Now the market has almost reached a key resistance level at 7426. If the rally starts to fade at the level, the market could retrace back to 7348 (38.2% retracement level). Alternatively, we might see a rally continuation to 7470.
GBPUSD
GBPUSD is bullish above 1.2904. Below the level, the market could trade down to 1.2850. The market is trending strongly higher with the nearest support level at 1.2976. UK May GDP m/m came in at -0.1% (-0.3% expected). There was no significant market reaction to the data release.
EURAUD
EURAUD is bearish below 1.6414. Above the level, we might see the market moving to 1.6465. The lower reactionary high at 1.6525 is a bearish indication and suggests the next key support at 1.6237 could be broken. However, as usually, look for price action to confirm your trade idea before executing any trades.
The next main risk events
- USD - CPI and Core CPI
- CAD - BOC Overnight Rate
- GBP - UK GDP
- USD - PPI and Core PPI
- USD - Prelim UoM Consumer Sentiment
For more information and details see the TIOmarkets economic calendar.
Trade Safe!
Janne Muta
Chief Market Analyst
TIOmarkets
Tio Markets UK Limited is a company registered in England and Wales under company number 06592025 and is authorized and regulated by the Financial Conduct Authority FRN: 488900
Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. All trading involves risk.
DISCLAIMER: TIOmarkets offers exclusively consultancy-free service. The views expressed in this blog are our opinions only and made available purely for educational and marketing purposes and do NOT constitute advice or investment recommendation (and should not be considered as such) and do not in any way constitute an invitation to acquire any financial instrument or product. TIOmarkets and its affiliates and consultants are not liable for any damages that may be caused by individual comments or statements by TIOmarkets analysis and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his/her investment decisions. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances, or needs. The content has not been prepared in accordance with any legal requirements for financial analysis and must, therefore, be viewed by the reader as marketing information. TIOmarkets prohibits duplication or publication without explicit approval.
Janne Muta holds an M.Sc in finance and has over 20 years experience in analysing and trading the financial markets.
Related Posts
