Daily Analysis: Dollar Falls, Gold Jumps on Dismal Data before the FED

Wednesday Market Recap

Asset Current Value Daily Change
S&P 500 2436 -0.15%
DAX 12835 +0.44%
WTI Crude Oil 44.76 -3.72%
GOLD 1279.00 0.81%
Bitcoin 2630 -3.56%
EUR/USD 1.1277 0.60%

The usual pre-Fed trading fell apart today as the much worse than expected US CPI and Retail Sales reports caused turmoil before tonight’s important announcements. While a rate hike is still more than likely today, the continued deterioration of the consumer-related indicators could push the central banks towards a more cautious outlook. The Dollar got hit hard after the releases, while the shooting Virginia also triggered safe-haven buying in early trading. The Japanese Yen and gold were heavily bought, with the Japanese currency rising to a two-month high against the Greenback.

Gold, 4-Hour Chart Analysis

The Euro also gained ground on the Dollar, while the Great British Pound rallied has been weak after yesterday’s jump. Wage growth was dismal in the UK according to the Employment Report released today, and that weighed on the currency together with the risk-off sentiment. The Canadian Dollar and the Australian Dollar are also strong today, despite the mixed performance of the major commodities, as the Dollar weakness lifted the other majors. Oil and Copper are both lower today, as weakness seems to be returning to the Chinese market. The S&P 500 and the DAX, on the other hand, hit all-time highs overnight, with the NASDAQ still lagging following Friday’s flash correction, underlying the mixed nature of the current market action.

Cryptocurrencies

The coins are experiencing a sharp decline today in US trading, led by BTC once again, with Ethereum also following in lower this time around. With the long-term picture still showing overbought conditions, more corrective action wouldn’t surprise us. Ripple jumped higher today in early trading topping the $0.30 level before the broad decline began in the crypto-segment. All of the major are trading lower today, with Stratis, NEM, and Litecoin showing relative strength so far.

Bitcoin, 4-Hour Chart Analysis

Technical Picture

The Chinese index failed to follow through following the rebound off the 3000 level in May and it traded in a bearish consolidation since then. The 3150 level acted as resistance lately, with the 3115 level serving as primary support right now.  A move below that level would warn of further weakness ahead, while bulls need a break-out above 3150, for the short-term rally to continue. The MACD indicator is also on the verge of a bearish cross.

                     Shanghai Composite, 4-Hour Chart Analysis

Key Economic Releases on Wednesday

Time, CET Country Release Actual Expected Previous
4:00 CHINA Industrial Production -0.20% -0.20% -0.10%
10:30 UK Average Earnings 2.1% 2.4% 2.4%
10:30 UK Unemployment Rate 6.4% 6.4% 6.5%
14:30 US CPI Index -0.1% 0.3% 0.2%
14:30 US Core Retail Sales -0.3% 0.2% 0.3%
16:30 US Crude Oil Inventories -1.7 mill -2.3 mill 3.3 mill
14:30 US Fed Interest Rate Decision 1.25% 1.25% 1%
20:00 US Fed Monetary Statement

Key Economic Releases on Thursday

Time, CET Country Release Expected Previous
3:30 AUSTRALIA Employment Change 10,300 37,400
3:30 AUSTRALIA Unemployment Rate 5.7% 5.7%
9:30 SWITZERLAND SNB Monetary Statement
13:00 UK BOE Monetary Statement
14:30 US Philly Fed Index 25.5 38.8
14:30 US Initial Jobless Claims 241,000 245,000
15:15 US Industrial Production 0.2% 1.0%
Author:
Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.