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Midday Update
The mood of the market is considerably more muted in European stocks, with many of the top indices in the eurozone failing to build on yesterday’s strong gains after yesterday’s US CPI inflation release.
This is most evident in the Euro Stoxx 50, which is a broad composite of top EU stocks, which has basically flatlined. The GER 40, formally the GER 30, is also struggling to post gains on the day despite US futures remaining positive. The CAC40 has also lost upside and has fallen back under the 7,200 level.
Strangely, the market saw a similar reaction in October and November of last year after the US CPI number revealed a 6 percent increase. I wonder if we are going to see a pump and dump after Wednesday’s 7 percent print in annual CPI inflation from the United States economy.
Bullish tones are still coming from the UK100, as the leading UK index grinds towards its highest level in nearly 2-years. The FTSE100 is currently trading around 7,550, marking its highest level since February 2020.
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One trend we are seeing is US dollar weakness sticking during the European trading session, and it currently shows few signs of stopping as some of majors continue their multi-month breakouts against the buck.
The GBPUSD pair has surged towards the 1.3750 level. This is a massive rise for sterling after starting the year close to the 1.3400 trading level amidst Omicron contagion fears.
EURUSD bears are also feeling much pain, as the surge in the single currency looks to be accelerating, with the 1.1500 level the next big technical barrier for the EURUSD pair.
Something is worth mentioning is that the EURUSD had strong support around the 1.1540 area last year. Potentially, this could be an area that the market is naturally going to gravitate towards to gauge the validity of the recent breakout.
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We are also seeing WTI and Brent oil posting strong gains today as commodity prices ramp shows few signs of stopping. Most commodity prices have backed off since yesterday, with Gold, Copper and silver nursing minor losing.
Cryptos continue to pump, with Bitcoin advancing past the $44,000 barrier after dropping to a six-month low on Monday. Ethereum is also knocking on the door of its 200-day MA.
Later today during the US session we more FED speakers. Federal Reserve Bank of San Francisco President Mary Daly is speaking on a public TV interview. FED member Daly recently said a rate hike from the Fed could come at the March meeting.
We also saw the release of prepared testimony from Lael Brainard, a member of the Board of Governors of the Federal Reserve System. Brainard is to appear before the US Senate Banking Committee as part of her nomination process as new Vice-Chair of the Fed.
