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Market Wrap
A lower-than-expected Initial Jobless Claims number that was offset by disappointing Durable Goods data today was enough to get the US equity markets trading towards the highs from the last few days. The market structure on the Nasdaq is seemingly forming a bull flag chart pattern and traders may be anticipating a breakout towards the all-time highs on receipt of inflation data tomorrow.
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The DAX closed the London session flat for the day and around the weeks opening price on expectations that the eurozone economy will begin rebounding faster in coming months as vaccination drives speed up. Earlier today the market received information from the Gfk Consumer Confidence for the month of Jun which showed confidence negative but better than the previous reading.
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The major forex pairs were very quiet today with the US dollar index ending the session flat for the day. The EURUSD lacked direction as did the USDCHF, with the USDJPY being the biggest mover on the day with a 0.65% move to the upside. The breakout of a bullish wedge on the USDJPY daily chart is significant for this pair which has been range bound for an entire month. The daily 20, 50 and 200 ema’s were able to maintain the bullish formation so an early test of the breakout level would provide the more cautious traders with a good entry with plenty of dynamic support to mitigate risk.
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The US dollar index is finding it very hard to stay below the $90 level for any period of time and at some point, bears will probably have to admit defeat and look for fresh orders to come in from higher prices. Trend channels tend to break in the opposite direction of travel and the DXY 2-month bear channel could break to the upside. If that were to happen the logical upside targets would be the swing highs around 90.800 and 91.410 formed at the end of April and beginning of May.
US GDP figures show the economy grew by an annualized 6.4% in the first quarter, matching the flash reading but under analysts’ expectations of a higher reading of 6.5%. US core PCE prices readings were higher than expected coming in at 2.5% for Q1 and tomorrow we get the PCE index that the Federal Reserve will be watching for their inflation modelling. The continuing jobless claims data that came out today will also be welcome news for the Fed as it shows the latest reading falling back down from the previous week. Along with the inflation and jobs data, the market is in wait and see mode for what the US senate can do to get President Bidens infrastructure bill through. Currently the Republicans are proposing a $928bln counteroffer, with the likelihood that the two side meet somewhere between that and the $1.7trn figure outlined earlier.
Tomorrow is a big day in the markets as it will be the end of month session before an extended bank holiday weekend.
