Last week was full of surprises! The US dollar plunged despite a better-than-expected retail sales report…
Risk-on keeps driving the market
The US dollar keeps falling for the third day in a row, whereas riskier assets are rising. Let’s discuss the main market events and analyze the charts.
- Donald Trump has changed his mind and expressed the desire to make an agreement over the fiscal stimulus package. Stocks surged higher. However, some analysts remain skeptical that the deal will be reached before the election on November 3.
- Chinese Caixin Services PMI came out 54.8, which was better than the forecasts of 54.5. USD/CNH dipped to levels, unseen since April 2019.
- A lot of British data came out this morning. A large portion of it was worse than expected, while only Index of Services beat estimates. Despite the negative economic indicators, GBP/USD keeps rallying amid the massive dollar’s sell-off.
- Hurricane Delta has approached the Louisiana coast, causing disruptions to oil production. Oil prices rose significantly: WTI oil broke above $41, while Brent oil - $43.
EUR/USD is trading in an ascending channel. It has just crossed the 38.2% Fibonacci retracement level of 1.1765. After some short selling, it should continue moving upwards. If it rises to the key psychological mark of 1.1800, it may jump to the 50.0% Fibo level of 1.1810. On the flip side, the move below the 1.1765 will drive the price to the next support of 1.1740.
S&P 500 is steadily moving up on hopes for a large-scale fiscal stimulus. If it manages to jump above the high of September 4 at 3 480, the way towards the all-time high of 3 580 will be open. In the opposite scenario, if it falls below the 200-day moving average of 3 390, it may fall deeper to the 100-day moving average of 3 330.
XAU/USD has just broken through the significant resistance of $1 900, clearing the way towards $1 920. However, it may struggle to cross the month trendline. If it manages to do so, the doors towards the next resistance of $1 960 will be open. Support levels are $1 900 and $1 875.
The aussie is driven upwards by the risk-on sentiment. If AUD/USD manages to break through October’s highs of 0.7195, the way to the 50.0% Fibo level of 0.7210 will be open. On the flip side, if the pair drops below the 38.2% Fibonacci level of 0.7160, it may fall deeper to yesterday’s low of 0.7130.
Follow up the Canadian unemployment rate at 15:30 MT time. Better-than-expected figures will push the CAD higher.
Last week was very interesting for the markets, as we saw the releases of the US Inflation and Disney’s earnings report. So let's see what we should await this week!
The volatility that the markets experienced last week promises the second tidal wave! What should your favorite assets anticipate during the first week of February?
The Australian Bureau of Statistics will announce the updated Unemployment Rate and Employment Change data on Thursday, May 19, at 04:30 MT.
The UK Office for National Statistics will publish Consumer Price Index (CPI) data on Wednesday, May 18, at 09:00 MT.
The US Census Bureau will announce Core Retail Sales and Retail Sales on Tuesday, May 17 at 15:30 MT.