Model Signal Alert
August 12, 2023
Weekends are bliss. And I take them seriously and try to detach myself from markets. The truth is, at least for me, that I can never really stop thinking about it. It’s one of the many pitfalls in investing or trading.
As far as data goes, US PPI beat consensus estimates for July and outweighed softer inflation expectations in the Michigan survey. Bonds and equities remained under pressure while the USD was on the mend.
Psychological support kept treasuries in check, though USD/JPY still approached 145. USD/CNH tested 7.26, NZD/USD broke 0.6 support, and EUR/USD's 1.10 resistance held strong. The lack of conviction in price action doesn't warrant complacency at these levels. Oil is technically set up for more upside, too.
A quick glimpse into next week reveals data outside of the US may shake up markets more, with highlights here being FOMC minutes, jobless claims, and housing data. After a strong GDP print, eyes on the UK labour report (Tuesday) and CPI (Wednesday) with event risk for the latter potentially underpriced. Inflation prints are due for INR (Monday), SEK, CAD and ILS (Tuesday), JPY (Friday), with Aussie LFS on Thursday also key. EUR sees ZEW survey (Tuesday) and Q2 GDP (Wednesday).
The RBNZ should hold rates (Wednesday) but is a small hawkish risk to a likely 25bps hike from Norges (Thursday). USD strength after PPI puts Japan intervention risk back on the radar, with USD/JPY nearing 145. China's real economy data and the MLF rate decision (Tuesday) will be watched with the recent string of data disappointments.
10-year treasuries (ZN) failed to trade above the 20 ema in three successive sessions, hence my warning to subscribers to expect further weakness. Now, we are approaching prior lows, which proved as solid support.
Let’s check out what other things have been flashing up as of yesterday’s close as we plan the week ahead.