The markets are working through weaker PPI data, weaker jobs data, regional banking concerns, soft or hard landing. Welcome to 2023.
PPI came in at 2.3% versus 2.4% as expected and 2.7% last month. The data is now within the range from the pre-pandemic. CPI data remains elevated at 4.9% year on year largely as a result of food and shelter inflation which remains elevated year on year. Hopes remain that CPI data will follow PPI data toward the 2% target. With the weaker initial jobless claims, perhaps that will reduce demand versus supply. Bank of America reported yesterday that credit card and debit card spending was down especially among the higher income sect.
The initial jobless claims reached the highest level in 19 months (since January 2022). Has the long-awaited weakening in the jobs market started again? It is just one week, but even though the BLS jobs report on Friday was higher than expectations, the 3 month average is moving lower (helped by primal through visions of -149K).
Looking at the US stock markets, the major indices are mixed. Disney shares are impacting the Dow industrial average. The NASDAQ index is marginally higher. The S&P is near unchanged. The regional bank KRE ETF is trading at $36.48 down from $37.06 at the close yesterday (-1.57%). PacWest is trading at $4.86 down from $6.08 at the close yesterday. That is down -20.39%. Looking at the major indices
- Dow Industrial Average is down -121 points with Disney a major drag on the index. Disney shares are trading at $95.35 which is down sharply from the $101.11 close yesterday
- S&P index is down -4.75 points
- NASDAQ index is up around 30 points
in the US at that market, yields are lower from early US levels:
- 2 year 3.824% -7.6 basis points
- 10 year 3.356% -8.0 basis points
- 30 year 3.729% -6.9 basis points
Crude oils moving lower with the price now down 100 and $0.09 or -1.52% at $71.47. Gold prices are still higher by $4.25 or 0.21% at $2033.41.
In the Forex:
EURUSD: The EURUSD remains sharply lower on the day. Looking at the hourly chart, the price high in the Asian session stalled against its 100 hour moving average and found willing sellers. Recall from yesterday, the the 100 and 200 hour moving averages stalled the rally. Sellers leaned against the moving average levels keeping the bias more to the downside. Sellers in control.
The price decline accelerated through swing levels between 1.0961 and 1.09653, and then a swing area near 1.0933 and 1.0941. The low price reach 1.0917. The price bounced up to 1.0947 through the Bank of England/US data, but than moved back below the lower swing area. The low price from April 17 comes in at 1.0908, and is the next target.
GBPUSD: The BOE raised rates by 25 basis points as expected. The decision pushed the GBPUSD higher initially, but the price remained below its 100 hour moving average at 1.2520 (blue line). The price has now moved back below its 200 hour moving average 1.25757 and traits to a new session law 1.2554. The next target comes at 1.25475 which is the 38.2% retracement of the move up from the April 17 low. The price low from last Thursday was also near that level (see chart below).
USDCAD: The USDCAD is break above its 200 day moving average at 1.3451 and the 38.2% retracement of the move down from the April 28 high at 1.3448. The 200 hour moving average at 1.3480 is the next target. That is at the low of a swing area between 1.34805 and 1.34886. The 50% midpoint of the move down from the April 20 high is just above that area at 1.34905 making the area between 1.3480 1.3490 as the next key upside target. Will buyers push the price higher now that the price is back above the 200 day moving average? Watching for momentum from the break. Buyers making a play.
Crude oil prices are down about a dollar which is helping to weaken the CAD.
