Daily Market Report

The U.S. Dollar extended its decline on Monday after the recent miss in the U.S. Non-Farm payrolls. The Greenback was down against other major currencies as traders await the release of the latest inflation data through the consumer price index. 

When looking at the recent stock market movements, we can see that major stock indexes managed to start the week on a positive note. The Dow rose 0.62% adding more than 200 points, the S&P500 advanced 0.24% while the Nasdaq composite was up 0.18%. This is the first rise for U.S. stocks after being three-day of losses. As mentioned earlier, the focus on the upcoming inflation figures that are likely to give guidance to investors about the future monetary policy that the FED can adopt. The probability of a 25bps rate hike by the end of this month remains at 92%.

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In the commodity market, gold has benefited from the recent weakness in the U.S Dollar and we have seen a strong buying around the 1910 support level. For the coming days, we will be looking for a potential bullish reversal in the near term as the yellow metal is showing an inverted head and shoulders pattern which can lead to an upside move in the direction of the 1956-1960 resistance zone. However, gold buyers have to clear the first barrier zone located between the 1932 and 1937 levels before confirming another extension to the upside. This zone represents the neckline for this reversal pattern.
In addition, WTI crude retreated after reaching a key resistance level located at $74.00 a barrel. Oil prices are likely to trade sideways at the beginning of this week, and a potential downside correction toward the 72.50 level which represents the formerly broken resistance level cannot be ruled out. From a technical standpoint, this level is likely to turn into support if tested in the coming days. Therefore, any decline is expected to be temporary in oil as long as prices continue to trade above the psychological support of $70.00 a barrel in the coming days. In extension, a break above the 74.00 handle should expose the 75.00 level as the next level of interest.
As for today’s important economic releases, the U.K. claimant count change came out at 25.7K compared to expectations of 20.5K, in the meantime, the unemployment rate rose to 4.0% up from 3.8%. The British pound remains in an uptrend against the U.S. Dollar and prices are testing the 1.2900 level at the time of writing. Later during the day, the U.S. NFIB small business index is due to rise.
Finally, the Reserve Bank of New Zealand is expected to keep interest rates unchanged at 5.50% during its monetary policy meeting.

Economic Analyst
Amine Hiani

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