Daily Market Report

U.S. stocks rose on Wednesday after the latest CPI figures showed a cool-down in inflation levels. The monthly CPI reading came out below expectations at 0.2% while the yearly figures dropped to 3.0% compared to forecasts of 3.1%. Investors are looking at the recent data as a positive signal that the FED is bringing inflation down without hurting the economy to ensure a soft landing and avoid a potential recession.
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Looking at the market reaction, the Dow advanced by 0.26%, the S&P500 surged 0.74% and the Nasdaq composite jumped 1.15%. Following yesterday’s close, it is important to note that the S&P500 and the Nasdaq have closed at their highest level since April 2022. Bank stocks were among the top performers with Citigroup and Goldman Sachs adding 1.8% and 1.7% each.
In the FX market, the U.S Dollar was sharply lower across the board. The EURUSD pair succeeded to print fresh highs for 2023 as the bullish momentum has helped the single currency to overtake the 1.1100 barrier. In the meantime, USDCAD extended its decline approaching a 2-month low after the Bank of Canada decided to raise interest rates by another 25bps points to settle at 5.00%. The Canadian Dollar has benefited from BoC’s recent monetary policy tightening measures.
In the commodity market, gold traded in line with our expectations. As we mentioned in our previous reports, the yellow metal has shown an inverted head and shoulders bullish reversal pattern and prices managed to break above the neckline of this formation which was located near $1935 per ounce. Prices advanced reaching our first target that stands at the 1956 level. As of now, the trend remains bullish in the near term which can lead to further upside towards the next barrier located between the 1967 and 1973 levels.
In the meantime, WTI crude prices extended their advance reaching the 76.00 handle. The bullish momentum is still strong; however, a potential downside correction remains possible before seeing another wave higher. If we do see a drop in oil prices, we will be looking for the 74.70-74.00 zone to provide support followed by the 73.85 level in extension. On the flip side, a successful breakout above the 76.00 level should expose the next resistance zone located between the $77.00 and $77.90 barrel.
Looking now at today’s economic calendar, traders will be waiting for the UK GDP monthly figures which are expected to decline from 0.2% to -0.3% in addition to industrial and manufacturing production data. In the U.S., unemployment claims are due to rise from 248K to 251K, meanwhile, the focus will be on the PPI (producer price index) figures which will give the market another guidance about the state of inflation. PPI forecasts are pointing to a rise from -0.3% to 0.2%.

Economic Analyst
Amine Hiani

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