Monday Changed Nothing. The Post US CPI Party Continues

Monday was a very quiet day and it didn’t bring us any major switches of sentiment. We’re still in the same mood as Friday and Thursday after seeing the CPI data from US.

Tuesday started with interesting data on the Far East front. First of all, we had meeting minutes from the Reserve Bank of Australia (RBA) and the general outcome is that Australia’s central bank is prepared to pause its tightening cycle or return to larger increases if needed. At that meeting, RBA considered two options; 25 or 50 basis points. It noticed that rising borrowing costs allowed their housing market to cool down a bit.

Another thing was the pack of data from China, which largely disappointed. Industrial Production came at 5%, which was lower than the expected 5.4% and lower than the previous month’s 6.3%. reading. Retail sales came in negative at -0.5%, which was the biggest shock of all, because the prediction was 0.7%, and the previous reading was 2.5%.

Weak Chinese data didn’t scare off the bulls. Futures on DAX and Dow Jones are on daily highs and it looks like we’ll enter the European session with great optimism.

Commodities remain mixed. Precious metals are doing really great, not showing any signs of exhaustion after the recent upswing. Silver is making itself comfortable above the 21 USD/oz barrier, getting ready for another bullish wave after completing the inverse Head and Shoulders pattern. Oil had a pretty bad day yesterday, with WTI falling down 3.47%, which was the biggest drop since October 14^th. The Head and Shoulders pattern on brent oil chart shows us that it may not be the end of the bad news for oil.

The Forex market remains calm. EURUSD is flirting with a horizontal resistance on 1.035 and the lack of bounce shows us that the breakout is currently much more probable. USDJPY stays above the 139 support which is currently most important for buyers. One of the best currencies is currently the Australian dollar, which means that traders liked what they read in the meeting minutes from the RBA.

Still on calendar we have the Empire State Manufacturing Index and PPI from the US. Both numbers are expected to be the same as the previous month.