Crude oil prices rose slightly after it was announced that 3 million barrels will be bought to replenish depleted supplies at the Special Petroleum Reserve. Chinese economic data showed slower than expected growth due to Covid-19 restrictions. Three Fed speakers gave different perspectives but Treasury yields were mostly unchanged and the US Dollar gave up some ground. The spotlight is on the debt ceiling issue, with gold seen as a potential haven. Japan’s TOPIX equity index traded at its highest level since 1990, while UK and EU data were released and the US will see retail sales numbers and Canada will get the latest CPI readings.
The UK labor market data shows mixed results with an increase in employment but also an increase in unemployment rates for those unemployed for over 12 months. Vacancies have declined and strikes have increased. The Bank of England may wait and see before considering interest rate hikes due to inflation expectations. Recent GDP data and retail sales suggest potential concerns for the economy. The GBPUSD has declined following the news, potentially breaking below an ascending channel. Developments around the US debt ceiling could impact the USD and GBPUSD.
The Australian Dollar has decreased due to weak economic data from China, including low industrial production and retail sales. The Reserve Bank of Australia is considering not changing or raising policy. The AUD/USD may continue to decrease.
The CFTC data reveals a prevalence of pessimism among speculators regarding the S&P 500 in the futures markets. This extreme bearish positioning has the potential to trigger significant short squeezes, resulting in sharp and sudden rallies. The S&P 500’s price action indicates the formation of a double bottom pattern.