Thursday 25/5/2023- 14:42 GMT
The market closed yesterday on another sour note. The S&P500 Futures closed with -0.79% below the opening level, DXY +0.36% while the US10 Year Yields closed 1.35% above the daily opening level reflecting the uncertainty tone of the FOMC minutes which was released yesterday during New York session. The dollar is attracting safe haven capital flows after the FOMC minutes uncovered the division in opinion within the FOMC board members into a camp that supports more rate hikes and another that supports a pause in rate hikes adding some uncertain flavors.
Today the market is trading in a mixed sentiment after the release of the Q1 GDP estimates. The GDP headline came out above consensus soothing recession fears and supporting the stocks bulls against the USD. As of the time of writing S&P500 is trading +0.62% for the day, DXY +0.33% while the US10 YY +0.56%.
Looking at the wider spectrum after a higher than the expectations GDP that slashed the fears of a recession, eyes are now on the Core Personal Consumption Expenditure which is the Fed’s favorite inflation gauge. A higher than the consensus Core PCE (MoM) or meeting consensus will imply a sticking inflation and will support the FOMC members camp of “more rate hikes” and vice versa.
I think the JPY pairs are interesting to keep an eye on specially the USDJPY which makes good moves after the release of inflation data. However, the precious metals Gold and Silver come second to fish for trading opportunities tomorrow.
Keeping an eye on today’s daily closure could be worth it for positioning on USDJPY tomorrow for a continuation towards the next resistance at 142.252 price zone.
