Hello traders, welcome to Wednesday's session. Today holds significant importance from a fundamental standpoint, primarily due to the awaited U.S. inflation report. Inflation is anticipated to rise from 2.4% to 2.6% on an annual basis, with a monthly expectation of 0.2%. This release is expected to generate noticeable market volatility, impacting indices, currencies, and commodities alike. Earlier, we also received the Wage Price Index from Australia, which came in at 0.8%.
On the earnings front, the spotlight is on Cisco, which is set to report its results after the market closes. As the earnings season nears its end, anticipation is building for NVIDIA's earnings next Wednesday, which will be one of the final major reports of this cycle.
Indices: Yesterday saw a significant downturn, particularly in European indices, which broke through important support levels. U.S. indices also experienced declines, though they managed to defend short-term supports. Despite these attempts, bearish pressure remains dominant, and the outlook for today suggests further downward movement. The European market’s response to the inflation data will be crucial, as it could either reinforce or alleviate the current bearish sentiment.
Currencies: The dollar is exhibiting strength today, with notable gains against most major currencies. On the stronger side, the New Zealand dollar, Australian dollar, and Canadian dollar are showing resilience, placing them in the green. Conversely, traditional safe-haven currencies, such as the Japanese yen and Swiss franc, are weaker, indicating a shift in risk sentiment among traders.
Commodities: Precious metals, namely gold and silver, are under significant pressure. Both metals are currently testing long-term uptrend lines, which they need to maintain in order to preserve their bullish trends. The outcome of today’s U.S. inflation data will likely determine whether these supports hold or break. If broken, a shift to a bearish trend could be confirmed.
Oil continues to face challenges, staying on the bearish side as it battles to maintain a midterm uptrend line. Buyers must act swiftly to stage a comeback and sustain any prospects of reversing this trend.
Notable Currency Movements: The EUR/GBP pair displayed sharp volatility yesterday, initially hitting new long-term lows before making a sudden reversal to the upside. This reversal stands out as a significant movement in the currency market. Simultaneously, there was a notable collapse in GBP/USD, driven by bearish sentiment around the pound.
Cryptocurrency Market: The broader cryptocurrency market is undergoing a correction, with altcoins experiencing sharp declines. This correction follows an earlier surge and marks an important shift in the market sentiment for digital assets.