Hello traders, welcome to Tuesday. Today’s calendar brings a key focus on the Canadian dollar, with Canadian inflation data set to be released at the start of the American session. Expectations point toward a monthly increase of 0.3%, which could influence the Canadian dollar's movement depending on whether the data surprises to the upside or downside.
Yesterday was marked by a significant wave of reversals across various markets as traders sought to reposition after last week’s moves. The most notable gains came from precious metals, including gold, silver, platinum, and palladium, all climbing strongly. This robust performance has triggered buy signals on these metals, reinforcing their long-term bullish sentiment. The surge indicates renewed interest and potential continuation, which traders should watch closely for further confirmation in the coming days.
Oil also rebounded after touching key horizontal support levels. Although yesterday’s bounce was encouraging for short-term buyers, it is important to note that the broader sentiment around oil remains negative. Any bullish positions in oil should be approached cautiously, given the ongoing pressures that could limit upward potential.
Indices showed attempts at recovery, though the movement lacked conviction. This cautious recovery suggests that traders are still wary, reflecting a wait-and-see approach as major indices hover near crucial supports. For instance, the S&P 500 is holding at its 5870-point support, the NASDAQ is testing the lower boundary of its wedge pattern, and the Russell 2000 is attempting to bounce off its key horizontal support at 2300 points. The performance of these supports will be critical in determining whether indices can sustain their current levels or face deeper corrections.
On the currency market, the Japanese yen, New Zealand dollar, and Australian dollar are gaining ground, displaying relative strength. Conversely, European currencies, particularly those from Central Europe like the Hungarian forint, Czech crown, and Polish zloty, are showing weakness. This divergence highlights differing regional economic dynamics and risk sentiments.
The main areas to watch today will be whether the precious metals can build on their recent gains and whether indices can capitalize on their support levels to establish a more convincing upward movement. Keep an eye on how the market digests Canadian inflation data, as it could set the tone for the Canadian dollar for the rest of the week.