With the exception of the Japanese Yen, the US dollar rose against all major currencies on Thursday. The Federal Reserve gathers next week, and it is widely expected that policy assistance will be removed more quickly. The unemployment claims data released yesterday indicates that the labour market is smoking hot. The monthly CPI growth rate is expected to decelerate, but the annualised rate is expected to surge, according to economists.
Considering Federal Reserve Chairman Powell’s latest speech where he mentioned that it’s time to drop the term “transitory” from their inflation definition, traders will be looking at the inflation data very closely. It is highly likely that we will get another strong reading for the US inflation in 30 years.
Throughout November, we saw gas prices soaring which resulted in Americans paying higher prices for their Thanksgiving meals. What we are seeing among traders and investors is cautiousness when it comes to purchasing the US dollar and selling equities ahead of the US Consumer Price Index announcement. If inflation is more than predicted, rate hike bets will rise, causing the US currency to rise versus the euro, sterling, and the Canadian dollar while equities fall.
The Asian stock market traded sharply lower on the final trading of the week. The Nikkei index plunged 0.50%. The Shanghai index decreased 0.32%, while the HSI index fell by 0.50%. The ASX index decreased by 0.38%.
Dow Jones and S&P 500: Market Breadth
The Dow Jones’ market breadth lost further momentum. 73% of the Dow Jones stocks traded above their 200-day moving average. The S&P 500 stock breadth also confirmed a decline in momentum. 72% of the shares traded above their 200-day moving average.
The Dow Jones futures are trading lower today. In terms of economic data, investors will be looking at the US CPI numbers which is the most important economic reading for today. It is widely expected that the number will be strong, the forecast is for 0.7% while the previous reading was 0.9%.
The Dow Jones futures have seen a strong come back this week as the prices have rallied from their previous week’s low. Now, the price is trading strongly above the 50, 100 and 200-day SMA on the daily time frame, which suggests that bulls are fully in control of the price. Having said that the price has formed a double top a bearish pattern as the price has reached a level where a sell off can take place. This is because, the last time the price reached this price, we saw intense sell off.
As for the RSI, it isn’t really indicating that the prices are oversold on the daily time frame. Currently, the RSI is trading at 56. The near term support is at 34,807, while the resistance is at 36,282.
Stock Market Rally
The S&P 500 stock index closed lower on Thursday; the index decreased by 0.72%. The real sector estate sector led the index higher, and 2 sectors advanced while 9 sectors closed lower. The Dow index declined on the last trading day; the Dow stocks moved the index lower by 0.01%. 17 shares advanced, while 13 shares closed lower. The NASDAQ composite, the tech-heavy index, closed lower by 1.71% yesterday as well.
Hormel Foods stock contributed the biggest gain, soaring 4.67%. Tesla stock was the largest drag; it fell by 6.096%. The S&P 500 stock index is up 22% so far this year. Walmart provided the biggest help for the Dow Jones; it advanced by 1.391%, while Intel Corp was the largest decliner, it fell by 2.452%.