Stocks rise ahead of US PPI inflation and FOMC minutes
Nasdaq => The index rises above 10850
BTC/USD => The cryptocurrency holds over 19k
EUR/GBP => The pair rises towards 0.89
Nasdaq recovers from a 2-year low
Nasdaq fell 1.1% yesterday to a new 2-year low as investors prepare for the minutes of the September FOMC, inflation data, and the start of earnings season across the coming weeks. Recent jobs and inflation data have pointed to the Fed acting more aggressively to raise interest rates, potentially pushing the US economy into recession. The CPI report on Thursday is expected to show a fall in headline inflation but another rise in core inflation, which could cement a 75 basis point hike in November. Today’s attention is on wholesale inflation, which is expected to ease slightly, and the minutes from the last Fed meeting. The minutes are expected to reinforce the Fed’s hawkish stance.
| US PPI September YoY | Expected: 8.4% (0.3%) | Previous: 8.7% |
Where next for NASDAQ?
The Nasdaq trades within a falling channel since mid-August, taking out the 2022 low. The RSI is supportive of further downside while it remains out of oversold territory. Sellers will look to break below 10713, the 20222 low, to extend the bearish trend to 10650, the September 2020 low, bringing 10,000 psychological level into focus. Buyers will look for a rise over 11670, the October high, and the upper band of the channel to mount a recovery towards 12150.
BTC/USD holds steady with attention on tomorrow’s CPI
BTC/USD, along with other major cryptocurrencies, traded in a holding pattern again on Tuesday, where it has been for several weeks, even as the Nasdaq fell over 1% yesterday. Investors remain cautious over where inflation is going and how aggressive the Federal Reserve will be in upcoming meetings. BTC/USD has traded broadly between 19k and 21k across the past month and is not expected to break out today. However, US inflation data tomorrow could be a key catalyst if it is significantly hotter or cooler than forecasts. It is worth noting that bitcoin active on exchange dropped to a 4-year low this week. Low balances on exchange have previously signaled a price rally is coming.
Pound tumbles post-Bailey, GDP data due.
EUR/GBP jumped 0.8% in the previous session in volatile trade after stronger-than-forecast UK jobs data, and the BoE stepped in to shore up the gilts market for the third time since the Chancellor’s mini-budget. However, BoE Governor Bailey warned that central bank support would end on Friday, which sent the pound tumbling. UK unemployment unexpectedly dropped to 3.5% as more people left the labour market. Demand remained steady, pushing up average wages and inflationary pressures. Today the pair is rising as attention turns to the UK GDP data, which is expected to show that the economy halted in August after slight growth in July. Weak growth could raise recession fears and push the pound lower.
Support can be found at 0.88 (20 sma) and 0.8720 (15 June).
Resistance for the pair can be seen at 0.8870 (October high) and 0.8980 (September 29 high).
