Yesterday's macro data from the US, i.e. a sharp drop in the Conference Board consumer confidence index (despite an expected increase) and weaker Chicago PMI and Fed Richmond readings, along with Moody's rating agency forecasts, increased downward pressure on the US dollar. USDIDX continues its corrective move and the sell-off has swelled in strength.
The weaker data supported market sentiment along the lines of 'the worse, the better' and suggests that despite the recent series of surprisingly positive readings from the US economy - it may be hard for it to repeat such great results in the face of the ongoing monetary tightening cycle and faltering, inflation-stricken consumers. According to Moody's, current forecasts point to a 1% decline in real GDP in the U.S. in both the third and fourth quarters of 2023, and the economy could be stuck in a 'tailspin' this year as the second, weaker half of the year offsets the slight upward trend seen in the first half of the year. The question, however, is how long stock market bulls will be able to celebrate an eventual less hawkish Fed tightening cycle during an economic slowdown, which could cause corporate margins and revenues to shrink. The market once again has the hope that the Fed will not be overly hawkish, although markets still see more than a 26% chance of a 50 bp rate hike in March.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile appUSDIDX on the H1 interval has slipped below the 100-session average, and a test of the key 104,200 support zone, set by the SMA200 (red line), seems likely for this moment. A fall below could open the way for the dollar index to reach levels near 103 points.
Source: xStation5
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
