The US Personal Expenditure Price Index, excluding food and energy, rose 0.4% m/m and slowed from 2.9% y/y to 2.8% in January, as expected.
A 1% rise in personal income came as a surprise, against expectations for a 0.4% rise. However, personal disposable income rose by 0.3% m/m, which did not break the trend of recent months.
At the same time, there was no acceleration in spending, which rose by 0.3% m/m. They rose by 5.2% y/y, against a 4.8% rise in total income and a 4.5% rise in disposable income. A worrying result - the savings rate of 3.6% is about half the pre-pandemic level. But the good news for markets is that this won't cause inflation to accelerate, meaning the Fed won't have to fight it and delay policy easing.
In the wake of this report, gold is storming through the resistance of the downward channel, and the Nasdaq100 and S&P500 indices are testing all-time highs again.
A 1% rise in personal income came as a surprise, against expectations for a 0.4% rise. However, personal disposable income rose by 0.3% m/m, which did not break the trend of recent months.
At the same time, there was no acceleration in spending, which rose by 0.3% m/m. They rose by 5.2% y/y, against a 4.8% rise in total income and a 4.5% rise in disposable income. A worrying result - the savings rate of 3.6% is about half the pre-pandemic level. But the good news for markets is that this won't cause inflation to accelerate, meaning the Fed won't have to fight it and delay policy easing.
In the wake of this report, gold is storming through the resistance of the downward channel, and the Nasdaq100 and S&P500 indices are testing all-time highs again.
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#WaveAnalysis
#USDJPY reversed from resistance level 151.35
Likely to fall to support level 147.90
USDJPY currency pair recently reversed down from the powerful long-term resistance level 151.35 (previous yearly high from 2022 and 2023).
The downward reversal from the resistance level 151.35 stopped the previous weekly ABC correction 2 from the end of last year.
Given the strength of the resistance level 151.35 and the resumed yen demand, USDJPY currency pair can be expected to fall further toward the next support level 147.90.
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#USDJPY reversed from resistance level 151.35
Likely to fall to support level 147.90
USDJPY currency pair recently reversed down from the powerful long-term resistance level 151.35 (previous yearly high from 2022 and 2023).
The downward reversal from the resistance level 151.35 stopped the previous weekly ABC correction 2 from the end of last year.
Given the strength of the resistance level 151.35 and the resumed yen demand, USDJPY currency pair can be expected to fall further toward the next support level 147.90.
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#WaveAnalysis #SPX
S&P 500 reversed from key support level 5050.00
Likely to rise to resistance level 5115.00
S&P 500 index recently reversed up from the key support level 5050.00 (former resistance from the start of February, which stopped the previous waves v and i).
The upward reversal from the support level 5050.00 continues the active impulse waves iii and 5 of the extended upward impulse sequence (C) from last October.
Given the clear daily uptrend, S&P 500 index can be expected to rise further toward the next resistance level 5115.00.
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S&P 500 reversed from key support level 5050.00
Likely to rise to resistance level 5115.00
S&P 500 index recently reversed up from the key support level 5050.00 (former resistance from the start of February, which stopped the previous waves v and i).
The upward reversal from the support level 5050.00 continues the active impulse waves iii and 5 of the extended upward impulse sequence (C) from last October.
Given the clear daily uptrend, S&P 500 index can be expected to rise further toward the next resistance level 5115.00.
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The crypto market cap has corrected by 2%, dropping below the $2.3 trillion. Now, this looks like a technical correction. Bitcoin and Ether are drawing their seventh consecutive daily growth candle, albeit at a distance from the previous two days' highs.
#Bitcoin rose 44.7% in February, the strongest monthly gain since December 2020. This coming March is not considered favourable from a seasonal perspective.
Over the past 13 years, bitcoin has ended March with eight declines and only five gains. The average decline was 15%, while the average gain was 17.5%.
Altcoins such as #Uniswap and #Theta have gained around 90% in the last 30 days, including +50% in the last seven days. The same can be said for Dogecoin, which has added around 50% over the month and 42% over the last seven days.
Is this the season for altcoins? We doubt it, given that the first cryptocurrency still accounts for over 50% of the total market cap and that this figure has been rising since the beginning of 2023.
#Bitcoin rose 44.7% in February, the strongest monthly gain since December 2020. This coming March is not considered favourable from a seasonal perspective.
Over the past 13 years, bitcoin has ended March with eight declines and only five gains. The average decline was 15%, while the average gain was 17.5%.
Altcoins such as #Uniswap and #Theta have gained around 90% in the last 30 days, including +50% in the last seven days. The same can be said for Dogecoin, which has added around 50% over the month and 42% over the last seven days.
Is this the season for altcoins? We doubt it, given that the first cryptocurrency still accounts for over 50% of the total market cap and that this figure has been rising since the beginning of 2023.
Gold tries to break through historical resistance
Gold has gained less than 1% over the past two days, but the gains are significant because they mark a break in the downtrend since late December. Thursday's and Friday's gains also reaffirm gold's ability to rise above its 50-day moving average, which it failed to do a month ago.
Since peaking at the very end of last year, gold has been in a downtrend, forming a series of declining local highs and lows.
Since mid-February, risk appetite has been growing in financial markets, as evidenced by the synchronised increase in buying in European and Asian markets and the ongoing rally in cryptocurrencies since the beginning of the month.
Gold has gained less than 1% over the past two days, but the gains are significant because they mark a break in the downtrend since late December. Thursday's and Friday's gains also reaffirm gold's ability to rise above its 50-day moving average, which it failed to do a month ago.
Since peaking at the very end of last year, gold has been in a downtrend, forming a series of declining local highs and lows.
Since mid-February, risk appetite has been growing in financial markets, as evidenced by the synchronised increase in buying in European and Asian markets and the ongoing rally in cryptocurrencies since the beginning of the month.
No need to rush, as we can only call a break of the downtrend corridor after a consolidation above the previous high.
Gold is currently testing this top at $2055, which is a substantial level from which selling has intensified since early January. Moreover, the price has failed to consolidate above this level since August 2020. It could well be called a historical resistance.
It will be possible to talk about the realisation of the bullish scenario for gold after the daily candle closes above $2055. In this case, the first target for growth will be in the region of $2088 - the December high.
There is an even longer-term scenario. The pullback from the beginning of the year to mid-February is a classic Fibonacci retracement of 61.8% of the first growth impulse from the October lows. The realisation of this scenario will be the advance to $2255 (161.8% of the first advance).
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Gold is currently testing this top at $2055, which is a substantial level from which selling has intensified since early January. Moreover, the price has failed to consolidate above this level since August 2020. It could well be called a historical resistance.
It will be possible to talk about the realisation of the bullish scenario for gold after the daily candle closes above $2055. In this case, the first target for growth will be in the region of $2088 - the December high.
There is an even longer-term scenario. The pullback from the beginning of the year to mid-February is a classic Fibonacci retracement of 61.8% of the first growth impulse from the October lows. The realisation of this scenario will be the advance to $2255 (161.8% of the first advance).
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#WaveAnalysis
#Gold approached key resistance level 2090.00
Likely to correct down to support level 2050.00
Gold today rose sharply after the price broke through the key resistance level 2050.00 (which has been reversing the price from the start of January).
The price is currently trading close to the key resistance level 2090.00, former monthly high from last December.
Given the strength of the resistance level 2090.00 and the overbought daily Stochastic, Gold can be expected to all further toward the next support level 2050.00.
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#Gold approached key resistance level 2090.00
Likely to correct down to support level 2050.00
Gold today rose sharply after the price broke through the key resistance level 2050.00 (which has been reversing the price from the start of January).
The price is currently trading close to the key resistance level 2090.00, former monthly high from last December.
Given the strength of the resistance level 2090.00 and the overbought daily Stochastic, Gold can be expected to all further toward the next support level 2050.00.
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#WaveAnalysis
#CADJPY reversed from key support level 110.30
Likely to rise to resistance level 112.00
CADJPY currency pair recently reversed up from the key support level 110.30 (former strong resistance from January).
The support level 110.30 was strengthened by the lower daily Bollinger Band and by the 38.2% Fibonacci correction of the previous upward impulse 1 from January.
Given the clear daily uptrend, CADJPY currency pair can be expected to rise further toward the next resistance level 112.00 (which stopped the previous impulse wave 1).
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#CADJPY reversed from key support level 110.30
Likely to rise to resistance level 112.00
CADJPY currency pair recently reversed up from the key support level 110.30 (former strong resistance from January).
The support level 110.30 was strengthened by the lower daily Bollinger Band and by the 38.2% Fibonacci correction of the previous upward impulse 1 from January.
Given the clear daily uptrend, CADJPY currency pair can be expected to rise further toward the next resistance level 112.00 (which stopped the previous impulse wave 1).
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#Crypto market cap rose 5% in 24 hours to $2.44 trillion, driven by extreme greed. The crypto market had a higher capitalisation for a few days in May and October-December 2021.
The current growth wave can be broken down into two drivers. The first is the demand for #Bitcoin and #Ethereum. They are favoured by large investors concerned about a new wave of problems at US regional banks. This buying interest also applies to gold. Almost exactly a year ago, we saw a similar move that saw the price of BTC rise by a third in a week.
In early trading on Monday, the price of bitcoin was above $65K. That's about 5% off the all-time high, but the cryptocurrency has only been above that level for a few hours, and we've only seen three daily closes above that level.
The other half of the rise is the demand for meme coins, which goes hand in hand with FOMO. Despite the meteoric rise, the market has not yet reached the absurd highs to start talking about reversal risks.
The current growth wave can be broken down into two drivers. The first is the demand for #Bitcoin and #Ethereum. They are favoured by large investors concerned about a new wave of problems at US regional banks. This buying interest also applies to gold. Almost exactly a year ago, we saw a similar move that saw the price of BTC rise by a third in a week.
In early trading on Monday, the price of bitcoin was above $65K. That's about 5% off the all-time high, but the cryptocurrency has only been above that level for a few hours, and we've only seen three daily closes above that level.
The other half of the rise is the demand for meme coins, which goes hand in hand with FOMO. Despite the meteoric rise, the market has not yet reached the absurd highs to start talking about reversal risks.
Did oil find its way up?
Oil is correcting 0.2% on Monday after closing almost 2% higher on Friday and peaking at 3.4%. WTI’s high of $80.3, last seen in November 2023, and a consolidation above $79 would indicate a break of long-term horizontal resistance, something the bulls have failed to do over the past four months.
Friday’s rally allowed a widening gap to the 200-day moving average, which should also be seen as a demonstration of bullish strength. Technically, there is no significant obstacle to oil rallying to the $89-92 area.
Of course, this bullish outlook is only valid if the coming days confirm oil’s ability to grow from current levels, which has not been the case since November.
OPEC+ is openly playing on the Bulls’ side by extending and strengthening (Russian) oil production and export quotas. The production recovery is postponed indefinitely “depending on market conditions”.
Oil is correcting 0.2% on Monday after closing almost 2% higher on Friday and peaking at 3.4%. WTI’s high of $80.3, last seen in November 2023, and a consolidation above $79 would indicate a break of long-term horizontal resistance, something the bulls have failed to do over the past four months.
Friday’s rally allowed a widening gap to the 200-day moving average, which should also be seen as a demonstration of bullish strength. Technically, there is no significant obstacle to oil rallying to the $89-92 area.
Of course, this bullish outlook is only valid if the coming days confirm oil’s ability to grow from current levels, which has not been the case since November.
OPEC+ is openly playing on the Bulls’ side by extending and strengthening (Russian) oil production and export quotas. The production recovery is postponed indefinitely “depending on market conditions”.
This could be a golden opportunity for the US to regain oil market share, but it is in no hurry to do so. Friday’s data showed that the number of oil drillers rose to 506.
That’s the highest since September, but only adding 9 units from the low of 497, which is more stagnation than growth. Just over a year ago - in January 2023 - there were 623 oil and 152 gas-producing wells in operation, compared to 123 now.
Perhaps the price rise will encourage oil producers who are still wary of the green agenda and new sudden price falls. Simply put, America has so far been highly sluggish in playing on the Bears’ side.
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That’s the highest since September, but only adding 9 units from the low of 497, which is more stagnation than growth. Just over a year ago - in January 2023 - there were 623 oil and 152 gas-producing wells in operation, compared to 123 now.
Perhaps the price rise will encourage oil producers who are still wary of the green agenda and new sudden price falls. Simply put, America has so far been highly sluggish in playing on the Bears’ side.
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The cryptocurrency market hit new highs on Monday, reaching a capitalisation of $2.5 trillion. Profit-taking was evident at the start of the active trading session in Asia on Tuesday. But before this, the market lacked enthusiasm.
#Bitcoin peaked at $68,789, just $122 below its historical high. This is before the halving and before the final capitulation of buyers, typical of the weeks leading up to the halving, when some miners leave the market and sell coins.
The Fear and Greed Index hit 90, the level last seen at the end of 2020. That's when we saw a similar test of all-time highs after almost two years. Back then, bitcoin needed about four weeks of fluctuations within 15% to form a base before the next leg up.
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#Bitcoin peaked at $68,789, just $122 below its historical high. This is before the halving and before the final capitulation of buyers, typical of the weeks leading up to the halving, when some miners leave the market and sell coins.
The Fear and Greed Index hit 90, the level last seen at the end of 2020. That's when we saw a similar test of all-time highs after almost two years. Back then, bitcoin needed about four weeks of fluctuations within 15% to form a base before the next leg up.
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Gold is primed for a substantial move. At the end of last week, we saw a swift technical completion of a bullish pattern.
Sometimes, gold avoids volatility for weeks, but at certain moments, strong multi-day trends are born, and the movement becomes almost one-sided, as we saw this time.
After breaking through the resistance of the descending channel, gold quickly moved higher, gaining almost 2% on Friday, another 1.5% on Monday and over 0.5% since the start of the day on Tuesday. Current levels at $2126 are around all-time highs. The higher price was off-market at the start of trading on the 1st, with a history-making short squeeze of 3.5%.
After Monday's strong rally above $2088, which rewrote the closing highs, the current working scenario for gold is for a rally to the $2255 area, which is the 161.8% level from the initial October-December impulse. The price has made a classic corrective pullback to 61.8% of the initial rally at the start of the year.
Sometimes, gold avoids volatility for weeks, but at certain moments, strong multi-day trends are born, and the movement becomes almost one-sided, as we saw this time.
After breaking through the resistance of the descending channel, gold quickly moved higher, gaining almost 2% on Friday, another 1.5% on Monday and over 0.5% since the start of the day on Tuesday. Current levels at $2126 are around all-time highs. The higher price was off-market at the start of trading on the 1st, with a history-making short squeeze of 3.5%.
After Monday's strong rally above $2088, which rewrote the closing highs, the current working scenario for gold is for a rally to the $2255 area, which is the 161.8% level from the initial October-December impulse. The price has made a classic corrective pullback to 61.8% of the initial rally at the start of the year.
One of the warning signs is the overbought RSI. At 77.7, the Relative Strength Index is at its highest level since March 2022, where it remained for the following 14 months.
The RSI reached even higher levels in July-August 2020, and we see more similarities with this particular episode. The overbought RSI then, as it is now, coincided with the entry into the historical high area above $1800. Technically, it wasn't an all-time high, as it is the case now, but it was a move out of a steadily traded range (then $1800, now $2050), and that is what matters.
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The RSI reached even higher levels in July-August 2020, and we see more similarities with this particular episode. The overbought RSI then, as it is now, coincided with the entry into the historical high area above $1800. Technically, it wasn't an all-time high, as it is the case now, but it was a move out of a steadily traded range (then $1800, now $2050), and that is what matters.
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Euro area PPI fell more than expected
Price falls in Europe are faster than expected, bringing the date of ECB monetary easing closer. It is looking more and more realistic that Europe will move to easing sooner than America.
Eurozone producer prices fell by 0.9% in January, following the same decline in the previous month and a 0.5% fall in November. Analysts had, on average, expected a 0.1% fall. Falling prices and slowing economic activity in China should also be seen as a factor weighing on prices in Europe. Both Europe and the US fear deflationary pressures on prices due to overproduction. The public is unlikely to see this as a problem at first and may welcome cheaper goods. In the longer term, deflation is likely to be seen as a sign of economic weakness.
For the FX market, weakness in producer prices is a downward pressure on the currency as it brings the date of policy easing closer and reflects weak demand.
Price falls in Europe are faster than expected, bringing the date of ECB monetary easing closer. It is looking more and more realistic that Europe will move to easing sooner than America.
Eurozone producer prices fell by 0.9% in January, following the same decline in the previous month and a 0.5% fall in November. Analysts had, on average, expected a 0.1% fall. Falling prices and slowing economic activity in China should also be seen as a factor weighing on prices in Europe. Both Europe and the US fear deflationary pressures on prices due to overproduction. The public is unlikely to see this as a problem at first and may welcome cheaper goods. In the longer term, deflation is likely to be seen as a sign of economic weakness.
For the FX market, weakness in producer prices is a downward pressure on the currency as it brings the date of policy easing closer and reflects weak demand.
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