The IndeX Files 13-12-2022


All Eyes on US CPI Ahead Tomorrow the FOMC global equity benchmarks have seen relatively muted action so far this week as traders await today’s US CPI headline event ahead of the November FOMC tomorrow. October’s CPI reading was a major market event that fueled a wave of USD selling that helped support equity sentiment and lift asset prices across the board. Stock bulls will therefore be hoping for a similar reaction today. Looking at the consensus forecast, the market is looking for a headline annual CPI at 7.3%, down from October’s 7.7%. This reading or lower should see stocks supported in tomorrow’s FOMC event with the Fed likely to have provided more room to signal a slower pace of tightening with a view to a pause in rate hikes if inflation continues to ease. However, behind the above surprise we saw in US jobs data, there are still risks of a surprise today. If seen, stronger US inflation will strengthen the likelihood that the Fed will maintain a more hawkish outlook tomorrow, dragging stocks lower in the near term. Looking beyond Wednesday, UK and European traders will then turn to the ECB and BOE meetings on Thursday. Both central banks are expected to hike by at least .5% with hawkish risks for both. As such, European and UK indices hold a lot of bilateral risk in these events. On the back of yesterday’s weak UK GDP reading, today’s data saw wages and unemployment both higher in October, compounding recession fears in the UK ahead of the meeting. Technical Views The DAXL index continues to hold in the recent range set between 14703.98 and 14170.79. after the 14703.98 and 14170.79. upside break seen in early November. Current studies have softened here, highlighting downside risks. However, focus remains on further upside while the range support holds. S&P 500 Following the rejection at the latest test of the bearish channel top, price later found support in a test of the 3910 level, turning the price higher again. Momentum studies are turning higher here keeping the focus on a further top and a test of the 4153.50 level while 3910 holds. FTSEL market continues to correct lower from the 7575.8 level which marks the peak of the latest FTSE rally at the moment. Price is trading back to the 7362.6 level, in line with falling momentum studies. Bulls will need to see this level hold to retain an upward focus in the near term. A NIKKEI rejection at the 28356.6 level saw the market correct as low as a test of the 27422.9 level, which later held as support. Momentum studies are increasing and while this level holds, the focus is on a possible break of 28356.6 and a continuation higher.



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