Week 2 Q1 2024 - Recap
US CPI increase and Red Sea tensions
With already expected a low volume and volatility week due to lack of economic events, all eyes were focused on US CPI data on Thursday and to close of the week we also had PPI and some Red Sea escalation tensions bringing upside on Gold to close positive for the week.
As we expected the first three days of week with low volume and volatility where gold kept is corrective move from previous week, printed anew intraday low at 2016 on Monday but then kept ranging as US CPI was in focus for the week.
Dollar also kept ranging within the range of 102.1 and 102.6 and not even the CPI increase was able to break that consolidation area showing us that sellers not yet out of control on the bearish move on Dollar we have been seeing since start of November where it double tops at 107s.
Going back into the economic events, overall US CPI increased and as we stated on our weekl preview, we saw economic indicators that could pose some pressure on inflation beside the energy costs decreasing. In that way we had a IR YoY at 3.4% increase from 3.1% and only Core YoY was reduced by 0.1% to 3.9%.
With such data that suggesting FEDs job is not yet complete, according to price action the increased report did not take out the early rate cuts narrative in play, as we already saw above on Dollar PA behavior, during the data reports Gold create a lot of whipsaws move and only on London close hours was able to break the lows of the news data candles but only for short term as it reversed after printing a new intraday low, and low of the week, at 2014 with a triple bottom at LTF closing the day positive.
Gold still close of the day positive as on Friday the eyes were on PPI that came poor at -0.1% that turned to be the same as revised downwardly previous. Of course such poor data feeds into narrative of rate cuts, but even before data release, during Pre-NY we had some headlines of US strikes on Red Sea due to Yemen ship attacks and such of course lead to upside on Gold.
As we can see, the first headlines lead to Gold to fade out the CPI move and the poor PPI gave the final push to print the high of the week at 2061 pulling back during NYSE retesting CPI prices.
Not much to add onto the week as it was overall slow and such reactive headlines were more interesting to close of the week and beside we all wanted a better CPI day volume, we have seen that if data is going against the narrative in play, price action can be messy. So for such sentiment to shift we need a stronger catalyst, but on the other hand, if it goes in favor we can catch very good moves and for that reason it doesn’t make sense to fight the markets and just take what it provides.
New week already started as today is bank holiday in US and markets will be closed but we will send right away our week 3 preview.
Stay safe and stay adaptive.