Stocks Soared, But Greenback Weakened After Consumer Prices
Yesterday’s Consumer Price Index release exceeded all the forecasts and boosted sentiment. At first, DOW reduced 24490.36 but then increased 1.03% to 24893.49. The index is expected to hit the key near term resistance area between 55 day EMA and 61.8% retracement of 26616 to 23360 at 25372. If it does, the correction from 26616.71 will be finished. S&P 500 rose 1.34%. NASDAQ was up 1.86%. 10 year yield grew 0.073 at 2.913 and thus recent uptrend prolonged to the key resistance of 3.036.
Greenback reinforced after CPI release but the improvement was temporary and the currency weakened. That means recovery of the Dollar index from 88.43 has completed and is now bounded under 55 day EMA. Larger medium term downtrend is expected to extend towards 61.8% projection of 103.82 to 91.01 from 95.15 at 87.23. Japanese yen is trading as the firmest. New Zealand dollar and Australian dollar follow suit.
Japanese machine orders fell -11.9% mom in December. Australian employment rose 16 thousand in prior month, unemployment rate declined 0.1% to 5.5%, consumer inflation expectation were up 3.6% this month. Today, the Eurozone will release trade balance, US will feature regional Fed surveys from Empire state and Philadelphia, Purchasing Price Index, jobless claims, industrial production and NAHB housing index.