Risk-Off Mood Prevails. Could U.S. CPIs Change that?
2022.09.12 18:39
witnessed a significant price movement over the past few days. Volatility in the cryptocurrency market is normal, but the price movement’s direction surprised traders. Bitcoin saw a 13.28% increase since Friday, recording its strongest increase since July 2022. The price is now at a 24-day-high.
Cryptocurrency is not the only market to see strong price increases. The US stock market formed its first bullish week after three consecutive weekly declines, with the increasing by 3.46% within the previous week.
However, traders are aware that even with the price increase, the wave remains below 50% compared to the decline. This means that the price is still at high risk of declining.
Crude Oil – Technical View
prices continue to see high levels of volatility as the European Union and Russia look to weaponize oil and gas.
The price saw a strong price increase on Friday, bringing it to $85, but it could not break onto a significantly higher wave.
The price is currently at a support level which has been flipped into a resistance point. Traders are considering whether this will cause a decline or a bullish breakout.
Bloomberg announced today that the US is exploring the possibility of releasing additional volumes of oil from oil stock to reduce domestic fuel prices.
The additional level of supply can apply further pressure on the price potentially. Currently, governments are attempting to bring prices down, whereas OPEC is attempting to increase prices.
Investors fear that the cost of “black gold” may rise sharply during winter due to the refusal of the EU countries to import energy resources from the Russian Federation.
At the moment, it is expected that this measure to be implemented between November and January 2023.
Traders also await the latest US (CPI) announcement. This will likely impact the Fed’s and, consequently, oil.
Many economists believe that the CPI may decline but not enough to satisfy the ‘beast’ (Fed).
GBP/USD – Technical View
The price movement of the saw significant increases this morning after the announcement of the UK’s Gross Domestic Product (monthly).
The exchange rate is now at a monthly high, and the price has formed a further bullish price breakout.
The price has also managed to remain above the 2- and 3-month moving average and form a further bullish crossover.
All are indicating a bullish price movement. However, traders need to be cautious as tomorrow’s CPI figure can change the trend potentially.
This morning, the UK’s was slightly lower than expected, but traders are happy that the UK has managed to avoid recession.
Officially, a country is considered to be in recession when it sees two consecutive quarters of GDP decline. Today’s monthly GDP figure came in at 0.2%, rather than the 0.3% predicted.
Why Did The Pound Rally?
This has partially resulted from the US Dollar declining across the market, as indicated by the . However, GBP has potentially also found support in the fiscal decisions.
Prime Minister Liz Truss announced new measures to tackle the energy crisis. In particular, about £90 billion will be directed to social assistance for households.
Also, the new government will impose a limit on energy bills, capping them at £2,500 a year. However, this could pressure the currency in the longer term.
