Daily Market Review - June 11
Yesterday, thanks to US data and ECB meeting, the market got some motivation after few dull days. According to the published data, United States recorded an unseasonably adjusted CPI annual rate of 5.0% in May, the fastest rise since August 2008. Its performance exceeded market expectations by 4.7% and the previous value of 4.2%.
In addition, the non-seasonally adjusted core CPI annual rate excluding energy and food increased sharply from the previous value of 3.0% to 3.8% (also exceeding market expectations of 3.4%), the highest since 1992. Overall, in the past 12 months, energy prices have increased the most, at 28.5%, and most probably, it was the main reason for fast-growing inflation.
Deeper digging data can be a bit more interesting. The inflation of used cars and trucks recorded an increase of 7.3%in May, equivalent to one-third of all gains. Also, new cars, air tickets, clothing, furniture, and operations, all printed multi-year high inflation. The energy index remained unchanged overall, mainly due to the increase in the electrical and natural gas index being offset by the decline in the gasoline index; and health care. The few indexes that recorded a slight decrease were -1.9%.
Besides the, as of June 5, the Initial Jobless Claims growth rate continued to hit a new record low since the pandemic starts. However, the 376 increase claims, and even though it was the six consecutive weeks of continuous decline, it was a bit more than market expectations. The four weeks average also fall by 25,500 to 402,500. Also, the continuing claims declined and recorded 3.499 million.
While US CPI got more attention yesterday, however, we had an ECB meeting as well. European Central Bank has kept its dovish monetary policy unchanged (holding the exact size of the 1.85 trillion euro emergency bond purchase plan (PEPP) and speeding up purchases this quarter, at least until the end of next March). After the monetary policy meeting, in the press conference. Mrs. Lagarde also emphasized that "it is still too early to withdraw from easing," "it is still far from achieving the inflation target," "governments need to provide timely support," and "end stimulus too early will harm economic recovery," etc.
Checking the published data of today shows that despite a decrease in the UK`s industrial and Manufacturing numbers in May, GDP rose by 2.3%, higher than the market`s 2.2% expectation. Eurozone countries also mainly published their CPI data, and all met the expectations, with no surprise.
US treasury yields also decline to their lowest level since March. USD index eased 0.3% yesterday to 90.02, kept the ease to 89.88 (S1) earlier today, but started to recover, as the market will be more logical.
While USD was weak, Euro also had not enough encouragement to use the momentum. However, the Euro rate against the US dollar is relatively bumpy. Despite the data, the currency pair also faces the impact from the speeches of the European Central Bank`s member and Governor Lagarde.
EURUSD Technical review
Technically pairing does not have any specific direction, and Indicators have mixed signals. RSI at 50 is flat. The paring trading in a pivot point of 1.2180, while the EMA crossing strategy can not confirm any direction. The next trend needs to prove itself above or under 1.2200 or 1.2140 respectively.