The DXY has a period of seasonal weakness ahead and the recent inflation data out of the US has been supportive for those looking for dollar weakness. The latest US PCE print came in fractionally lower than expectations for the month over month reading at 0.2% vs 0.3% expected.
The reason is that the meeting also includes news that production will be gradually increased from Oct 2024 (depending on market conditions). So, the two way news is mirrored by the two way seasonal pattern for oil.
The EURUSD for example has an interesting event pattern around the start of June, which is also around the release of the Fed’s preferred measure of inflation, the PCE print at 13:30 UK time on Friday May 31.
Silver has been one of the best performing commodities this year gaining over 40% since the start of the year. It has also been reported across financial media and trending on twitter over the last few days as buyers have increased in confidence.
Now Nvidia is a well known big tech AI play and it has seen significant moves over the last few months. The seasonals are also very strong right now. Over the last 15 years, between May 26 and August 31 Nvidia has gained an average of 10.60% with some gains greater than 50%, but some losses nearly as large as 30%.
This CPI print is in a major focus as investors want to know whether the Bank of England is winning the inflation battle. A surprise print to the upside or the downside is likely to send the GBP on a sharp move, but how much of a move can be expected?
Some analysts are pointing to the fact that , despite the ‘bear market’ rally the fundamental outlook has not really changed and economic uncertainty remains with lower earnings set to remain for now. However, other analysts point to very high stock valuations in the US and Japan as a potential driver for a renewed interest in China and likely to encourage a further rotation of funds.
Walmart is announcing its earnings on Thursday before the open. Seasonally Walmart has had a weak period from May 16 through to June 30th over the last 15 years with a fall in the share price 60% of the time.
On Wednesday we have the US CPI print being released and it is a major focus for the Fed. In the last Fed meting, on May 01, the Fed confirmed that recent US inflation data had been disappointing. In the Press Conference Powell said, when asked about the prospect of 3 cuts this year, that the Fed needs more confidence on inflation and that the Fed did not see progress in Q1.
With the latest US jobs data showing a slowdown in the jobs market, and the services ISM print surprising to the downside investors eyes may be turning towards more defensive stocks like Health Care or Utility stocks.
