Stocks steady after yesterday’s selloff, but recession fears linger
Dow Jones => The index rises to
Copper => The commodity falls towards 3.74
EUR/AUD => The pair falls to 1.52
Dow Jones rises ahead of GDP data
Dow Jones closed 1.5% lower yesterday after weak consumer confidence data-fueled recession worries. Consumer confidence plunged to the lowest level in 16 months as prices surged and recession fears grew. Inflation fears were on the rise again after China announced the easing of more COVID restrictions, which sent commodities higher, prompting bets that the Fed would need to hike rates aggressively. Today the futures are edging higher as treasury yields ease, and attention turns to US GDP data, the third reading for Q1, and a speech by Fed Chair Powell.
|US Consumer confidence
US GDP Q1
|Actual: -98.7 (7.7)
Expected: -1.5% (0)
Where next for the Dow Jones price?
The Dow Jones has been trending lower across the year. It trades below its 20 & 50 sma and recently ran into support at 29650 on June 17. The price has rebounded from this 2022 low but has struggled to close above the 20 sma at 31350. Buyers need a move above here to expose the 50 sma and February low at 32190 to bring 33500, the June high, into play. On the flip side, the RSI is still in bearish territory. Failure to retake the 20 sma could see the price fall back to support at 30625, the May 20 low.
Dr. Copper falls as recession fears rise.
Copper is falling after three days of gains. The metal has moved into a loss for the week, the fourth straight week of losses. The metal, often called Dr. Copper for its ability to signal a recession and gauge the health of the overall global economy, has fallen over 20% since April. Copper is widely used in a vast range of products, so when demand starts to fall and the price drops, alarm bells ring. Coppers fell below a key support last week before consolidating and has come under fresh pressure today. Sellers will look for a move below 3.6400 to continue the bearish trend.
EUR/AUD falls ahead of German inflation data
EUR/AUD is heading lower extending losses from the previous session; The pair declined following dismal German consumer confidence data, which showed that morale had sunk to a record low as inflation continues to climb. Meanwhile, the Aussie, also a proxy for China, found support from news that China was easing COVID quarantine restrictions for international travelers. Today the pair is falling after better than expected Australian retail sales, indicating that consumers were still happy to spend despite rising prices and interest rates. Looking ahead, German inflation data is in focus and is expected to show that consumer prices rose to a new record high. ECB’s Christine Lagarde is due to speak.
|Ger. Consumer confidence
Aus. retail sales
|Actual: -27.4 (1.2)
Actual: 0.9% (0)
Support can be found at 1.5160 (weekly low) and 1.5050 (20 sma).
Resistance for the pair can be seen at 1.5345 (June high) and 1.54 (round number).