US and European stock market futures are trading a bit soft as traders continue to take a small breather after the recent stellar rally that we have seen in the equity markets. The reality is that bulls needed an excuse to take some profit off the table, and the weakness in the Chinese data and the news of a downgrade by the rating agency Fitch in regional banks have given them enough reason to shave off some of the profit.
If you look at the fundamentals, we believe that they will continue to remain highly strong. This is because if one pays attention to the recent commentary coming out of the Federal Reserve’s members, there is more of a dovish tint in that, and it seems like the interest rates are likely to stay where they are for the time being.
US Futures Now
It also means that traders should take every comment from the Fed members with a pinch of salt, as everything is still very data-dependent, and if a few members are giving dovish comments, it doesn’t mean that they can actually change the overall narrative. The main narrative is driven by the data and, most importantly, the US CPI number that will be released. It will be this number that sets the tone for the Fed in terms of their future path for the interest rate. Given that oil prices are on the move, one should continue to pay very close attention to CPI, as there are chances that we may see a wrong turn in those economic numbers. Although the wrong turn may be for a brief moment, it would bring significant volatility for the market players.
What About Gold Prices
As for the precious metal, we continue to see more weakness despite the fact that traders haven’t been backing riskier assets for the past few days. In addition, the Fitch rating agency’s downgrading of the US regional banks has also failed to revive momentum in the previous metal, and this means that traders are actually out of luck for the time being.
Gold Price Chart
One of the obvious reasons for the weakness in the dollar index is some bullishness in the dollar index, but overall, it seems like the gold price is mostly out of luck. Having said this, from a technical price point, the price has started to look a bit oversold now, and the RSI on the daily time frame is moving towards the level of 30, and the price itself is also approaching near the 200-day SMA. Both of these factors could provide support for the precious metal.
BTC Prices
The BTC price has been interesting in light of Fitch’s downgrade of US regional banks, but that momentum seems to be fading once again as the price is really struggling to move back above the 50-day SMA. Tomorrow’s CPI data will be an important economic number to watch as inflation readings tend to drive the price action for Bitcoin. If inflation continues to slowdown, we could see weakness for the dollar index, which could move the BTC price higher, but again, the whole move could also be limited as BTC is naturally considered a hedge against inflation due to its limited supply.
Oil Prices
Brent and Crude oil prices are certainly off their lows of the week, and they are on track to be positive once again for the week after posting a record six consecutive weeks of upward momentum. There is no doubt that there is plenty of momentum here, and traders are really ignoring all the bad news that is embedded in the Chinese data, which many analysts are trying to drum as loud as they can. Oil traders are feeling highly comfortable with their approach when it comes to trading oil prices, and the clear trend seems to be skewed to the upside.
