USD's full news week will end with PMI numbers on Friday. So far, we have seen mostly dollar strength and a 1% decline in the equities market. In a mixed market like this one, it's possible to play both sides of the coin in terms of risk. Traders will have to be more timely on entries though. Here is why both the USD and SPX500 could be buys going into next week.
Bullish Case
There are a handful of reasons for the Fed to remain hawkish on the dollar. For one, jobless numbers came out less than expected which is a good sign for the economy. That is good for the USD because it encourages the Fed to keep focusing on bringing inflation down.
On the other hand, strong economic news like falling jobless claims is good for stocks as well. Claims fell for the fourth week in a row, suggesting a healthy path towards a soft landing as the Fed planned.
Consumer confidence fell this week too, putting pressure on the stock market and pushed dollar bears aside. On top of that, the 10-year bond yield rate jumped to over 4%.
Longer term, it looks like the dollar is going to remain strong. The EdgeFinder's growing interest on yield rates has also brought a lot of attention to the dollar. March is a historically good month for the dollar at a +5 Buy.
Trade Setups
GDP numbers came in lower than expected in the US, marking the third straight drop in economic output. This is usually good news for the stock market indices and gold, however, bond yields continue to hold up above 5.1%. Here are some potential trade setups for both dollar and index longs depending on how the […]
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Last Friday's report showed a significant change in global market sentiment from smart money. What COT signaled has turned ultra-risk-off for traders who have been hoping for Fed fears to subside. This news could spark up worries about higher interest rates for the long term. EdgeFinder Analysis GBPUSD is now a -12 on the EdgeFinder […]
