The IndeX Files 13-12-2022

All Eyes on US CPI Ahead of Tomorrow's FOMCGlobal equities benchmarks have seen relatively muted action so far this week as traders await today’s headline US CPI event ahead of the November FOMC tomorrow. October’s CPI reading was a major market event fuelling a wave of USD sales which helped underpin equities sentiment and lift asset prices across the board. Equities bulls will therefore be hoping for a similar reaction today.Looking at consensus forecast, the market is looking for headline annual CPI at 7.3%, down from October’s 7.7%. This reading or lower should see stocks supported into tomorrow’s FOMC event with the Fed likely afforded more room to signal a slower pace of tightening with a view towards pausing rate hike if inflation continues to calm. However, on the back of the upside surprise we saw in US labour data, there are still risks of an upside surprise today. If seen, stronger US inflation will bolster the likelihood of the Fed retaining a more hawkish outlook tomorrow, dragging stocks lower near-term.Looking beyond Wednesday, UK and European traders will then be turning to the ECB and BOE meetings on Thursday. Both central banks are expected to hike further by at least .5% with hawkish risks for both. As such, European and UK indices hold plenty of bilateral risk into these events. On the back of yesterday’s weak UK GDP reading, today’s data saw wages and unemployment both ticking higher into October, compounding recessionary fears in the UK ahead of the meeting.Technical ViewsDAXThe index continues to hold in the recent range set between 14703.98 and 14170.79 following the upside break seen in early November. Momentum studies have softened here, highlighting risks of a downside break. However, focus remains on further upside while the range support holds.S&P 500Following the rejection at the latest test of the bear channel top, price has subsequently found support into a test of the 3910 level, turning price higher again. Momentum studies are turning higher here keeping the focus on further upside and a test of the 4153.50 level while 3910 holds.FTSEThe market continues to correct lower from the 7575.8 level which marks the peak of the latest FTSE rally for now. Price is trading back towards the 7362.6 level, in line with falling momentum studies. Bulls will need to see this level hold to retain upside focus near-term.NIKKEIThe rejection at the 28356.6 level saw the market correcting as low as a test of the 27422.9 level, which has since held as support. Momentum studies are turning higher and while this level holds, the focus is on an eventual break of 28356.6 and a continuation higher.


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