US stock indexes seemingly pulled back by long liquidations with the start of the corporate earnings session. SPX Futures were down by about 0.2% and NASDAQ fell with the Dow Jones index by about 0.3% in the European trading session.

The markets soared due to the softer-than-expected producer price index which fell by about 0.5% in the month-to-month perspective in March. This might initiate higher production which could fight inflation additionally, pressures the dollar by a potential dovish prospects of the interest rate hike projections.

Initial jobless claims rose to the highest level since January, sorting the labor market outlook which soared the markets due to the possible dovish effect on interest rates.

Looking at the day’s session we can identify the b-shaped profile structure with a single print area might serve as a buying area for core positions with the upper value extreme. Secondary options could emerge around the lower value extreme while the daily interval still trades inside of the balanced price range, leading market participants to lean on the extremes. The unsecured low on the prior profile might be targeted to be cleared to keep this into the notes of potential scenarios.

(Click on image to enlarge)

A lower dollar might be beneficial for the equities as retail sales and production data wait to conclude further scenarios for the monetary path. Lower sales could point to a weakening economy and may hint to early interest rate cuts and an easing of the tightening cycle from the US central bank Fed. Higher production data could lift the market as well – hinting to more supply with the effect of lower inflation.

The managed money sector was mixed with new and closing positions, hinting to the current balanced price range as of the COT data from 4th April.

Current projections of the interest rates hinting to another 25 bps hike in May with probable cuts around July (49% probability). The total probability of 74% pointing rate cuts around November while the curve seemingly is dovish supports the stock markets for the moment while events such as the latest banking crisis could change the current calculations.

SEE ALSO

Banking Situation Deepens Drop In Equities While Gold Benefits

1 MONTH AGO

The latest FOMC meeting minutes, pointing to an easing of the aggressive rate hikes, taking notes about the recently mentioned banking crisis which could tip the economy into a recession which prompts the central bank to react with a possible supportive cycle.

The dollar weakened the fourth day in the row and may target the decades developing VWAP around $99 while the prior lows around $100.70 and the prior Year’s lower value extreme might serve as supportive with potential data or events specific to the greenback unfolding. 

More By This Author:

US Equities Await Non-Farm Payrolls Data On Friday
Equities: Easing Labor Market And Inflation With Mixed Behavior
Crude Oil Output Cut Surprises, Leads Price To Soar