UK inflation, Canada retail sales and energy prices in focus

Energy prices are climbing this morning with oil rallying 0.8% while gasoline and natural gas gain 1.0%. Stock markets are mixed. US index futures are up 0.2%. In Europe the FTSE is down 0.1% while the Dax is up 0.1%. In Asian the Hang Seng rose 0.3% while the Nikkei fell 0.3%.

‎The big story overnight and this morning is the UK inflation report which has seen consumer prices spike 2.3% more than the 2.1% the street had expected and last month’s 1.8%. This news has sparked a big figure rally in the pound. At last week’s Bank of England meeting, one MPC member voted for an interest rate increase on inflation concerns and this news adds to her case.

In other news, the UK continues to move toward triggering Article 50, planned for Wednesday March 29th. The first French election debate appears to have been won by Macron‎ according to polls. In Germany the latest poll shows the Socialist party taking the lead over Chancellor Merkel. EUR appears to be benefitting from this news which suggests Frexit risks easing a bit.

In North America today, the main event is Canada retail sales. The street is looking for a big bounce of 1.0% or more from a decline last month. ‎CAD is already on the rebound ahead of this news tracking with the rebound in energy prices. In the US, the political focus remains on the health care reform bill with Fed speakers likely to continue talking interest rate increases.

Chart Signals: GBP and EUR rally as USD Index breaks down under 100

The US Dollar is starting to really break down today with the Dollar Index taking out the big 100.00 round number. So far, Cable has been the biggest beneficiary gaining a big figure on the greenback with EUR also posting a strong charge. Oil and CAD have been picking up as well while gold, JPY and indices have been spinning their wheels.

North American and European Indices

US 30 is trading near 20,930 as it continues to trend sideways between 20,780 and 21,000. Initial support appears near 20,880 with next resistance near 21,155.

US SPX 500 is still trending sideways between 2,350 and 2,400 recently trading near 2,375 the middle of the range. Signals are a bit mixed with higher lows indicating continued accumulation offset by a recent double top.

US NDAQ 100 is consolidating its recent breakout between 5,395 and 5,435. A negative RSI divergence indicates upward momentum slowing while an overbought RSI suggests it may need to trend sideways for a while to digest recent advances.

UK 100 continues to consolidate recent gains between 7,400 and 7,440. Next measured resistance possible near 7,480 with next support in a pullback possible near 7,355 then 7,320.

Germany 30 is holding steady trading near 12,070 between 12,050 and 12,080 within a wider sideways range between the 12,000 round number and 12,180 resistance. RSI flat just under 70 indicates a consolidation phase underway within an ongoing uptrend.

Commodities

Gold is bouncing around between $1,225 and $1,235 digesting last week’s rally around $1,230 a Fibonacci level. RSI levelling off suggests a pause starting. Next resistance looks possible near $1,242 with next support near $1,221 and the 50-day average.

Crude Oil WTI is on the rebound, bouncing up off a higher low near $47.80 and advancing on the $48.50 to $48.80 zone. Next resistance appears near $49.00 then $49.60. RSI back above 30 indicates downward pressure easing.

FX

US Dollar Index is breaking down today, taking out 100.00 and falling toward 99.60. RSI breaking under 50 confirms the downturn in momentum. Next potential support appears near 99.25 then 98.90 a 62% retracement of the post-election rally.

USDJPY has levelled off between 112.35 Fibonacci support and 113.00. RSI levelling off near 40 suggests its broader sideways trend remains intact. Next downside support possible near 111,60 with next resistance possible near 113.45.

EURUSD is breaking out today with a bullish engulfing candle and a rally up off $1.0720 indicating renewed interest. Rallying toward $1.0800 next potential resistance appears at a Fibonacci cluster in the $1.0820 to $1.0840 area. Rising RSI confirms increasing upward momentum.

EURGBP continues to turn downward, diving back toward 0.8660 Fibonacci support from lower resistance near 0.8730. Next potential support on a breakdown appears near 0.8600 and the 50-day average then 0.8530 near the 200-day average.

GBPUSD continues to climb, rallying up off of $1.2360 toward the $1.2450 to $1.2475 zone with next potential resistance near $1.2500 then $1.2580. RSI above 50 and rising confirms upward momentum accelerating.

USDCAD is starting to turn back downward sliding from near $1.3350 toward $1.3310 but it needs to break $1.3300 and 50 on the RSI to confirm a downturn. Next support possible near $1.3280 then a moving average cluster near $1.3190.

CADUSD is back above $0.7500 trading between $0.7475 and $0.7535. Next potential resistance near $0.7550 a Fibonacci level then $0.7575 the 50-day average. RSI still needs to retake 50 to confirm an upturn in momentum.

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