Benzinga - by A1 Trading, Benzinga Columnist.
Indices recover from Friday's lows as the dollar index hovers at break even. The mounting tensions in Israel-Iran escalated market worries, but financial earnings have kicked off to a good start.
EdgeFinder Analysis
Retail Sales came in higher than expected which is a good sign for the economy. It's also strong for the USD as it may indicate a further rise in inflation over time. The pair's score increased by 7 points with help from COT data and unemployment data.
CHF is getting heavily sold from last week's report as investors see higher-for-longer interest rates in the US. A longer period of this will help the carry trade for the bulls on this pair so investors may want to keep piling in this asset as well as others that have low or lowering interest rates.
UJ is the same way as the US has a much higher interest rate. Price finally broke a significant line of resistance on the 1D timeframe. If the pair came back to the 151.5 level, it could be a buying opportunity for those looking to long.
Otherwise, chasing price could difficult. After breaking the highs, the uptrend will have to take a breather before seeming like another buying opportunity. Right now, price is the highest it's been since the '90s. The next level of resistance is around 160.
USDCAD is one of the strongest bullish biases on the EdgeFinder right now at +12. The score changed by 8 points to the upside with help from COT, Services PMI, and jobs numbers. This is seasonally one of the worst months of the year, but this time might be different.
Canada is set to report their CPI numbers tomorrow which is expected to come in higher on a month-to-month basis. If CPI does come in higher, it may spark some bullishness around CAD which is still expected to cut much sooner than the US. However, BOC may have to wait on it if inflation does end up coming in hotter.
Retail Spotlight
Retail is now long on several risk-favoring assets such as crypto, Russell (small caps) and NASDAQ. Gold is still mixed, SPX and GER30 are the top short positions from the crowd.
Smart Money Spotlight
COT data came in mixed for last week's sentiment data. Metals are long, US indices long, dollar is long bonds are long. They are shorting gold, bitcoin, silver, Russell, oil, and a number of currencies.
Fundamental Spotlight
US retail sales beat expectations and rose above last month's report. This might be more bullish for the dollar than the indices, however. As higher inflation rates are expected from this report, the trend of CPI may continue to beat expectations at a concerning rate for the Fed which wants to start monetary easing this year.
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