By ForexTime
Note: This report was published before the US CPI revisions.
After breaching 5,000 for the first time, can US500 bulls maintain their charge?
While bulls seem to be in control, the incoming US inflation report among other key data points and speeches by Fed officials could impact the index in the week ahead:
Monday, 12th February
Tuesday, 13th February
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Wednesday, 14th February
Thursday, 15th February
Friday, 16th February
Just looking at the charts, the US500 has been on a roll – notching a string of all-time highs over the past few weeks thanks to upbeat data and strong corporate earnings.
With all the above said, it will be wise to keep a tab on not only the incoming US CPI revisions this afternoon, but the January US Consumer Price Index (CPI) data published on Tuesday 13th February.
Markets are forecasting:
Headline inflation is expected to fall 2.9% while the annual core inflation is seen cooling to 3.7% – its lowest since May 2021.
Market expectations around when the Federal Reserve will start cutting interest rates have been one of the key forces influencing the US500.
Traders are currently pricing in a 73% probability of a 25-basis point cut by May with a cut fully priced in by June, according to Fed fund futures.
Given how the incoming inflation data may impact these bets, it is likely to be reflected in the index.
Beyond the US CPI report, much attention will be directed towards the latest retail sales figures along with other data points for insight into the health of the US economy. A selection of Fed speakers will also be in focus which may offer additional clues on when the Fed will start cutting interest rates. When considering how the US500 has a handful of tech stocks that remain sensitive to interest rates, this could mean more volatility for the index.
The US500 is firmly bullish on the daily timeframe due to the consistently higher highs and higher lows. Although prices are trading well above the 50, 100 and 200-day SMA, the Relative Strength Index (RSI) signals that prices are heavily overbought.
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