U.S. inflation in investors' crosshairs

June 10, 2021 14:00

It is a day of waiting for the stock markets, in which investors cast their attention towards various macro events that could affect the future of the markets in the coming sessions. This is because, throughout today's session, we will find out a series of important data, including the monthly report of OPEC, and the decision on interest rates by both the ECB and the CPI in the United States.

In the last few hours, we have learned that the United States and China have held a new conversation on trade issues, thus continuing the talks held during the past few weeks. It appears that a new trade negotiation is close to taking place, although at the moment it does not seem that Washington has any plans to cut the tariffs imposed by Donald Trump.

In recent weeks, we have been able to observe how the barrel of Brent has managed to overcome after several attempts the level of $70 per barrel, thanks to the good future prospects in relation to oil consumption. Today's OPEC report should confirm these good feelings, consolidating and thus supporting this recovery in the price. On the contrary, a negative or not entirely positive report could affect the barrel of crude oil, causing a price reduction.

On the other hand, the European Central Bank is not expected to take any decision on interest rates at this time although we will have to be very attentive to Christine Lagarde's subsequent press conference since her words could give some clues to possible measures or decisions in the medium term.

Therefore, the main focus of interest for investors will be around the monthly inflation rate in the United States, which we will know before the opening of the market. In recent months, the fear of rising inflation has led to sharp corrections in financial markets, as high inflation could lead to changes in the Federal Reserve's current monetary policy by progressively withdrawing the current monetary stimulus, starting with tapering.

The main index affected by the increase in inflation has undoubtedly been the Nasdaq, as a possible rise both interest rates and the yield on US bonds directly affects the financing of technology companies.

Technically speaking, if we look at the daily chart we can see that the NQ100 has managed to overcome its important support/resistance level higher in the red band, which could give rise to a new upward momentum in order to try to recover the 14,000 points.

If inflation is finally worse than expected and subsequently remains high, the Nasdaq could experience high volatility, which would put this upward structure at risk. Losing its current support level (red stripe) could lead the price to look at its average of 18 blank sessions. The loss of this level could open the door to further correction.

Source: Admiral Markets MetaTrader 5. Daily chart of the NQ100. Data range: October 8, 2020 to June 10, 2021. Prepared on June 10, 2021 at 10:50 am CEST. Please note that past returns do not guarantee future returns.

 

Evolution in the last 5 years:

  • 2020: 43,64%
  • 2019: 35,23%
  • 2018: -3,88%
  • 2017: 28,24%
  • 2016: 7,50%

 

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