One of the main conditions for the functioning of a perfect market is the so-called completeness of information. That is, when market participants have all the information about the quality and properties of goods, in the case of financial markets we are talking about assets, rational decisions are made on its basis. What is happening in the market clearly shows that this principle does not work. All market participants have the same information regarding what is happening with prices in the United States, but their actions are contrary to this very information. The acceleration in the growth rate of producer prices, from 4.2% to 6.2%, practically guarantees that inflation, which is already quite high, will continue to grow. This means that the Federal Reserve System has no choice but to tighten its own monetary policy. Given the fact that the economy is still trying to recover from the consequences of the coronavirus pandemic, business is clearly not ready for this. The financial markets themselves will not be happy about this either, because they will have to conduct a complete reassessment of all positions, collaterals, and the like. In general, the step is extremely unpleasant. However, the market behaves as if there is no threat of an inflation spiral and a subsequent rise in interest rates. Let's just say that market participants do not proceed from actual data, but from the words of representatives of the Federal Reserve System, which contradict the real state of affairs in the economy. Of course, the American regulator does not want to allow panic, but in the end it brought the situation to the point that neither business nor market participants now have time to prepare. Instead, the market was essentially dangling in one place, albeit with quite noticeable volatility. Nevertheless, instead of an obvious weakening of the dollar, we are seeing how it is marking time.
Producer Price Index (United States):
One of the most important conclusions from all this is that the market will be rather weak in responding to certain macroeconomic data. While retail sales and industrial production data are published in the United States today, they are quite significant. However, it should be noted that just today, it is rather difficult to rely on these data. For example, the growth rate of retail sales should accelerate from 27.7% to 30.5%, and the growth rates of industrial production may grow from 1.0% to 19.0%. Such impressive figures are only possible due to the low base effect that arose due to the closure of factories and stores last spring. The stringent quarantine measures have had an extremely negative impact. In other words, it is rather difficult and even unreasonable to draw any conclusions based on such data. It is necessary to wait until the moment when this anomalous failure ceases to affect the statistics. So, the most logical is the further stagnation that we saw yesterday. Another thing is that the level of volatility should decrease somewhat.
Retail Sales (United States):
During the last trading day, the EUR/USD currency pair showed local activity. However, it did not change the order of trading forces in any way, since a general examination of the trading chart will see a side channel within the boundaries of 1.2050 / 1.2106.
At the same time, the market dynamics has signs of slowing down, with the exception of local manifestations of speculators.
If we proceed from the current location of the quote, the sideways movement of the price will be seen, within the previously set boundaries, where the quote is directed to the upper limit.
In this situation, it can be assumed that price fluctuations in the range of 1.2050 / 1.2106 will remain in the market, where the most optimal trading tactic will be considered a method - a breakdown of one or another border, working on an impulse outgoing from the range.
From the point of view of complex indicator analysis, it can be seen that the indicators of technical instruments on the 1-minute and 1-hour intervals have a variable buy / sell signal due to the price movement along the amplitude of the side channel. The daily period is still focused on an upward cycle.
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