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Post-CPI Score Flips

October 19, 2023
Frank Cabibi

This week was full of CPI news on top of the weekly US unemployment claims. The EdgeFinder has flipped its bias on a handful of pairs as a result. Here are some new setups for the remainder of the week:

EdgeFinder Analysis

USOil went from neutral to bullish on the EdgeFinder. The latest score flip changed when unemployment claims came out this morning lower than expected. The jump into bullish territory could start another leg of upside for the commodity that is hovering under the $90 mark.

Prices also rose after US sanctions eased in Venezuela and as Saudi Arabia's spare capacity is down to 3 to million barrels per day; the daily global demand is 103 million bpd. With rising global demand and shortening production, the price of oil may start to find some upside.

EURCAD is now a bullish reading after being in short sentiment all month. This flip is likely due to the recent inflation data that came from Canada. All of their CPI reports missed expectations suggesting weakness in the CAD as inflation is falling.

Price came up to resistance on the 1D timeframe for the second time and touched slightly higher. If the pair can break this level, we might see price come up to test the falling trend line. On the other hand, it is important to watch out for the increasing oil demand which is a benefactor to CAD which is very reliant on oil's performance..

The SPX500 fell from a -2 to a -3 on the EdgeFinder indicating that price is going back into bearish territory. Although we saw a lower number in unemployment claims, the labor market is the only factor with a positive reading.

The other categories such as inflation and GDP growth suggest weakness in stock market sentiment. October is not a historically bullish month for the index, so it might be stuck in mixed-to-bearish readings until next month when demand usually picks up.

Retail Spotlight

Retail shows that they are mostly bearish euro and swiss while being mixed GBP, SPX, US30, GER30. The three most bullish pairs from retail are EURCHF, GBPCHF, and NZDCAD.

Smart Money Spotlight

On the Smart Money side, institutions are mostly bullish EUR and USOil. SPX and CAD are still bearish and saw growing bearish sentiment overall.

Fundamental Spotlight

The recent inflation study for EURCAD shows a decrease in both countries' CPI numbers. The timeline shows a declining inflation rate over time as well. Because euro has a higher rate, however, it will get a +1 overall for the inflation score.

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