Just when it looked like pain was coming
The past few days in equities have raised some red flags. The lower-than-expected CPI report should have been a tailwind for stocks. Instead, after a strong open they crumbled. It was like the ever-present dip buyers had vanished.
Then today they reappeared even after a terrible China retail sales report and rising energy prices that will hurt demand and raise central bank risks.
I think GBP/JPY is a good illustration of a market that’s feeling whipsawed today. The pair broke to a one month high yesterday only to reverse lower. The drop continued early today to a two-week low only to reverse and now the pair is down just 2 pips on the day.
If you zoom out on the chart, you can see that we’ve been in a period of consolidation for awhile. Given this price action, I don’t think we’re ready to break in either direction just yet. But when it comes, it’s going to be a big move.
Sept 22 is a day to circle on the calendar with both the PBOC decision and the FOMC.