The positive risk sentiment in markets seems to continue. Last week started with some negative momentum, which was quickly reversed. The weakness of the Dollar also helped pushing stock markets higher. While the S&P 500 pushed higher in particular the Nasdaq technology index had created new highs with tremendous speed. This also helped the crypto market moving higher again. Last week Bitcoin was able to defend the USD 80,000 support level and closed above that zone. The positive sentiment might now depend on the situation in the Middle East. According to news sources Iranian drones have resumed attacks on bases in the region. The Kuwaiti army reported that drones had entered their territory while the UAE shot down ballistic missiles as well as drones earlier last week.

The United States in the meantime remain calm, trying to resolve the conflict as well as looking for ways to agree upon a peace deal with Iran. The impact on the global energy market remains strong. Prices for jet fuel continue to rise and airlines rethink their flight schedules especially for destinations with lower demand.

Following a volatile trading week, the economic calendar remains rather light with only limited news events moving forward. Despite a stronger NFP report on Friday last week, the weakness of the Greenback might continue supporting the positive risk sentiment.

Important events this week:

– US producer price index- the producer price index in the US is in particular interesting during times of geopolitical tensions. A weaker reading might push the Dollar lower. The data from April was expected to rise but stabilized at 0.5%. The tensions between the US and Iran had not caused prices to rise at least as per the official data.

SP500 weekly chart

The S&P 500 index has risen sharply and could continue this upward trend. However, whilst the market continues to push higher, corrections may also be on the horizon. Those might be used as entry opportunities to get into the strong uptrend. Short- term entries at around 7,250 might be on the cards. A bigger correction could push the market down towards the 6,900 level, which might be interesting for an entry into the long- term uptrend. The producer price index will be released on Tuesday, 13^th May at 14:30 CET

– US core retail sales– The economy in the United States is extremely dependent on consumption. Automobile sales account for about 20% of Retail Sales and they might disappoint currently due to the sharp rise in gasoline prices. The core data might hence be more important as it is a better gauge of the general trend. A rise in sales data might not necessarily mean that the economy is growing but simply attributed to the fact that prices have been rising.

USDCAD weekly chart

The USDCAD currency pair remains interesting for now. The price has bounced off the technical support level at 1.3575. The currency pair bounced higher following Friday’s much lower employment data from Canada. A positive retail sales report might hence continue and give the USD a boost pushing the pair even higher. If the market can break above 1.3700 the uptrend might continue to gear up fresh momentum. The retail sales report will be released on Thursday, 14^th May at 14:30 CET