The driving force behind the moves yesterday was firstly the collapse of Chinese stock markets again (-8.48% worst performance since February 2007) as well as improved German confidence numbers. These sharp moves in China are also felt across global stock markets. With FOMC tomorrow and corporate earnings taking place in the US now, a loss of confidence in China has not helped matters, sending the S&P 500 and other stocks down to significant support levels. Today the index had another weak opening, but managed to bounce and is now down only 1 % on the day.
In the US, durable goods orders jumped to 3.4% versus 3.1% expected. Gold is still struggling slightly below 1100 handle. Crude oil’s decline continued as it broke the $47 level. Back to the currency markets, USD remains the weakest major currency as markets await FOMC statement.
Today, UK Q2 GDP is the major focus. Recently, markets are expecting BoE to hike rate mid next year while Fed is expected to hike in September. But there is a minority view that BoE could hike in November while Fed would hike in December.
Trading quote of the day: “The markets are the same now as they were five or ten years ago because they keep changing-just like they did then.” – Ed Seykota
USDCAD
Pivot: 1.305
Likely scenario: Short positions below 1.305 with targets @ 1.298 & 1.295 in extension.
Alternative scenario: Above 1.305 look for further upside with 1.3095 & 1.3125 as targets.
Comment: The upward potential is likely to be limited by the resistance at 1.305.
USDCHF
Pivot: 0.9585
Likely scenario: Long positions above 0.9585 with targets @ 0.9635 & 0.965 in extension.
Alternative scenario: Below 0.9585 look for further downside with 0.9545 & 0.9525 as targets.
Comment: The RSI lacks downward momentum.
OIL
Pivot: 47.9
Likely scenario: Short positions below 47.9 with targets @ 46.4 & 45.95 in extension.
Alternative scenario: Above 47.9 look for further upside with 48.5 & 49 as targets.
Comment: As long as 47.9 is resistance, likely decline to 46.4.
Pivot: 10950
Likely scenario: Long positions above 10950 with targets @ 11305 & 11435 in extension.
Alternative scenario: Below 10950 look for further downside with 10800 & 10660 as targets.
Comment: The RSI calls for a rebound.
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