Inter Market Analysis – 20th July

Equity

Risk On

  • Greek banks reopen today (expect riots?)
  • Asian shares fared better but possible dead cat bounce despite no short sell
  • No Greece crisis at the start of the week
  • Strong US earnings to continue?

Risk Off

  • Ongoing middle east turmoil Yemen and Syria / Car bomb

Outlook: Eurozone equities are recovering and far from ATH / US equities are leading the way to close above ATH

Biased: What could have go wrong this week as market offer stability and peace (post Greece)?     

Currencies

  • A dollar resurgence but met with resistance from April swing low
  • Dollar remains king but a healthy retracement here means pullback remains a buy as it continue within the rising channel
  • Retracement in the dollar to retest previous breakout level and still trade within an upward channel

Outlook: Hawkish Yellen and Carney – dovish BOC / RBA / RBNZ / BOJ

Biased: With Greece resolved is there any more need for safe haven currency? No is the answer on Yen while dollar and sterling could still go higher

Bonds

  • Euro weakness should transpire with higher Bunds prices

Outlook: Bunds held on to support and it could continue higher but watch the EUR/USD closely

Biased: Set to test higher as long as support at 20 and 50 ma holds

Commodities

  • Commodities crunch time
  • Potential reversal zones on several commodity as they hit oversold area
  • As per our previous write up we stick to our view as mentioned:
  • Expect a retest of previous low for support before any meaningful counter rally?
  • Commodities remain weak as Asian stocks did not recover fully

Outlook: We are seeing the dump and heavy selling as anticipated but will we see a meaningful reversal from here on? Otherwise expect consolidations first

Biased: After the sell off – consolidation and retest of the new low? Let the dust settle first  

Watch list

USD index

Price revisited April swing low and could potentially act as a short term resistance. Pullback remains a buy to target the April high.

German Bund

With the Bunds trading well above the 20 and 50 ma, pullback remains a buy with a target to hit 100 ma as targets. A break and close above 152.87 is the start and then resistance at July high. As long as 20 ma and 50 ma hold as support today, we will not rule out a retest higher.

Copper

The selloff may not be over yet and we still envisaged any recovery to remain weak. Only a break and close above 20 ma will give us the indication that there is a relief rally. Not ruling out a retest of previous support zone (purple line)

German Dax

There was no retracement and Monday open gapped higher on DAX. Resistance does not exist in the realm of European equities. With so many Gaps below, it is bound to fill it one way or another – a matter of when and not if.

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