Inter Market Analysis 21st July

Equity

Risk On

  • Greek no intention to call early election (stability)
  • Greece to start rescue talks
  • Asian equities rose higher
  • No Greece crisis at the start of the week
  • Apple earning expected to beat estimate?

Risk Off

  • Toshiba scandal to hurt Japanese investor confidence
  • North Korea reject talks such as Iran nuclear deal
  • Suicide bombing in Turkey
  • Automakers in china expect slowdown

Outlook: Equities are discounting the effect on the Chinese economic slowdown and implication on the stock market recent fall

Biased: Risk On running out of juice? Cautious trading with possible new ATH on US equities while EZ equities remain cautiously higher

Currencies

  • A dollar could continue higher as it is held back by resistance – without any pullback as of yet
  • However, we will be cautious of any more extension on the dollar and envisage a possible retracement
  • More easing expected from export economy as commodity prices are hard hit

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: We continue to envisage higher bunds in the short term and pullback remains buying opportunity

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

Commodities

  • A retest of the new low on several commodities in the next few days is possible
  • Talk of lower commodity prices to further hurt export economies (AUS / NZD / BOC) further easing expected?

Outlook: No reversal as of yet and expect further bout of weakness but look out for bargain hunters

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

Watch list

USD index

Price action is converging tighter while resistance of April swing low still there. Only a break above will clear the air for more upside potential. More rooms to the upside as price is stalling but not looking exhausted as of yet.

German Bund

We remain with the view that Bunds has room to the upside with the upper Bollinger band as potential target of resistance. Can it break above previous high of 154.22? possible yes and break higher to 50% fib and 200 ma coming in as confluence where we look to setup a short.

Copper

Price bounced from 61.8% of the low to high but price could due to face resistance of the downtrend line (orange) and the 20 MA as potential resistance. With China added stimulus, we could see some relief stock piling but we are cautious that the selling may not be over yet. Bounce is selling opportunity.

German Dax

Gaps below remain unfilled and we will not rule out at least 2 out 3 gaps should be filled but on this weekly chart a potential retracement to 319 and a rebound is possible.

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