Inter Market Analysis – New Format

Risk On

  • Asian shares inched higher for Friday but post a loss for the month
  • Dollar index hit a possible triple top – Is this temporary or a top is in?
  • US GDP growth was revised higher for Q1 and Q2 growth came in below expectation but it is still growing
  • Grexit under the carpet for now – Tsipras fighting local battle
  • Dollar strength continues on the back of an imminent rate hike – this is not priced in yet?
  • Pre-election euphoria on recovering economy such as Spain and Ireland

Risk Off

  • Japanese economic data shows a drop in household spending – inflation in danger? Will BOJ do more easing?
  • Japanese economic data shows a rise in June jobless rate – slowdown in the economy?
  • Chinese authorities go the extra length to clamp down trading accounts that have abnormal bids – no more spoofing?
  • Imminent rate hike by the Fed – rate hike tantrum has not set in yet?
  • Has the global economy priced in the potential impact of Chinese equity rout?
  • Puerto Rico nears default as debt restructuring beckons
  • Commodities continue to struggle – gold propelled higher with the dollar but closed lower
  • New Zealand business confidence is at -15.3 against previously -2.3 – need more easing?
  • Australian PPI QoQ comes in lower but YoY is higher
  • German Retail sales comes in lower MoM
End of the month book squaring and positioning for August – market priced in all the negative news – market favour a risk on approach?

Multi Time Frame Analysis

USD Index

Daily

4 hour

Daily chart shows a persistent dollar bull – any setback is a buying opportunity on the promise of an imminent rate hike. Watching how the RSI has begun diverging as well . One would have thought that this has all been priced in? 4 hour chart shows a potential triple top formation.

German Bund

Daily

4 hour

Lower time frame has signalled an RSI divergence but the daily price momentum continue to grind higher within this ascending triangle. We cannot rule out that this action could continue but are aware that the daily resistances are coming to play – confluence of resistance such as upper Bollinger band, 100 and 200 ma as well as a potential double top.

If Bunds come to resistance, expect EUR/USD to come to support and potentially a viable trade to long Euro if and when dollar hit resistance and create a swing high failure.

Eur/Usd

Daily

4 hour

Daily chart shows a strong support area for Euro to bounce and continue to trade within an ascending triangle pattern. The 4 hour structure will need to break above the red channel line to retest higher. With the dollar and bunds at resistance, the Euro may look favourable again.

Dax

Daily

4 hour

Resistance stands at 20 ma and the 50% fib from last week high to this week low. A potential bear flag formation and a break below will target the lower daily Bollinger band for a potential support and a double bottom formation.

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