Inter Market Analysis – 6th August

Risk On

  • European equities shore higher – better German Factory orders
  • With Dollar rate hike imminent = Weaker Euro = Stronger EZ equities = Higher Bunds
  • US ISM non-manufacturing PMI came in better than expected
  • Asian Shares – Nikkei closed up while the rest languished on

Risk Off

  • Rio Tinto profit slumps – talks on improving efficiency and cut backs
  • China banking regulator estimated bad debt jumped 35.7% since last year
  • Australia unemployment jumped
  • Apple Disney debacle – but entering strong support zone soon
  • Standard Chartered profit tumbled
  • Oil firms fear continued slump could negatively affect the industry
  • UK Housing Halifax survey fall in July
  • Commodities sector remain in danger of further weakness with China languishing
Tomorrow employment numbers PRICED IN yet for better numbers already? Stay cautious of a potential fake high in the dollar index.

US equities seasonality at play but OPEX could change for the better. European equities are faring better with QE induced programme – prospect of weaker EURO if US rate hike – but with China suffering – how do we justify a better equity numbers in the coming days or weeks?

Multi Time Frame Analysis

USD index

Daily

4 hour

Dollar index continue to stay strong – well above the 20 ma on the back of a strong possibility of a September rate hike. We are cautious if the dollar index may have priced in a better NFP numbers out for tomorrow. We maintain the view that the daily RSI divergence is a concern but as long as the dollar is being bought with no alternative, then dollar will continue to reign.

German Bund

Daily

4 hour

The Bunds is certainly giving mixed signs as to a risk on or off scenario. Here we have the Bunds pulling back while the Euro continue to whipsaw between support and resistance – all thanks to the dollar strength. Simply looking at the Bunds, a daily break and close below the 20 ma will get us to target the 76.4 Fib at 150.78 where we look to enter a potential swing long.

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

At the moment, Euro found support – a higher low from the purple trend line that has been tested 4 times and if this breaks below then things will get ugly quick. Only a break above the red trend line (see daily) will give Euro a boost higher – all eyes on the dollar index –Bunds has head lower (an early signal?) NFP data will determine the next directional play.

German Dax

Daily

4 hour

Run up on EZ equities because of dollar imminent rate hike = Lower Euro = Higher DAX. However, we note dollar index into resistance so will keep an eye on it. We will not discount out the possibility for one more move up to hit PRZ at 700-730 levels.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s