Ring of Debts – Inter Market Analysis

Risk On

  • Qantas in profit – business expansion underway
  • Greece pays ECB on maturing government bond

Risk Off

  • Co-Op banks losses trebled as restructuring continues
  • Tenge floated – dollar rose after USD weakness from FOMC latest statement
  • Safe haven asset continue to rose – with gold, silver, platinum and palladium picking up higher – Oil took a knock further
  • Emerging economies continue to battle with Yuan devaluation – summer lull trading seen investors pulling out their investment in droves
  • China crackdown on corruption after Tianjin blast – dampening demand on luxury goods
  •  US inflation numbers came in soft – condition for rate hike is not there yet
European equities have suffered long streak of selling-gaps above unfilled while there is no certainty a bottom is in – US equities rose higher after a dull FOMC statement but gave up all its gain. Emerging market stock market in the cusp of bear market (point of no return here?)

Extra Stimulus has yet to kick in but wary of the build up to Santa rally

Multi Time Frame Analysis

USD index

Daily

4 hour

As per the write up yesterday, the dollar bull runs for the exit door on the back of an indecisive FOMC statement. Chart damage on the dollar continues and we are not ruling out more weakness in the days to come. Unless the 4 hour chart suggest a potential double bottom, then we can only envisage a retest lower on the megaphone pattern.

German Bund

Daily

4 hour

Bunds continue higher and broke out of the triangle formation. We continue to see limited upside as next set of resistance are at 155.79 and 156.04. The 4 hour chart has a bearish diverging RSI which could well indicate some sort of exhaustion. We might see a push higher before a reversal here. Appreciation in EUR/USD has certainly spin a higher bund prices – safe haven buying?

Eur/Usd

Daily

4 hour

Price action played out with a strong gained after FOMC statement fail to indicate any possibility of raising or not raising rates in September. Euro squeezed higher as the 4 hour chart shows price dipped to order block that has various support zones. The next move for Euro is to consolidate and need to break previous high.

German Dax

Daily

4 hour

Weakness continues for the 7th day and the daily chart has a channel that is playing out with a potential target of 10350 – 10405 levels for a swing long opportunity. The daily chart is damage as price has traded below the 200 ma for 3 consecutive days and outside the lower end of the Bollinger band with a very oversold RSI indicator. We are wary of a potential short squeeze but with Euro lingering ever higher – the inverse relationship remains fuzzy – giving short sellers a slight edge. The extra stimulus from China seems to have a delayed effect.

Gold

Daily

4 hour

Price hit a high of 1142.54 which we marked on our daily chart a week ago. The bull flag did play out as discussed on our previous report. The question now – is it a dead cat bounce and is the current rally sustainable? There are rooms for the metal to test a tad higher but resistance comes in fast at 1150 and then the 100 dma. If the dollar index did managed a double bottom then the upside will be limited on gold advances – will be looking for order block to short.

Silver

Daily

4 hour

Silver found support from the breakout area and ran higher again on the back of a weaker dollar index. There is a potential cup and handle formation on the daily chart – if this plays out then we expect higher silver prices in the near future. However, we will remain cautious and will need confirmation that it can take out previous high of 15.55 levels.

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