Revising Economic Growth – Inter Market Analysis

Risk On

  • Asian equities faring better
  • China to celebrate WW2 commemoration – government promised stimulus stabilise China stock market above 3000 levels
  • Mild positive start to European shares – Overnight flush and pump higher
  • Japanese largest whale consider moving from bonds to equity
  • Thursday ECB press conference – talk of additional QE?

Risk Off

  • Canada refused to admit recession
  • Australia poor GDP data surprises some but potentially RBA look to do more easing
  • Lagarde admit spillover of market turmoil exist
China away for 2 days – Global equities to recover in their absence? All eyes on ECB press conference – US Jobless claim and NFP data that determine Federal Reserve stance

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

The dollar daily price action shows that it found support at 20 dma and bounced higher. We cannot rule out a test higher from here as the daily ascending triangle formation is still valid. This is despite the fact that the 4 hour chart is showing a slight RSI divergence. Certainly one to keep watch as the market will have Jobless claim data tomorrow and NFP Friday to digest with.

German Bund

Daily

4 hour

With the ECB press conference tomorrow, Bunds price action may stall for a post ECB directional play. We maintain the view that current price action is in support but not ruling out a retest lower again.

Eur/Usd

Daily

4 hour

It remains a possibility that we could see a head and shoulder formation in the Euro but it is a hard one to call as the daily Mas are converging higher for a so called bullish cross over. The price action remains favourable with higher low but currently consolidating. The 4 hour chart is now an ascending wedge formation and with that in mind, we see further risk to retest lower first.

German Dax

Daily

4 hour

Weakness after Europe closes meant that buyers are not confident to hold on their position overnight. We also witness a washout before the US close – extending losses (stop hunting) before price regained higher during Asian trading sessions. After the black Monday we have seen 4 days of recovery followed by 3 days of selling. Has the selling abated pre ECB press conference?

Gold

Daily

4 hour

Gold remains well bid within this rising channel. Daily chart remains bullish as price trade above 20 dma and in a rising trend line. Only a break below will instigate further selling but with the market heavily positioned short, this rally may last despite a stronger dollar. Dips are still being bought here and this could continue until price breaks away from the channel.

Silver

Daily

4 hour

With China away on holiday-will industrial metal suffer from the lack of news? Silver price action remains weak and a retest lower is still possible. Right above, there are various resistances and only a break and close above 20 dma will give us that confidence for higher prices.

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