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Nikkei 225 Aims For 2018 Lows, S&P 500 May Gap Down as Yen Gains

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Asia Pacific Market Wrap – Trade War Fears, Risk Aversion, Nikkei 225, Japanese Yen

  • Asia Pacific stocks echo market pessimism amidst US-China trade war relief pessimism
  • Nikkei 225 heads for worst performance in about 6 weeks, 2018 lows may be on horizon
  • Wall Street likely to gap lower as anti-risk Japanese Yen gains. All eyes on OPEC meet

Check out our 4Q forecasts for equities in the DailyFX Trading Guides page

As anticipated, Asia Pacific benchmark stock indexes traded broadly lower following weakness in yesterday’s European trading session. Generally, market optimism has been taking a hit in what has been interpreted as a rather underwhelming G20 Leaders’ Summit this past weekend. An inversion in the US yield curve on certain maturities have also weighed against sentiment.

To add more complications to the political front, the Chief Financial Officer of Huawei, a major Chinese tech giant, was arrested for potential violations of US-Iran sanctions. China’s Shanghai Composite traded about 1.50% lower as this seemed to have ignited more US-China tensions. But, the damage to equities was not isolated to the world’s second largest economy.

Japan’s Nikkei 225 traded about 2.53% lower heading towards Thursday’s close, undermined by all sectors. Such an outcome would result in the index’s worst performance over the course of one day in almost six weeks. Meanwhile, Australia’s ASX 200 headed about 0.19% lower, weighed down by materials and financials. South Korea’s KOSPI declined roughly 1.6%.

Looking at currencies, the anti-risk Japanese Yen and Swiss Franc outperformed against their major counterparts. Meanwhile the pro-risk Australian and New Zealand Dollars depreciated. The haven-linked US Dollar, thanks to its world reserve currency status, rose as demand poured into local government bond yields.

US stocks were closed on Wednesday, but S&P 500 futures are now pointing considerably lower (-1.2%). This suggests that market pessimism may continue to reverberate into European stocks and that Wall Street is likely to gap lower. Sentiment-linked crude oil prices are continuing to come under pressure following mixed views on how OPEC may treat 2019 output cuts while US President Donald Trump favors lower prices.

Speaking of, the 175th OPEC meeting in Vienna is taking place over the remaining 24 hours. The Canadian Dollar may get a sigh of relief after yesterday’s less hawkish BoC rate announcement if higher oil prices might be in the cards next year. Otherwise, sentiment-linked currencies such as the AUD and NZD may continue experiencing selling pressure as the anti-risk Japanese Yen pulls further ahead.

Nikkei 225 Technical Analysis

With recent weakness in the Nikkei 225, the index now finds itself sitting squarely on a rising support line from late October. This is after failing to push above a horizontal range of resistance between 22,698 and 22,486. A push through support exposes the October low which is also closely aligned with levels achieved in mid-February and early March at 20,950. Falling through that opens the door to testing the current 2018 low at 20,347.

Nikkei 225 Daily Chart

Nikkei 225 Aims For 2018 Lows, S&P 500 May Gap Down as Yen Gains

Chart created in TradingView

FX Trading Resources

— Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter



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Gold Price Rally Primed For a Fed Boost, Silver Price Struggling

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Gold (XAU) Price, Silver (XAG) Price Analysis and Chart

  • Global risk sentiment remains, interest rates look set to go lower.
  • FOMC minutes on Wednesday, Fed chair Powell speaks at Jackson Hole on Friday

Q3 2019 Gold Forecast and Top Trading Opportunities

Gold Remains Underpinned and Ready to Move Higher

Gold remains bid and underpinned around current levels and is looking for the next bullish impulse to send it through its recent multi-year high. Risk sentiment, one of gold’s main drivers, remains with US-China trade talks still not confirmed, while in Hong Kong, mass protests continue, and these may well be a hot topic of discussion between the US and China. On Wednesday the latest FOMC minutes, while on Friday, Federal Reserve Chairman Jerome Powell will speak at the Jackson Hole Symposium and he may well give further insights into the central bank’s thinking around the next round of US interest rate cuts. Any hint of that the Fed wants to get ahead of the curve and cut rates aggressively will push gold higher.

The daily gold chart suggest further short-term consolidation as the market unwinds its recent heavily overbought bias. There are a few recent lows between $1,487/oz. and $1,503/oz. that will support gold in the case of any sell-off, while to the upside, $1,520/oz. before $1,528/oz. and $1.535/oz. If this latter level is broken and closed above, then $1,540/oz. is the next upside target.

Gold Price Daily Chart (January – August 19, 2019)

Gold Price Rally Primed For a Fed Boost, Silver Price Struggling

IG Client Sentiment data show that 62.3% of retail traders are net-long of gold, a bearish contrarian indicator. However, recent daily and weekly positional changes give us a stronger bearish contrarian trading bias.

How to Trade Gold: Top Gold Trading Strategies and Tips

Silver Price Struggling Around Multi-Month Highs

Silver is stuck in a short-term downtrend after hitting $17,51/oz. last week when the commodity space rallied. Since then, silver has made a series of lower high and lower lows and if price breaks below $17,00/oz. then the August 8 and 12 double low at $16.80/oz. will be tested. Below here, the 61.8% Fibonacci retracement at $16, 57/oz. should provide strong support. Silver has moved out of overbought territory and will likely remain in lock-step with the price of gold.

The gold/silver ratio remains stable around 88.60.

Silver Daily Price Chart (August 2018 – August 19, 2019)

Gold Price Rally Primed For a Fed Boost, Silver Price Struggling

How to Trade Silver: Top Trading Strategies

Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.

What is your view on Gold and Silver – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author at nicholas.cawley@ig.comor via Twitter @nickcawley1.



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Gold, Crude Oil Prices Eyeing FOMC and ECB Minutes, Jackson Hole

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Gold, Crude Oil Prices Eyeing FOMC and ECB Minutes, Jackson Hole

Crude oil, gold price performance chart created using TradingView

GOLD & CRUDE OIL TALKING POINTS:

  • Gold price technical positioning hints at pullback brewing ahead
  • Crude oil prices idling near $55/bbl as risk trends await catalyst
  • FOMC and ECB meeting minutes, Jackson Hole in the spotlight

A risk-on mood broadly prevailed across global financial markets Friday. Cycle-sensitive crude oil prices edged higher alongside stocks. Treasury bond yields also rose as capital moved away from haven assets, undermining the appeal of non-interest-bearing alternatives and weighing on gold. The anti-risk US Dollar and Japanese Yen likewise declined.

From here, a slow start to an otherwise action-packed week might see key assets idling as traders withhold conviction before forthcoming event risk. Minutes from July’s FOMC and ECB meetings as well as the Fed’s Economic Policy Symposium due to kick off Thursday in Jackson Hole, Wyoming will probably take top billing. Political turmoil in Italy also warrants attention.

With slowing global growth top-of-mind for investors, scope for incoming monetary stimulus expansion is a critical consideration. The ECB is widely expected to ease next month, but its preferred delivery strategy is unclear. As for the Fed, the markets are priced for 75bps in additional rate cuts before year-end. Such robust hopes may be disappointed by a more reserved central bank, souring risk appetite anew.

Get our free guide to help build confidence in your gold and crude oil trading strategy!

GOLD TECHNICAL ANALYSIS

Gold prices are treading water below the monthly swing high at 1535.03. Negative RSI divergence warns of ebbing upside momentum, hinting that a pullback might be in the cards. A break below initial support at 1480.00 exposes the 1437.70-52.95 zone. Alternatively, a push above resistance aims for a weekly chart inflection level at 1563.00.

Gold, Crude Oil Prices Eyeing FOMC and ECB Minutes, Jackson Hole

Gold price chart created using TradingView

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices continue to mark time near the 54.72-56.09 congestion area. Resistance defining the near-term bearish bias is now at 58.48, with a daily close above that targeting the 60.04-84 zone next. Critical support is clustered around the $50/bbl figure. Breaking below that sets the stage for a descent to challenge three-year lows just above the $42/bbl mark.

Gold, Crude Oil Prices Eyeing FOMC and ECB Minutes, Jackson Hole

Crude oil price chart created using TradingView

COMMODITY TRADING RESOURCES

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter



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US Dollar May Rise vs Nordic FX From Trade Wars, FOMC Minutes

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NORDIC FX, NOK, SEK WEEKLY OUTLOOK

  • US Dollar may rise vs Nordic FX amid trade wars, FOMC minutes, Italian politics
  • Critical data out of the Eurozone and US may exacerbate growing recession fears
  • Commentary from officials at Jackson Hole symposium could induce risk aversion

See our free guide to learn how to use economic news in your trading strategy!

The US Dollar may extend gains vs Nordic FX if growth concerns continue to pressure cycle-sensitive currencies and redirect capital to anti-risk assets. US-China trade tensions appear to be escalating against the backdrop of growing political uncertainty in Italy. Recessionary fears may be exacerbated this week from the release of the FOMC meeting minutes and commentary from officials at the Jackson Hole symposium.

Financial Markets Brace for Deteriorating US-China Trade Relations

Early into Monday’s Asia-Pacific trading hours, US President Donald Trump held a press conference and said he was not ready to make a trade deal with China and that Huawei posed a threat to national security. Furthermore, he also said reaching a trade agreement with Beijing may be more difficult if the violence amid the protests in Hong Kong continues. Greater friction will likely continue to erode market sentiment.

FOMC Meeting Minutes: Will the Transcript Simply Re-Emphasize the Market’s Worse Fear?

As outlined in my weekly US Dollar forecast, the Greenback may rise at the expense of equity markets when the FOMC meeting minutes are released. The prospect of cheaper credit has remained a key factor buoying investor sentiment as the fundamental outlook continues to dim. What the minutes will likely show is just a more detailed message from the last meeting by Fed Chairman Powell: The Fed is not as dovish as you think.

Jackson Hole Symposium May Pressure Nordic FX if it Exacerbates Global Growth Fears

Fears about the prospect of a recession gained momentum last week after a number of recessionary signals began to sound the alarm. Commentary from officials at the symposium may exacerbate global growth fears and could pressure export-oriented currencies like the Swedish Krona and Norwegian Krone. However, amid the uncertainty and search for liquidity, the US Dollar may catch a haven bid.

G7 Summit Will be Closely Eyed by Investors Amid Rising Geopolitical Tensions

Traders will be closely monitoring the G7 Summit this week in Biarritz, France from August 22-24. Given the current state of rising geopolitical tensions around the world, looking for key developments at this conference will be crucial. Some key topics will include Facebook’s Libra cryptocurrency, US-China/EU trade and discussing the replacement of IMF chief after Christine Lagarde transitions to her post as ECB president.

ECB Minutes May Spook European Markets Despite Prospect of Stimulus

The publication of the European Central Bank’s meeting minutes is expected to carry dovish undertones after central bank president Mario Draghi said monetary authorities are entertaining QE and rate cuts. However, optimism about the prospect of cheap credit may be overwhelmed by gloomy undertones if the overall message of the transcript is prevailing conditions are so severe that they require stimulative policy measures.

A Chilling Outlook for European Growth

Chart Showing German PMIs

Italian Political Uncertainty May Sap Confidence, Weigh on Nordic FX

Political volatility out of Italy will likely sap confidence in European markets and pressure the sentiment-linked Krone and Krona. The Riksbank has repeatedly cited political risk out of the EU as a key source of uncertainty. Deputy Prime Minister Matteo Salvini will attempt to consolidate power and break away from his coalition in order to end cabinet infighting and push forward his market-disrupting fiscal agenda.

Critical Data out of EU, US May Induce Risk Aversion

Traders will also be watching the release of key US and EU economic data. The more notable ones include Eurozone inflation, flash PMIs and consumer confidence, US manufacturing PMIs and new home sales reports. A poor reading from these indicators will likely only strengthen the case for central banks to adopt accommodative monetary policy measures and will likely send a chilling message to Nordic FX markets.

SWEDISH KRONA, NORWEGIAN KRONE TRADING RESOURCES

— Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter



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