Finally, after more than a week’s delay, the S&P 500 has burst through its resistance in February against the peak time. The move came with encouraging news flow about COVID treatment (US FDA allowing a plasma treatment of patients with the virus) and potential use of vaccinations in the US (although this has not been confirmed). In addition, the news that top-level telephone conversations between U.S. and Chinese trade leaders over developments in Phase One of the trade agreement were encouraging. As Wall Street takes into account new highlights all the time, there is a positive attitude towards risk appetite in the major markets. This is reflected in a move that is higher in US government interest rates and a subdued outlook for gold. Although the US dollar is a weaker shade today, there is a sense of consolidation across major forex pairs. Missing big this week is a speech by Fed Leader Jerome Powell, which could define the path of monetary policy in the months and possibly years to come. While there are some interesting data points in the coming days (US consumer confidence today), it is unlikely that traders will take too much of the view ahead of such an important speech. We therefore see that EUR / USD is gravitating around 1.1800, cable around 1.3100 and Dollar / Yen around 106, all of which are old revolutions. This sense of consolidation is also across gold and silver again. Despite this, however, the stock association seems to be continuing today.
Wall Street closed resolutely higher with S&P 500 + 1.0% at 3430 and far into all highlights. It does not seem to stop there, with futures ticking even higher today (E-mini S & Ps + 0.4%). The Asian markets were largely higher with Nikkei + 1.4% men Shanghai Composite was -0.4%. European markets also seem to be fair FTSE futures + 0.4% and DAX futures + 0.7% early today. IN forex, helps the risk-positive vibe EUR and British pound rebound slightly while AUD also works well. Once again we see NZD as the main feature. IN raw materials, gold and silver acts simultaneously with the flat line oil is also mixed.
There is a link of US data points on financial calendar today, but the key data starts with German Ifo business climate at 0900BST. Ifo for August is expected to improve to 92.2 (from 90.5 in July). This is expected to be driven by improvements in both Current conditions component (to 87.0 from 84.5) and Expectations component (to 98.0 from 97.0). Then into the US session, the data begins S&P Case Shiller House Price Index which is expected to improve to + 3.8% in June (from + 3.7% in May). US Conference Board Consumer confidence is at 1500BST and is expected to improve in August to 93.0 (from 92.6 in July). Enjoy home sales also at 1500BST an improvement of + 1.3% is expected to 785,000 in July (from 776,000 in June). The final data will be noteworthy as regional Fed surveys have tended to falter in August and come up with negative surprises, with Richmond Fed Composite Index is expected to remain at +10 (+10 in July).
Daily overview – EUR / JPY
The outlook for the euro rally has reached an important turning point, and this is well reflected in the Euro / Yen. After six consecutive losses, Friday’s low was almost all the way up to the old key breakout level of 124.40. However, it seems to have been supportive and builds on this yesterday with a (mild) positive candlestick, as a basis for support between 124.30 / 124.40 holds on now. The bulls may have been disappointed that a five-week uptrend has been broken, but a major 15-week uptrend stemming from early May is still intact (today at 124.25) and adds support around 124.40 . However, the bulls have to work hard as a mini-week downtrend is intact (at 125.45 today) and short-term momentum indicators are mixed. Stochastics and MACD lines pull lower while the RSI has to hold above 50 to maintain otherwise the corrective outlook with overall force. Currently, this is a short-term correction within a bull trend in the medium term. However, how the market reacts around 124.25 / 125.40 in the coming days will determine whether this is a buy option or not. At present we still have a positive view of the euro, but the bulls have to work hard now. A crucial close below 124.25 opens a step back towards 122/123 and seriously questions the bullfight. Keeping 124.40 is important, and a crucial step above 125.55 would help regain bull trust for a 126.75 genetic test.
Burnt crude oil
After a series of disappointing closures at Brent Crude, a decisive and solid session of wins has started the week on the right note for bulls. A move that has boosted support at $ 43.60 / $ 43.90 has helped improve declining momentum as Stochastics and MACD stabilize and the RSI holds in the mid / high 50s. It appears to be stabilizing what had threatened to be a corrective operation, which had threatened to pull the market significantly below the 21-day moving average, which has been a basis for support for the recovery (rose today around $ 44, 60). The bulls now have to put together a series of positive sessions to get their confidence completely restored, and an early cross higher today is a good start. They are therefore keeping an eye on last week’s response of $ 45.55 as the first resistance to testing. In addition, the $ 45.80 / $ 46.25 barrier remains the key movement. The time card shows initial support of $ 44.30 / $ 44.75.
Dow Jones industrial average
Breakout in the major Wall Street markets. With the S&P 500 bursting to new highs, we see the Dow accelerating higher. A third positive close to the row and a decisive step through resistance at 28,155 brings the Dow to its highest level since February. The move looks strongly configured technically with the use of June breakout support around 27,580, leaving good support now in a band 27,525 / 27,580. Momentum is strong with the Stochastics crossing higher and the RSI into the 70s to reflect a strength in the trend. The next test is finally to “close” the old February bear column of 28,400 / 28,890. This movement has similar characteristics to the previous early August rally, which came after a period of weak consolidation that got lower. This move released a series of seven crucial positive closures. We seem to use intraday weakness as an opportunity to buy. First breakout support comes in at 28,000 / 28,155. The full-time peak of 29,568 should not be ruled out over time, although there is likely to be another corrective phase before that.
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