- The BOE Governor Andrew Bailey played down the potential for negative interest rates for the UK, effectively ruling them out in the near future. GBP pairs mostly finished flat for the session although GBP/CAD lost notable ground near the session’s end.
- Fed Chair Jerome Powell spoke in front of the House panel and retained his view that more fiscal stimulus from the government is required. Indices initially dipped when he said the economic recovery had a long way to go.
- RBA’s Assistant Governor said yesterday that they expect unemployment to rise above 6.8%. Whilst AUD is “broadly aligned with fundamentals”, a lower currency would benefit the economy. They are closely watching the exchange rate and FX intervention remains an option.
- Led by the Nasdaq 100, US indices posted a rebound from last week’s lows. The USD remained firm and sent EUR/USD, GBP/USD, AUD/USD and NZD/USD.
- Gold closed just below the critical 1900 support level – although not quite enough to call it a comfortable breakout.
- RBNZ are expected to hold rates steady for a fourth consecutive meeting today.
- Markit Flash PMI’s for Europe, UK and US could help sway sentiment. Given the large losses sustained by equity indices, a strong data set could help revive a risk-on tone and help support indices. Conversely, disappointing numbers could weigh on risk-sentiment (Particularly if any of the headline PMI numbers go below 50).
DJIA (US30): Seeking Its Next Leg Lower?
- Bearish momentum saw prices break beneath the bearish trendline and prices have retraced from their recent lows.
- Bears could seek to fade into (short) around or below resistance levels such as Fibonacci levels (blue), broken trendline (black) or the weekly and monthly pivot point resistance zone.
- Bearish targets could include the recent lows and weekly/monthly pivot support levels.
GBP/CAD: Bearish Outside Candle on the Daily Chart
- Bears are clearly back in control and prices may retest (or even break below) the 1.6750 lows.
- Two lower highs have formed since the July high and bearish momentum is increasing.
- Bias remains bearish below the resistance zone. Bears could seek to fade into rallies within yesterday’s range or enter a break beneath yesterday’s low.
EUR/JPY: Consolidation at the Lows
- After reaching the bearish target, prices are now consolidating around this key area of support.
- As the trend remains bearish, a downside break appears more likely. In which case bears could target the lows around 121.80.
- However, if bullish momentum moves higher, counter-trend traders could try to target resistance around 124.30/43.
USD/CAD: Bias remains bullish above 1.3250. A small bearish hammer shows a hesitancy to push higher, which is good, as we wanted prices to consolidate above the 1.3250 breakout level before reconsidering longs.
Nasdaq 100 (USTEC): Mean reversion is underway as prices broke above the bullish hammer highlighted yesterday. The bias remains bullish above the hammer low, although a close beneath 10,900 would also be undesirable.
EUR/GBP: Prices have broken above Friday’s high in line with our bullish bias. However yesterday’s wide Doji warns of a hesitancy to push higher. A break beneath yesterday’s lows invalidates the bullish bias.
CHF/JPY: H4 trend remains bearish, and the potential for a fall to 110 remains. However traders may want to trail their stops lower to lock in any profits if short.
CAD/CHF: Removed from watchlist. Yesterday’s bullish engulfing candle warns of a failed break (bear-trap).