Asian Indices:
- Australia's ASX 200 index fell by -22.2 points (-0.31%) and currently trades at 7,028.80
- Japan's Nikkei 225 index has fallen by -621.66 points (-1.92%) and currently trades at 31,694.33
- Hong Kong's Hang Seng index has fallen by -75.77 points (-0.43%) and currently trades at 17,737.68
- China's A50 Index has fallen by -86.65 points (-0.71%) and currently trades at 12,162.35
UK and Europe:
- UK's FTSE 100 futures are currently up 23 points (0.3%), the cash market is currently estimated to open at 7,622.60
- Euro STOXX 50 futures are currently down -1 points (-0.02%), the cash market is currently estimated to open at 4,135.12
- Germany's DAX futures are currently down -3 points (-0.02%), the cash market is currently estimated to open at 15,183.66
US Futures:
- DJI futures are currently up 30 points (0.09%)
- S&P 500 futures are currently up 8.25 points (0.19%)
- Nasdaq 100 futures are currently up 40 points (0.26%)
- The Middle East conflict remains very much in focus for investors to see if it escalates to the point that other countries from across the region get involved
- It comes at a crucial time for central banks who are trying to fight inflation, because the knock-on effect for oil prices could potentially drive another round of higher prices when interest rates are already at multi-year highs
- Gold has pulled back from Friday’s highs after posting its best day’s performance in percentage terms in six months, but such extreme moves tend to beckon mean reversion – especially on Monday’s with little economic data scheduled in Asia
- We have also seen stock market index futures rise, but these are the hallmarks of mean reversion over a mild risk-on bounce
- NZD/USD was the strongest forex major during Monday’s Asian session, after Conservative Christopher Luxton ousted Labour government over the weekend and is perceived to be more business friendly
- AUD/USD also tracked it high, although with both NZD/USD and AUD/USD holding just above key cycle lows on Friday then it seemed both were set for at least a mild sympathy bounce over the near-term
Events in focus (GMT+1):
- 07:00 – German WPI
- 08:30 – ECB’s Enira speaks
- 09:00 – China’s foreign direct investment
- 09:30 – BOE deputy governor Woods speaks
- 09:30 – BOE MPC member Pill speaks
- 13:30 – NY empire state manufacturing sales
- 15:30 – BOE deputy governor Woods speaks
- 15:30 – FOMC member Harker speaks
- 15:30 – BOC business outlook survey
FTSE 100 technical analysis (daily chart):
The FTSE 100 has been making hard work for trend traders for most of the year, but it has provided some decent swing trading opportunities on the daily chart. It has been ranging between the March low and July high since July, and recent candles on the daily chart are showing a hesitancy to retest the September high, and has found resistance at the June high.
From here, we prefer to fade into minor rallies whilst prices remain beneath 7690 and to target the 7550 area, near the 200-day EMA. If risk aversion spreads and weighs meaningfully on global indices, a move towards 7400 could be on the cards.
EUR/USD technical analysis (daily chart):
Last week I highlighted the importance of the resistance area around 1.0630, near the bearish trendline and cycle lows. It worked a charm as resistance for bears to load up following a stronger-than-expected US inflation report, although the resulting selloff saw prices hold above the January low heading into the weekend. Prices are recycling high, and perhaps the upside can stretch further over the near-term. From here, I’d prefer to seek evidence of a swing high on the 1 or 4-hour chart at higher prices, and can seek potential setups around trend resistance 1.0580 or 1.0600. This could allow the reward to risk ratio to improve for bears for a potential move back to the January low, 1.0450 or 1.0400.
View the full economic calendar
-- Written by Matt Simpson
Follow Matt on Twitter @cLeverEdge
