- Australia's ASX 200 index fell by -21.2 points (-0.3%) and currently trades at 6,955.30
- Japan's Nikkei 225 index has risen by 26.54 points (0.08%) and currently trades at 32,594.65
- Hong Kong's Hang Seng index has fallen by -24.46 points (-0.14%) and currently trades at 17,178.80
- China's A50 Index has fallen by -94.13 points (-0.78%) and currently trades at 11,945.43
UK and Europe:
- UK's FTSE 100 futures are currently up 4 points (0.05%), the cash market is currently estimated to open at 7,364.55
- Euro STOXX 50 futures are currently up 7 points (0.17%), the cash market is currently estimated to open at 4,204.36
- Germany's DAX futures are currently up 4 points (0.03%), the cash market is currently estimated to open at 15,238.39
- DJI futures are currently down -122 points (-0.36%)
- S&P 500 futures are currently down -20.5 points (-0.46%)
- Nasdaq 100 futures are currently down -81.5 points (-0.52%)
Events in focus (GMT):
- 06:00 – Japan machine tool orders
- 08:00 – China new loans, outstanding loan growth, total social financing, M2 money supply
- 08:15 – ECB's De Guindos Speaks
- 10:00 – EU Economic Forecasts
- 11:55 – BOE Breeden speaks
- 12:00 – OPEC monthly report
- 13:45 – BOE MPC member Pill speaks
- 13:50 – Fed Cook speaks
- 17:45 – Fed Goolsbee Speaks
Markets took Moody’s downgrade within stride at the market open, most likely because it doesn’t really come as a surprise when you look at their reasoning. And I think the more pressing issue is whether the government will default. But if history is anything to go by, the debt ceiling will be raised at the 11th hour and the can is kicked further down the road once more.
We have a slew of Fed speakers this week, and there’s a decent chance they might stick to Powell’s script and dangle the threat of higher rates. And that could further support the US dollar and yields, unless US inflation comes in softer than expected tomorrow. But even if we’re treated to a softer CPI print, the Fed are likely to continue to push back against hopes of rate cuts. As it’s not in their interest to even think about cutting rates, let alone mention it whilst inflation remains above target.
USD/JPY rose to a 13-month high late in the Asian session, which takes it to within 16 pips beneath the October 2022 high which formed when the BOJ last intervened. Whilst there have been some comments from officials in recent weeks, they have remained surprisingly quiet during its recent rise towards 152. Perhaps that is because the volatility is lower compared with the rally heading into the October 2022 high.
GBP/USD technical analysis (4-hour chart):
GBP/USD retraced for four days last week, and its retracement pulled back into a support zone I’ve been monitoring around 1.22. The area is significant as there was high levels of volume around 1.22 just before prices broke higher, and in theory traders long at that level may try to defend their current position or even add to them and support prices for a move towards the monthly R1 pivot / 1.23. A small bullish hammer formed on the 4-hour chart on Friday and a bullish RSI formed on the RSI (2). So it at least appears to be trying to carve out a swing low. Take note that two members from the BOE and Fed (four in total) are speaking today, ahead of tomorrow’s key CPI report for the US.
DAX technical analysis (4-hour chart):
The DAX has rallied around 5% since its October low, yet with prices meeting resistance around the 200-bar EMA (4-hour chart and the monthly R1 pivot, I’m on the lookout for a swing trade short and for prices to potentially head towards 15k. Obviously it is a big round number, but gap support and the monthly pivot point are also in the area to provide potential support should momentum turn lower.
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