After Fed cuts its interest rate, the global risks rise.
The rise in global trade risks came as equity markets around the world fell and bond yields fell, suggesting the Fed was looking to cut rates further. Panic spread, with the VIX, the fear index, rising to 21.48 of its highest since May 9, and the yield on 10-year us treasuries at its lowest in more than two-and-a-half years.
In the US, key non-manufacturing PMI data for July came in weaker than expected. Specific data showed that the ISM non-manufacturing PMI actually reported 53.70 in July, with 55.5 expected compared with the previous reading of 55.1. The ISM non-manufacturing PMI index in the US in July hit its lowest level since August 2016. Separately, the ISM's index of non-manufacturing new orders fell in July to its lowest level since August 2016.
Dollar index continued to slide to 97.50 after the support level to its lower support in the K line 200 average daily lines 97.00 integer near the barrier. The above short-term pressure is in the 98.00 line.
The euro continued to rally on the back of a sharp pullback in the dollar index, while a steady improvement in euro zone service sector PMI data in July also tempered market expectations of excessive easing by the European central bank, further contributing to the euro's strength. ECB executive board member Ewald Nowotny went out of his way to say he did not see an urgent need for the ECB to restart QE just yet.
The EUR/USD from the lowest point 1.1026 after three consecutive rallies closed positive, currently blocked at the 1.1200 level. The above short-term pressure is at 1.1250, then above the pressure level is near the 200-day average of 1.1300.The below short-term support is at 1.1150 around.
Global trade risks rose further as demand for safe-haven assets strengthened, with the yen surging for a third straight day to a seven-month high. In addition, trade frictions between Japan and South Korea are escalating and are expected to hit stock markets, although Japan's top foreign exchange official said he was prepared to act against excessive volatility in the yen, analysts said the BOJ's action was likely to be limited.
The dollar yesterday hit its second low of the year against the yen at 105.78 before recovering, with support below the 105.00 round mark and pressure above the 107.00 line.
XAU/USD
Spot gold prices is nearly in 75 months high 1469.67, due to the onshore prices fall to a new low in more than 11 years, around the trade tensions sharply rising concern increasingly intense. US-China trade confrontation facing potential upgrade at the same time, also do not forget to trump knocking on Europe, unease spread further to trade. Many investors have turned to gold, safe-haven assets such as treasuries.
Yesterday, the gold price fell back to the high, below short-term support is around 1453.Then below support is at 1440, if breaking a new high can see as high as 1480 line.
USO/USD
New York crude oil tumbled yesterday, hitting a low of 54.22, before closing at the 55 level, weighed down by renewed concerns about global growth. After President Donald Trump announced he would impose tariffs on more Chinese imports that could damp demand for fuel in the world's two largest economies.
New York crude oil support is still at the 54 level, the above short-term pressure is in the 56 line, and above the pressure in the 200-day average of 56.70.
Author
Ray Shen
CPT Markets
Graduated from Canada TRU university of finance department, national golden trader; Engaged in financial industry for more than 10 years; Served as a staff writer of many networks, magazines and media; Invited as guest lecturer fo
