Market Brief: Stimulus Hopes Support Risk Appetite

AUD and NZD are today’s strongest major after the release of RBA’s August minutes. Whilst little new could be gleaned from them, the lack of any dovish surprise helped support the Aussie after their release.
Narrow ranges once again overall due to the lack of first tier data. However, a cautious approach is expected ahead of the Jackson Hole symposium and keynote speeches from Central Bank governors.
PBOC Vice Governor Liu says future interest rate policy focus will be on LPR (loan prime rate), and benchmark rates may not be changed over the near-term

Matt Simpson, CFTe, MSTA CityIndex

Ahead of the European session open, most Asian stock markets have continued to inch higher for the second consecutive day on the backdrop of more stimulus hopes from major developed central banks.
The Australia’s ASX 200 and South Korea’s Kospi 200 are the star performers as at today’s Asian mid-session where both indices have rallied by close to 1.00%.
The outperformance seen in the ASX 200 has been led by the energy sector which has gained by 2%. Over at Kospi 200, the energy and technology sectors are leading with gains of 1.87% and 1.43% respectively. In addition, the on-going optimism seen in the South Korean’s stock market has been fuelled by a positive regulatory news flow where the Vice Finance Minister has announced today that South Korea may consider easing market restrictions on share buy-backs, while tightening short-selling rules to stabilise local markets.
The S&P 500 E-mini has inched up higher by 0.21% in today’s Asia session after three days of consecutive gains since last Thurs, 15 Aug. Overall, the U.S. stock market has almost recovered the losses inflicted by the yield curve inversion seen on the 10 year and 2 year Treasuries (US govt bonds) on last Wed, 14 Aug.

Up Next

Germany’s Producer Price Index for Jul where consensus is set at 0.1% m/m, a gain from -0.4% m/m seen in Jun.
German producer prices were flat in the month of June and the YoY% rate is polled to drop to 1% (from 1.9%) to take it to its lowest rate of growth since December 2016.
Late US session sees dairy prices and milk auctions, which puts NZD crosses on trader’s radars.

Author

Matt Simpson, CFTe, MSTA

CityIndex

Matt Simpson is a certified technical analyst who combines charts and fundamentals to generate trading themes.

EUR/USD trims gains, hovers around 1.1900 post-US data

EUR/USD trades slightly on the back foot around the 1.1900 region in a context dominated by the resurgence of some buying interest around the US Dollar on turnaround Tuesday. Looking at the US docket, Retail Sales disappointed expectations in December, while the ADP 4-Week Average came in at 6.5K.

GBP/USD comes under pressure near 1.3680

The better tone in the Greenback hurts the risk-linked complex on Tuesday, prompting GBP/USD to set aside two consecutive days of gains and trade slightly on the defensive below the 1.3700 mark. Investors, in the meantime, keep their attention on key UK data due later in the week.

Gold loses some traction, still above $5,000

Gold faces some selling pressure on Tuesday, surrendering part of its recent two-day advance although managing to keep the trade above the $5,000 mark per troy ounce. The daily pullback in the precious metal comes in response to the modest rebound in the US Dollar, while declining US Treasury yields across the curve seem to limit the downside.

XRP holds $1.40 amid ETF inflows and stable derivatives market

Ripple trades under pressure, with immediate support at $1.40 holding at the time of writing on Tuesday. A recovery attempt from last week’s sell-off to $1.12 stalled at $1.54 on Friday, leading to limited price action between the current support and the resistance.

Dollar drops and stocks rally: The week of reckoning for US economic data

Following a sizeable move lower in US technology Stocks last week, we have witnessed a meaningful recovery unfold. The USD Index is in a concerning position; the monthly price continues to hold the south channel support.