Jump to content

Quiet start to the week with US market holiday: EUR/USD, China A50, Brent crude


Recommended Posts

Initial gains by major US indices following the US non-farm report release were reversed in the latter half of the trading session, as selling pressure sought to override recent dip-buying efforts.

USSource: Bloomberg
 
 Yeap Jun Rong | Market Strategist, Singapore | Publication date: Monday 05 September 2022 

Market Recap

Initial gains by major US indices following the US non-farm report release were reversed in the latter half of the trading session, as selling pressure sought to override recent dip-buying efforts. The lower-than-expected wage growth (0.3% month-on-month versus 0.4% forecast) and a surprise increase in unemployment rate (3.7% versus 3.5% forecast) on higher participation rate in the August job report may be supportive of a dovish pivot from the Federal Reserve (Fed), with expectations of a 75 basis-point (bp) hike being pared back from a week ago to a 57% probability while US Treasury yields saw a broad-based decline. That said, recent push-back of any near-term policy shift by Fed officials continue to keep expectations in check, while risk sentiments took a turn with the indefinite suspension of the Nord Stream 1 pipeline by Russia. The announcement brought a sharp turnaround in the US dollar, while driving equities to pare back on its gains mid-day.

The heightened economic risks in Europe with its heavy dependence on Russian energy supplies have brought the euro back below parity with the dollar, despite expectations calling for the European Central Bank (ECB) to hike rates by 75 bp to 1.25% in its meeting this week. While the central bank could move to front-load rate increases as quickly as possible, any reference towards economic conditions eventually limiting its scope for tightening could put a cap on EUR/USD upside. The pair has been trading in a descending channel pattern since February this year, with its overall downward bias intact thus far. Further downside could leave the 0.960 level on watch, where the lower channel trendline may stand in place.

 

EUR/USDSource: IG charts

 

The closure of US markets today for Labour Day holiday may bring a quiet start to the new trading week with reduced liquidity, before focus are placed on comments by Fed officials, Lael Brainard and Jerome Powell, on Thursday. The firm stance to curb inflation by policymakers could be reiterated, which could potentially bring about little surprise. The key determinant factor for market sentiments could revolve around the US consumer price index (CPI) data next week. Until then, the S&P 500 could see some consolidating moves between its key support at the 3,915 level and the 4,000 resistance.

Asia Open

Asian stocks look set for a muted open, with Nikkei -0.44%, ASX -0.07% and KOSPI +0.17% at the time of writing. The failed attempt in Wall Street to tap on the US job report for a rebound last Friday could see the Asia session trading muted to lower today. Wider Covid-19 lockdowns in China have brought about a dampened risk environment as well, with the extension of lockdown curbs in Chengdu and the adoption of tiered restriction measures in Shenzhen. The day ahead will leave China’s Caixin composite and services purchasing managers' index (PMI) on watch, which is likely to reiterate ongoing weakness in economic conditions once more. The stronger US dollar at its fresh yearly highs could also serve as a weighing factor, with its general negative correlation with the MSCI AC Asia Pacific Index. Overall, the lack of positive catalysts could lead markets to drift lower in line with the ongoing bearish trend.

After a period of consolidation since August, the China A50 index has broken below its lower consolidation base, with the formation of a new lower low reinforcing its overall downward bias. This suggests that its key 23.6% Fibonacci retracement level has failed to hold, leaving the 13,000 level on watch as the next line of support.

 

China A50Source: IG charts

 

On the watchlist: Brent crude back to retest key support ahead of OPEC+ meeting

Oil prices are faced with a series of opposing catalysts on the geopolitical front, with the Group of Seven (G7) countries’ plans to implement an oil price cap against Russian oil imports being met with retaliation by Russia to shut off the Nord Stream 1 pipeline indefinitely. The Organization of the Petroleum Exporting Countries Plus (OPEC+) meeting today will likely be the key driver for prices. Greater clarity will be sought on whether production cuts are on the table after that was brought up by its top producer Saudi Arabia last month, but with oil prices being back to retest its previous key support, expectations seem to be pricing for a lacklustre development on that front. Recent attempts to rebound has been short-lived and if the US$86.20 support level were to give way, a retest of the US$80.00 level could be next.

 

Brent crudeSource: IG charts

 

Friday: DJIA -1.07%; S&P 500 -1.07%; Nasdaq -1.31%, DAX +3.33%, FTSE +1.86%

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
      23,635
    • Total Posts
      97,041
    • Total Members
      44,193
    • Most Online
      7,522
      10/06/21 10:53

    Newest Member
    Hcoaster
    Joined 06/12/23 13:50
  • Posts

    • Johnson & Johnson, Elliott Wave Technical Analysis Johnson & Johnson, (JNJ:NYSE): 4h Chart 6 December 23 JNJ Stock Market Analysis: We changed the count to a bullish scenario. At this stage we are looking for upside in either a wave 3 or C that seems to be unfolding as expected. Looking for 5 waves within wave 3/C. JNJ Elliott Wave Count: Wave (iii) of {iii}.   JNJ Technical Indicators: Above all averages. JNJ Trading Strategy: Looking for longs into wave 3.   TradingLounge Analyst: Alessio Barretta           Johnson & Johnson, JNJ: 1-hour Chart 6 December 23 Johnson & Johnson, Elliott Wave Technical Analysis JNJ Stock Market Analysis: Looking for a sideways consolidation into wave (iv) to then continue higher as we seem to be finding support on 158$. Upside target for wave {iii} stands at 161.5 as we have 2.618 of {iii} vs. {i}. JNJ Elliott Wave count:  Wave (iv) of {iii} JNJ Technical Indicators: Above all averages. JNJ Trading Strategy: Looking for longs into wave (v).    
    • EURUSD Elliott Wave Analysis Trading Lounge Day  Chart, 6 December 23 Euro/U.S.Dollar(EURUSD) Day Chart EURUSD Elliott Wave Technical Analysis Function:  Counter Trend Mode: impulsive as A   Structure:blue wave 2 of A Position: Y of wave 2/B Direction Next lower Degrees: blue wave 3 of A   Details:After blue wave 1 now blue wave 2 as a correction started  . Wave Cancel invalid level: 1.10192 The "EURUSD Elliott Wave Analysis Trading Lounge Day Chart" for 6 December 23, delves into the Euro/U.S. Dollar (EURUSD) pair within a daily timeframe, employing Elliott Wave analysis to provide traders with a comprehensive view of market dynamics. Identified as a "Counter Trend" analysis, the focus is on potential reversals against the prevailing market trend. This is crucial for traders aiming to capitalize on corrective movements or trend changes. The analysis characterizes the current market "Mode" as "impulsive as A," signifying that the observed price action is impulsive and falls within the context of an A-wave in the Elliott Wave structure. Impulsive movements are typically strong and directional, often marking the initiation of a new trend. The primary "Structure" is labeled as "blue wave 2 of A," detailing the current phase within the Elliott Wave framework. Understanding the wave structure is fundamental for traders to gauge the market's position in the broader cycle. The specified "Position" is denoted as "Y of wave 2/B," indicating the current wave count within the larger degree of correction. This level of detail assists traders in comprehending the intricacies of the ongoing correction. The directional guidance for "Next Lower Degrees" is projected as "blue wave 3 of A," suggesting an anticipation of the next impulsive wave within the overarching correction. This information is valuable for traders seeking alignment with the expected market direction. In terms of "Details," the analysis notes that "After blue wave 1, now blue wave 2 as a correction started." This informs traders that the market is currently undergoing a corrective phase following the completion of the first impulsive wave. The "Wave Cancel invalid level" is identified as "1.10192," serving as a critical threshold. If the market reaches this level, it would invalidate the current wave count, prompting a reconsideration of the prevailing market conditions. To summarize, the EURUSD Elliott Wave Analysis for the day chart on 6 December 23, presents a counter-trend impulsive movement labeled as "wave 2 of A." The analysis provides insights into the wave structure, position, expected next wave, and a crucial level for potential wave cancellation.    
×
×
  • Create New...
us