As often happens when the US goes on holiday, stock markets around the world, including 24 hour trading on US indices, have been advancing in light trading. There hasn’t been much news, but traders appear to be taking the Turkey/Russia situation not getting any worse has been seen as a positive for stocks but a negative for oil markets, eroding the political risk premium.
The big action overnight has been in industrial metals which are rallying on the back of a call by Chinese metal producers on the government to buy up base metals to soak up oversupply and shore up metal prices. Chinese nickel producers also apparently have been discussing production cuts. Copper is up 2% on the news, which precious metals with industrial applications are also soaring with palladium up 2.5% and platinum up over 1%.
Somewhat surprisingly AUD has been sliding overnight particularly in relation to USD and JPY. A very poor capex report for Australia has been dragging on the dollar.
On the other hand, GBP has been weakening again this morning and has two big round number tests underway at $1.5000 for GBPUSD and $2.0000 for GBPCAD. Sterling appears to be getting caught up in a general concern about what could happen to European currencies around next week’s ECB meeting.
Governor Skingsley of Sweden’s Riksbank reminded everyone of the proximity problem as he indicated that it’s difficult for his central bank to deviate too far in policy from the ECB (due to the potential effect that could have on the currency). While other central backs in Europe have had to go dovish to match the ECB’s move toward stimulus, talk in the UK has been toward raising interest rates in 2016, so the divergence gap that may need to be closed is larger between the ECB and the Bank of England than for others.
Chart Signals
North American and European Indices
Dow Jones Industrial Average has been steadily gaining overnight, advancing up from near 17,830 toward 17,900 with support moving up toward 17,880. Next resistance appears at its previous high near 17,990.
US Nasdaq 100 is on the move again, regaining 4,685 and advancing on 4,700 with nest resistance possible near 4,740 its previous high, then a measured 4,780.
US S&P 500 is back under accumulation, climbing to test 2,100 with next potential resistance near 2,115 then the summer triple top near 2,135. RSI confirms upward momentum increasing.
DAX is breaking out today! Clearing 11,215 and driving on toward 11,370 before sliding back toward 11,330 with more support near 11,290. Next upside resistance possible near 11,435 a Fibonacci level. RSI confirms upwards momentum increasing.
FTSE 100 has turned decidedly higher, rallying up from 6,330 toward 6,380 and into the upper half of its 6,050 to 6,500 trading channel. RSI lifting up off 50 confirms momentum turning upward. Next potential resistance near 6,455.
Commodities
Gold continues to pause in the $1,064 to $1,086 zone below a Fibonacci level in what appears to be a pause to work off an oversold RSI with a retest of the $1,000 big round number still possible.
Crude Oil WTI continues to form a saucer bottom between $40.00 and $42.00 but for the moment it’s still unable to overcome resistance slipping back from $42.00 toward $41.60.
FX
US Dollar Index is steady just below the 100.00 big round number having peeked above it yesterday.
EURUSD is trading flat in the $1.0600 to $1.0620 range today but remains under distribution having fallen recently from $1.0700 with next potential support in the $1.0475 to $1.0500 zone.
EURGBP is having an inside day near 0.7030 having recently bounced ovf of 0.7000 but also having seen an advance rejected by 0.7080 resistance.
GBPUSD is retesting the $1.5000 level once again but this has held so far and a double bottom could be forming The pair is bouncing between $1.5070 and $1.5120 today recently trading near $1.5100.
USDCAD is holding steady near $1.3300 as it continues to roll over with resistance falling toward $1.3340. Next support possible near $1.3255.
CADUSD is attracting support just above $0.7500 as it continue to base build. A double bottom may be in place near $0.7425. Initial resistance near $0.7520 then $0.7550.
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