Yoast SEO
var a = document.querySelector("#google_translate_element select"); a.selectedIndex=1; a.dispatchEvent(new Event('change'));

During the pandemic, PMI numbers have often been the key indicator of the health of developed economies that usually see most of the GDP growth coming from the service sector. At the same time, manufacturing is likewise a significant component of the gross domestic product.  Therefore, both the PMI readings (services and manufacturing) have been followed keenly by the traders and have often moved the markets significantly. Today’s a big day when it comes to PMI releases, we have these key reports coming out from major economies in Europe but also from the US. Get ready to trade the dollar pairs by identifying the current momentum and key price levels. By reading further you agree with our disclaimer at the end of this report and acknowledge that we do not provide investment advice.

This image has an empty alt attribute; its file name is 728x90-1-2-9.gif

The S&P 500 (+0.81%), the Dow Jones Industrial Average (+0.65%) and the NASDAQ Composite (+1.19%) rallied all strongly on Friday after we highlighted on Friday’s report (Read more here!) the kind of price action that suggested the taper tantrum could be over. The move higher has continued in the equity futures today as the Asian traders have been bidding the futures higher. 

All 11 S&P 500 sectors finished the day up. The best performing sectors were technology (+1.29%), utilities (+1.25%) and consumer discretionary (+0.98%). Energy (+0.22%) and consumer staples (+0.17%) attracted the least money but the fact that all the sectors were being bought the conclusion is that the mood is strongly bullish on US stocks. The biggest winners among stocks in our CFD selection were NVDA, ILMN, TGT, LOW and MSFT. DE, LRCX, LYFT, GLW and AAL were the biggest losers in Friday’s trading. There are no stocks on the earnings watchlist

This image has an empty alt attribute; its file name is 728x90-1-2-9.gif

Gold (+0.05%) and silver (-0.51%) continue to consolidate while Platinum (+2.37%) rallied alongside while crude oil (-2.14%) were weak on Friday. Crude oil is rallying today with futures up 1.92% at the time of writing this. The benchmark US 10-year Treasury yielded 1.2650% at the close of trading (previous 1.2720%). 

Kaplan’s Since the London session open on Friday the strongest currency has again been CAD (+0.95%) with the other two commodity currencies AUD (+0.55%) NZD (+0.34%) also benefitting from the bull mood. JPY (-0.27%) and USD (-0.24%) and CHF (-0.03%) have been the weakest further signalling that there’s no demand for safe havens today. The performance values are from the time of writing this report and are naturally subject to constant change. 

Today’s main risk events are the PMI numbers from Eurozone, the UK and the US. For more information and details see the TIOmarkets economic calendar here.

EURUSDDaily 23 08

EURUSD has been trending lower and is now trading near to the lower end of the bear channel. At the time of writing this, the pair is trying to get back above the 1.1704 level that has been a key support in the past. There are three confluence zones that could come into play if EUR continues to benefit from the bullish mood in the markets. The areas are 1.1777 – 1.1804, 1.1829 – 1.1856 and 1.1888 – 1.1915. Other key S&R levels are 1.1600 and 1.19760.

USOIL.spDaily 23 08

Market update: We said on Friday (here) that Crude oil is trading relatively close to levels where the buying started in May and that we should look for a slowdown in the downside momentum over the coming days. Today USOIL has rallied 2.43%. This bounce from the bull channel low could take the market to the 65.00 resistance level.  Other key price levels and areas are 57.13 and the confluence zones at 68.08 – 69.40 and 70.50 – 71.42. This rally has helped the CAD today.

USDCADDaily 23 08

USDCAD failed to stay above the 1.2807 resistance level after it formed a bearish shooting star candle. Now the pair is weak as the USD is weak and the price of oil is moving higher. The key price levels in the pair are 1.2250, 1.2418, 1.2589, 1.2589 and 1.2948. The pair is trending lower in intraday and has some way to go before the nearest key support level at 1.2589.

Macro Drivers for the USD 
As the most followed, invested and traded markets for risky assets are priced in the USD it is helpful to understand what macroeconomic factors impact the other side of the equation, the USD. Whether we are trading EURUSD, XAUUSD or US equity CFDs the factors impacting the dollar, the nominator in the equation, have a significant role in the formation of all medium to long-term price action. The following table summarises the most important fundamentals.

The FEDThe more hawkish Fed bankers have been voicing their views on the need for the tapering and the rate hikes to take place earlier rather than later. The July FOMC Meeting Minutes indicated that taper might start as soon as in 2021.
StimulusThe US lawmakers have authorised approximately five trillion dollars of economic stimulus since the beginning of the pandemic. Now, US lawmakers have agreed to a  $1.2 trillion infrastructure spending plan. The Fed officials consider ending the asset purchases in the middle of 2022.
YieldsAfter trending higher since the beginning of August 2020, the Treasury yields have been moving lower or sideways. All in all, the yields and interest rates are extremely low on both nominal and real basis.
EmploymentThe last two employment reports have been very positive (+938K and +943K) indicating that the hawks in the Fed will have fundamental backing for their views on early tapering and rate hikes.
InflationThe month on month Core CPI (excluding food and energy) for July came in at 0.3% (0.4% expected) which indicated a big drop in the rate of inflation from the month before (0.9%). The Fed has earlier taken a view that inflation is transitory and will be therefore likely to fade away. Even though one data point doesn’t make a trend it seems that the Fed has been correct in their inflation projections. The lumber futures for instance are once again trading at October 2020 levels and down over 70% from their May highs.

Open a VIP Black account now at www.TIOmarkets.com. We want you to be able to exploit trading opportunities in financial markets with 0 commission and tight spreads. Take advantage of the best trading account in the industry: Tiomarkets VIP Black. For more details on this truly exceptional offering see here.

 Market News & Facts 

  • Paypal accepts bitcoin from this week
  • RBNZ Chief Economist: No pressure to act on monetary policy
  • Fed’s Kaplan softens his views on taper
  • Germany PPI for July +1.9% (0.8% expected)
  • New Zealand lockdown extended to 24th of August
  • Yellen proposes extending Jobless claims in some states
  • US Jobless Claims 348K (362K expected)
  • FOMC Minutes indicated tapering could start this year
  • Canada CPI for July 3.7% versus 3.1% last month
  • The RBNZ Official Cash Rate 0.25% (0.50% expected)
  • The UK CPI 2.0% (2.3% expected)
  • New Zealand enters a three-day full lockdown 
  • US retail sales for July -1.1% (-0.2% expected)
  • US August Empire Fed manufacturing index 18.3 (28.9 expected)
  • BOE to raise rates by 0.5% in 2023
  • OPEC+ sees no need to increase output

Quick Links to Recent Analysis

GOOG, USOIL, DJIA

AMD, TSLA, USDJPY

GBPUSD, XAUUSD

TSLA, NZDUSD, AUDNZD

EURUSD, AUDNZD, CADJPY

This image has an empty alt attribute; its file name is 728x90-1-2-9.gif

The Next Main Risk Events

  • French Flash Manufacturing PMI
  • French Flash Services PMI
  • German Flash Manufacturing PMI
  • German Flash Services PMI
  • Eurozone Flash Manufacturing PMI
  • Eurozone Flash Services PMI
  • UK Flash Manufacturing PMI
  • UK Flash Services PMI
  • US Flash Manufacturing PMI
  • US Flash Services PMI

For more information and details see the TIOmarkets economic calendar here.

Trade Safe!

Janne Muta
Chief Market Analyst
TIOmarkets.com

Open a VIP Black account now at www.TIOmarkets.com. We want you to be able to exploit trading opportunities in financial markets with 0 commission and tight spreads. Take advantage of the best trading account in the industry: Tiomarkets VIP Black. For more details on this truly exceptional offering see here. For more analysis and commentary, visit our YouTube channel where you can find market commentary videos to support your learning and growth as a trader. 

DISCLAIMER TIOmarkets offers exclusively consultancy-free service. The views expressed in this blog are our opinions only and made available purely for educational and marketing purposes and do NOT constitute advice or investment recommendation (and should not be considered as such) and do not in any way constitute an invitation to acquire any financial instrument or product. TIOmarkets and its affiliates and consultants are not liable for any damages that may be caused by individual comments or statements by TIOmarkets analysis and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his/her investment decisions. The analyzes and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. The content has not been prepared in accordance with any legal requirements for financial analyzes and must, therefore, be viewed by the reader as marketing information. TIOmarkets prohibits duplication or publication without explicit approval. FX and CFDs are leveraged products. They are not suitable for every investor, as they carry a high risk of losing your capital. Please ensure you fully understand the risks involved. All the prices in this report are CFD prices based on price charts provided by TIOmarkets unless otherwise stated. 

Best pair to trade today Best stocks to trade right now Best time to trade Best time to enter a trad

Author

Write A Comment

X

Get our latest market analysis by email, daily

en_USEnglish (United States)
Tio blog

FREE
VIEW