Daily Report on September 07, 2016
Asian shares rose to one-year highs on Wednesday, carrying forward the bullish momentum from the US equity markets after Wall Street had finished yesterday’s session in the green. A spate of weaker-than-anticipated data released on Tuesday has nudged investors to bet against any U.S rate hike this month and created some doubts over an interest rate increase by the end of 2016.
The Federal Reserve was handed some reasons to delay increasing rates after the Institute for Supply Management published its non-manufacturing PMI for August. The August PMI fell to 51.4. The result was far short of expectations, marking the largest one-month drop since November 2008 and the lowest PMI reading since February 2010. The Fed’s labor-market conditions index also swung back into negative territory last month after a positive reading in July, slipping to -0.7 from 1.3 one month earlier.
In response, the U.S dollar fell sharply against most of its peers. The Japanese Yen strengthened on the back of a softening greenback and was also bolstered further by a reported split between Bank of Japan officials ahead of the BOJ meeting on September 20-21. According to a report in the Sankei newspaper, BOJ policymakers are currently divided into three groups. One supports negative interest rates, another advocates more government bond purchases, while the third group opposes further stimulus.
The Australian dollar edged down 0.1 percent to $0.7681 after rising more than 1 percent on Tuesday after the Reserve Bank of Australia held interest rates steady at 1.5 percent. The Australian Bureau of Statistics reported the country’s gross domestic product (GDP) for the second quarter decelerated to 0.5%, indicating a cooling off in growth compared to the January-March period.
GBPUSD broke above the ascending trading channel that has formed since early August, after a steep up move from the key support level at 1.33000. The market has pulled back for some consolidation after bulls pushed the prices into overbought territory. However the upper boundary of the trading recent trading channel is now acting as support after the breakout from the channel, and has kept the market from falling back into the price range. This support zone is expected to push the price higher from the current levels
Buy Digital Call Option from 1.34400 to 1.34800 valid until 20:00 GMT September 07, 2016
EURCHF has breached below the 50.0% retracement at 1.09090 after decisively dropping from the 61.8% level at 1.09774. A brief correction was seen yesterday but weak bulls failed to retain the bullish momentum and had to reverse lower after coming up against the short-term MA. The MA20 has just converged with the MA50 from above, signaling more declines for the pair.
Buy Digital Put Option from 1.09000 to 1.08800 valid until 20:00 GMT September 07, 2016
USDJPY has been on a precipitous down move which helped the pair easily move past both the long-term and short-term MAs. In general, the U.S dollar has been trading in a shrinking range against the JPY and is currently moving towards the lower boundary of the trading range. As the market has entered the oversold zone, we may witness a period of consolidation moves. More declines in USDJPY are expected since two MAs placed above the price action are casting downward pressure on the price.
Buy Digital Put Option from 101.300 to 100.850 valid until 20:00 GMT September 07, 2016
Having surged more than 9.5 percent from two-month lows at 18.371 created on August 29, the grey metal retreated after the market entered a state of overblown volatility. Nonetheless, silver is forecast to extend the up wave as the two moving averages placed below the price action are exerting upward pressure which could send the price higher.
Buy Digital Call Option from 20.100 to 20.300 valid until 20:00 GMT September 07, 2016
WTI crude prices are continuously forming lower highs and higher lows causing the commodity to move in a narrowing range. The market has failed to define a clear direction for itself and reversed regularly every time it hits the upper or lower trend lines that have marked the recent trading range, and no clear breakout or resolution of the trend has been observed. At the moment, crude prices are moving towards the 23.6% retracement at 45.55 and anticipated to reverse lower below this resistance.
Buy Digital Put Option from 45.55 to 44.50 valid until 20:00 GMT September 07, 2016
The SP500 has recorded a crossover by the MA20 through the MA50 from below, suggesting further up moves on the index after the price action broke above the 2184.00 resistance. RSI (14) that has soared to 59.74 is also supportive for the prices to retest the recent high at 2193.00 reached on August 15.
Buy Digital Call Option from 2186.00 to 2193.00 valid until 20:00 GMT September 07, 2016