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Option Banque Daily Technical Analysis: 27-Aug-2015


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  • Asian stocks extended gains on Thursday as a sharp rebound on Wall Street and gains in battered Chinese shares eased fears of a deep and protracted global market rout, while the dollar rallied as risk aversion eased. Sentiment was also supported by comments from New York Fed President William Dudley on Wednesday who said the prospect of a September rate hike “seems less compelling” than it was only weeks ago given the threat posed to the U.S. economy by recent market turmoil. Still, some investors remained on edge, after European shares slid nearly 2 percent overnight and ahead of more readings on China’s factory and services sector activity early next week. Markets around the world plunged earlier in the week as a slump in Shanghai shares fueled worries over China’s economic health, but some calm returned after Beijing rolled out strong policy easing steps late on Tuesday.
  • The greenback subsequently rallied as ebbing risk aversion reduced demand for the yen and euro, which had been bought as safe haven plays during the recent equity selling. The dollar got an additional boost from upbeat U.S. durable orders data, which backed the view that the Fed would remain on track to eventually raise interest rates as the U.S. economy continues to recover. The common currency was also hurt by comments from a senior European Central Bank official. Peter Praet said the risk of the ECB missing its inflation target has increased due to commodity price falls and weakness in some overseas economies.
  • Crude oil prices jumped in Asia on Thursday as investors see recent liquidity and policy easing moves by China as a spur to demand. Ahead, the market is looking to rig count data in the U.S> at the end of the week. According to industry research group Baker Hughes (NYSE:BHI), the number of rigs drilling for oil in the U.S. increased by two last week to 674, the fifth straight weekly gain. The rig count dropped for 29 straight weeks before rebounding modestly in recent weeks. Overnight, West Texas Intermediate oil futures added to losses on Wednesday, after data showed that oil product supplies in the U.S. rose sharply last week, underlining concerns over weak demand. U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories fell by 5.5 million barrels in the week ended August 21. Market analysts’ expected a crude-stock rise of 1.1 million, while the American Petroleum Institute late Tuesday reported a decline of 7.3 million barrels. Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, increased by 256,000 barrels last week, following a rise of 326,000 barrels in the preceding week.Total U.S. crude oil inventories stood at 450.8 million barrels as of last week, remaining near levels not seen for this time of year in at least the last 80 years. The report also showed that gasoline inventories increased by 1.7 million barrels, while distillate stockpiles rose by 1.4 million barrels.
  • Gold held steady on Thursday in Asia as investors cast a wary eye on China’s markets to see if the latest stability measures will calm concerns of a rout.Overnight, gold prices fell to the lowest levels of the session on Wednesday, after data showed that U.S. durable goods orders rose unexpectedly in July, boosting optimism over the health of the economy and supporting the case for a U.S. interest rate hike this year. The U.S. Commerce Department said that total durable goods orders, which include transportation items, increased 2.0% last month, compared to expectations for a decline of 0.4%. Orders for durable goods in June were revised to a gain of 4.1% from a previously reported increase of 3.4%. Durable goods are typically bulky or heavy products designed to last at three years, such as trains, planes and automobiles. Core durable goods orders, excluding volatile transportation items, inched up 0.6%, topping forecasts for an increase of 0.4%. Core durable goods orders rose by an upwardly revised 1.0% in June. Orders for core capital goods, a key barometer of private-sector business investment, increased 2.2% last month, above expectations for a 0.4% increase. Shipments of core capital goods, a category used to calculate quarterly economic growth, tacked on 0.6%, beating forecasts for a 0.4% gain. The upbeat data should strengthen expectations of a Federal Reserve interest rate hike as early as next month. The timing of a Fed rate hike has been a constant source of debate in the markets in recent months.