Stock markets around the world have been steady overnight as markets prepare for the return of US traders. Nasdaq futures had been underperforming overnight but has rebounded in the last few minutes. Big Tech remains an area of potential vulnerability with earnings expectations running really high after the sector left everything else in its dust over the last few months.
The US Dollar is up slightly against gold and other major currencies. Later today, minutes from the last FOMC meeting are due. Traders may be looking for more hints regarding the Fed’s future plans. Press reports Tuesday suggested the Fed could announce the start of its balance sheet reduction plan in September and hold off on raising rates until December. I agree on rates but think a government shutdown could push the balance sheet decision to October or later.
Crude oil is down 1.5% today after Russia indicated it opposes deeper production cuts on the grounds that it could cause prices to overshoot to the upside and cede more market share to US shale producers. CAD has not been impacted by this yet, indicating that the loonie remains more sensitive to speculation on a potential Bank of Canada rate hike, possibly as soon as next week.
Chart Signals: WTI and NDAQ active as the US returns to trading
North American and European Indices
US 30 is bumping up against 20,550 resistance with a double top forming. The index has settled back toward 21,500, and RSI drifting back toward 50 indicates slowing upward momentum. Next potential support near 21,365 then 21,300.
US SPX 500 is holding steady near 2,430 just above the middle of a sideways channel between 2,400 and its recent high near 2,450. RSI sitting on 50 confirms sideways momentum dominant for the time being.
US NDAQ 100 has popped up through 5,585 rallying from support in the 5,560 to 5,570 zone back up toward 5,600. RSI suggests downward pressure levelling off and possibly starting to ease. Initial resistance possible near 5,655 then 5,690.
UK 100 continues to hold above 7,300 bouncing up into the 7,350 to 7,370 area, while RSI suggests downward pressure may have peaked. Still, it needs to retake 7,400 to call off a head and shoulders top and signal an upturn.
Germany 30 remains in a downtrend, unable to retake 12,475 resistance, confirming its recent breakdown. Trading in the 12,420 to 12,470 area, next potential support appears near 12,305. RSI still below 50 indicates ongoing distribution.
WTI crude oil was under pressure overnight but has started to rebound after establishing support at a higher low near $46.00, bouncing up toward $46.40. This could be a dead cat bounce though as the fall from $47.20 and the RSI suggest the market appears to be rolling over.
US Dollar Index is retesting 96.30 its recent breakdown point. If resistance holds, it would confirm a new downleg underway with initial support in place near 95.90 then 95.40. a breakout would signal an upturn with next potential resistance near 96.70 then 97.10.
USDJPY continues to climb, clearing 113.35 a Fibonacci level and advancing on 113.65. Rising RSI indicates accelerating accumulation. Next potential resistance tests near 114.00 then 114.60 with next support near 112.85.
EURUSD remains in correction mode, trading near $1.1330 below its recent peak near $1.1450 but above $1.1290 its recent breakout point. RSI falling away from 70 but well above 50 confirms a trading correction underway.
EURGBP is still sending mixed signals. The pair continues to trade below 0.8800 where it recently broke an uptrend line but is attracting support above 0.8760. RSI falling toward 50 indicates a downturn pending but a golden cross confirms the underlying uptrend.
GBPUSD appears to be attracting support above $1.2900 and its 50-day average near $1.2865 indicating the recent drop back from $1.3040 and under $1.3000 as a normal trading correction within an uptrend.
USDCAD continues to consolidate recent losses and work off an oversold RSI in the $1.2900 to $1.3000 area, recently trading near $1.2950 within a $1.2940 to $1.2970 initial band.
CADUSD is having an inside day, consolidating recent gains and working off an overbought RSI between $0.7700 and $0.7745 trading near $0.7725 a Fibonacci level. Next resistance possible near $0.7790 with next support possible near $0.7685.