Market calm and traders are waiting for FOMC meeting tomorrow

Markets seem to have given a sigh of relief as we saw the European and Asian Markets on the rise during the previous two sessions. Global stocks and S%P futures rebounded sharply on Monday as tensions over an imminent conflict with Pyongyang receded after U.S. officials played down the likelihood of a nuclear conflict with North Korea.

Market calm and traders are waiting for FOMC meeting tomorrow

Traders waiting FOMC meeting

Markets seem to have given a sigh of relief as we saw the European and Asian Markets on the rise during the previous two sessions. Global stocks and S%P futures rebounded sharply on Monday as tensions over an imminent conflict with Pyongyang receded after U.S. officials played down the likelihood of a nuclear conflict with North Korea. The Dollar also rose from its four-month lows it had hit against the yen.

European shares bounced after falling nearly 3% last week, with the STOXX 600 up 0.7% following on from a 0.9 % jump in MSCI’s index of Asia-Pacific shares outside Japan. The Stoxx Europe 600 Index headed for its first gain in four days, tracking increases across markets including South Korea. Gains were led by bounces in Australia, Hong Kong, and South Korea while the MSCI world index rose 0.2%.

In commodities, trading was mixed overnight with safe-haven gold (-0.2%) mildly pulling back from 9-week highs amid an improvement in global risk sentiment. WTI quiet overnight with prices unchanged during Asia trade. Crude prices seeing a modest move lower, however prices are still up significantly from last week’s gains with Brent remaining above USD 52. Much like fixed income, gold and silver prices are bearing the brunt of a more risk on environment. Libya’s top oil field is said to drop on security threats.

In currencies, as news flow covering the spat between North Korea and the US simmers down, the USD index has been trading at better levels against the Yen which has pressured major pairs. In turn, EUR tripped through 1.18 to hover near session lows. Poor data out of China damped AUD, as Chinese Industrial Production and Retail Sales missed across the board. As the data was digested, AUD/USD came off best levels, and trades around session lows, through 0.79 once again. A clear break through 0.7840 is needed to indicate any clear change of direction. Yen has seen some unwinding of the risk of positions taken throughout last week’s trade, amid the growing geopolitical tensions. USD/JPY’s June’s low just through 109.00 saw some bids waiting, as the pair has come off best levels, with bulls likely to look to test 110.00.  The pound has seen range bound trade throughout the Asian session despite Brexit commentary emerging from the woodworks once again. Comments from UK Chancellor Hammond and Trade Minister Fox stated that the Brexit transition period will be limited and will be intended to avert a cliff edge.

OUTLOOK

On today’s calendar, there is no major economic data and no Fed speakers. There is simply absolutely nothing that can have an impact on the market today in terms of Economics. The market should continue in its current state as the focus will shift to any rising geopolitical tensions between the U.S. and North Korea.

TRADERS VIEW

The Bloomberg Dollar Spot Index rose the most in more than a week, recovering most of Friday’s losses, as a pickup in risk sentiment and higher Treasury yields spurred demand for the greenback against the Group-of-10 currency bloc.

EURUSD – The euro dropped below $1.1800 as few stops below the level were filled. The common currency’s dip was faded by leveraged names while model accounts drove it after London open to its $1.1838 days high. Momentum indicators show that the euro traded at overbought levels.

 

EUR/USD

 

USDJPY – USDJPY rose as much as 0.6% to 109.80, with offers by Japanese exporters around 109.50 and bids by importers at 109.00 initially set the day’s range for the pair until the dollar buying-spree during London Hours.

 

USD/JPY

 

GBPUSD – The Sterling reversed its gains and dropped 0.3% to 1.2957 low amid muted liquidity flows. Support comes in at the 55-DMA at 1.2931 whereas the top side is capped by the 21-DMA at 1.3061.

 

GBP/USD

 

AUDUSD – The Australian Dollar has been moving with downside momentum ever since July 31st after falling from the 0.8030 resistance level. The pair has reached a 1-month low at 0.7839.

 

AUD/USD

 

USDCAD – Bouncing from the Lows of 1.2410s, the pair has regained control over the 1.2700-level which has been acting as a resistance on the pair. As the pair consolidates around said level, it is expected that flows should remain muted until the Jackson Hall Symposium next week.

 

USD/CAD

 

Dow Jones – Positive flows have re-emerged on the Dow after the tensions between the U.S. and North Korea seem to elevate. The Index has regained control over the 21,900-level and heads towards the 22,000 once again.

 

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***Information contained in this newsletter are gathered from third parties and should not be regarded in any way as trade advice or recommendations by CM Trading. CM Trading does not recommend or advise traders or investors in their decision making, but merely provides information from the market for its clients as additional information is made available as per the events occurring in the financial markets.

 

 

HIGH RISK WARNING:

Trading Foreign Exchange (Forex) and Contracts for Differences (CFD’s) is highly speculative, carries a high level of risk and may not be suitable for all investors. You may sustain a loss of some or all of your invested capital, therefore, you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with trading on margin.

© Copyright 2015 – CM Trading – All rights reserved 

 

Dow Jones – Back below the 22,000 since the first time it broke through the level in August. The Futures of the Dow Jones show high levels of volatility as the VIX has reached higher after the geopolitical tensions.

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