A fairly quiet session yesterday, as markets weigh up geo-political risks, as well as awaiting any significant news from central banks today.
There was talk yesterday of Iraq becoming less of a concern, but we’re not entirely sure where that has come from. Maybe we owe that to The Daily Show’s Jon Stewart with his remarkably creative explanation of of the geopolitical situation in Iraq on his Monday night comedy show? (This is a must watch by the way!)
Overnight we’ve seen oil prices stay steady despite Iraq shutting their primary oil refinery. Perhaps the market is comforted on oil supply issues by the warming diplomacy between Iran and the West. There are some pretty wild predictions about what could happen to oil prices if the Iraq situation escalates. China’s Center for Energy and Economic Research see prices going above $120 per barrel if the crisis hits the south of the country, where the main oil fields are. Others say that if Iraqi oil goes completely offline it won’t be long before we see $200 per barrel.
The exceptions to the general calm were following the UK inflation number, where Sterling dipped a little on news that inflation fell once again in May. Once again, it was air fares and food prices that were the biggest drivers for the fall. Sterling quickly recovered against the Euro though, as German investor confidence numbers disappointed. confidence is now at its lowest point since 2012 and is the sixth consecutive month that the numbers have shown a decline. Many analyst had this number pegged as the turnaround month, where we would see some optimism, but in lieu of that the only option was to sell the Euro.
President Obama yesterday ruled out airstrikes for the time being, but the New York Times make some interesting points and also proffer the possibility of using highly targeted airstrikes to disrupt the advancement of extremism, rather than to support the Iraqi government – which apparently is a fine enough distinction to want to consider – Senior Sunni and Shi’ite political leaders have released a joint statement calling for national unity
In the US, inflation data showed an unexpected rise yesterday, pushing the dollar higher and bond prices lower as investors speculated that the Fed may start raising rates earlier than they expect. Janet Yellen will be speaking this evening, following the Fed’s rate decision, which will now be watched with even more interest by the market who had, until yesterday, thought that rates will probably be static into Q2 2015. The debate the Fed are having is not dissimilar to the UK in that raising rates is long overdue, but any premature rise could prevent the economy from taking up any more of the slack in output.
In the Bank of England minutes, released this morning, investors will be looking for further signs that members of the voting panel are getting ready to raise rates. The most obvious sign will be if there is a split vote, either 8-1 or maybe even 7-2 in favour of keeping rates on hold, where as previously it has been a unanimous 9-0. Other, more subtle signs, might include expansion on last month’s comments that the policy decision was “becoming more balanced”. We’re not too sure how much downside there is for Sterling if the vote comes in at 9-0, but if it does shift to show some dissention in the ranks, then we could see another spike in the Pound, albeit probably briefly.
Overnight trading has been mixed. Japan’s Nikkei index has rallied as a result of a weaker Yen, which offset trade balance data that showed exports declining for the first time in 15 months. China property prices were cause for concern as data showed a significant slowdown in the pace of price rises. This is one to watch in the coming months, to see if this is a continuing trend – something the country can ill afford.
Intraday Forex Technical Levels
EUR/USD Intraday: the upside prevails.
Invest Diva likes: Long positions above 1.353 with targets @ 1.358 & 1.36 in extension.
If pair goes nuts: Below 1.353 look for further downside with 1.351 & 1.349 as targets.
What’s up on the forex dance floor: The pair remains on the upside and is approaching its resistance.
Supports and resistances:
1.362
1.36
1.358
1.3569 Last
1.353
1.351
1.349
GBP/USD Intraday: under pressure.
Invest Diva likes: Short positions below 1.697 with targets @ 1.6905 & 1.686 in extension.
If pair goes nuts: Above 1.697 look for further upside with 1.701 & 1.704 as targets.
What’s up on the forex dance floor: The pair stands below its new resistance.
Supports and resistances:
1.704
1.701
1.697
1.6948 Last
1.6905
1.686
1.683
USD/JPY Intraday: the upside prevails.
Invest Diva likes: Long positions above 102.05 with targets @ 102.4 & 102.65 in extension.
If pair goes nuts: Below 102.05 look for further downside with 101.9 & 101.75 as targets.
What’s up on the forex dance floor: The pair is trading within a bullish channel.
Supports and resistances:
102.8
102.65
102.4
102.185 Last
102.05
101.9
101.75
USD/CHF Intraday: under pressure.
Invest Diva likes: Short positions below 0.9 with targets @ 0.8955 & 0.894 in extension.
If pair goes nuts: Above 0.9 look for further upside with 0.9015 & 0.9035 as targets.
What’s up on the forex dance floor: The pair is breaking below its support.
Supports and resistances:
0.9035
0.9015
0.90
0.8979 Last
0.8955
0.894
0.893
NZD/USD Intraday: bullish bias above 0.862.
Invest Diva likes: Long positions above 0.862 with targets @ 0.868 & 0.87 in extension.
If pair goes nuts: Below 0.862 look for further downside with 0.8565 & 0.8535 as targets.
What’s up on the forex dance floor: The RSI is mixed to bullish. The pair is drawing a flat consolidation in a 0.864-0.87 range ahead of another up move.
Supports and resistances:
0.8745
0.87
0.868
0.8671 Last
0.862
0.8565
0.8535
AUD/USD Intraday: under pressure.
Invest Diva likes: Short positions below 0.937 with targets @ 0.9315 & 0.93 in extension.
If pair goes nuts: Above 0.937 look for further upside with 0.939 & 0.9415 as targets.
What’s up on the forex dance floor: The RSI lacks upward momentum. The downside breakout of the 0.937 former support is a negative signal calling for further weakness.
Supports and resistances:
0.9415
0.939
0.937
0.9342 Last
0.9315
0.93
0.928
USD/CAD Intraday: consolidation in place.
Invest Diva likes: Short positions below 1.088 with targets @ 1.0835 & 1.081 in extension.
If pair goes nuts: Above 1.088 look for further upside with 1.0905 & 1.092 as targets.
What’s up on the forex dance floor: As long as 1.088 is resistance, look for choppy price action with a bearish bias.
Supports and resistances:
1.092
1.0905
1.088
1.087 Last
1.0835
1.081
1.079
Intraday US Index Levels
S&P500 (CME)
Short positions below 1936 with targets @ 1918 & 1906 in extension.
Alternative scenario: Above 1936 look for further upside with 1941 & 1947 as targets.
Dow Jones (CBT)
Short positions below 16760 with targets @ 16625 & 16550 in extension.
Alternative scenario: Above 16760 look for further upside with 16810 & 16880 as targets.
Nasdaq 100 (CME)
Short positions below 3786 with targets @ 3746 & 3728 in extension.
Alternative scenario: Above 3786 look for further upside with 3800 & 3814 as targets.
Russell 2000 (ICE)
Short positions below 1175 with targets @ 1147 & 1136 in extension.
Alternative scenario: Above 1175 look for further upside with 1185 & 1192 as targets.
Long term traders. Don’t sweat the small losses and look at the big picture. Short term traders, invest responsibly. And wait, are we hooked up on the social media? To get the most recent intraday updates, don’t forget to follow Invest Diva on Twitter and Facebook.
