GLOBAL STOCKS CALM AS FOCUS SHIFTS TO JACKSON HOLE SUMMIT
The EURUSD pair retreated after the mixed German business sentiment numbers. According to the ifo Institute, the German business expectations declined from 101 in July to 97.5 in August. This decline was lower than the median estimate of 100.0. At the same time, the business climate declined from 100.7 to 99.4 while current assessment remained unchanged at 101.4. German companies are generally concerned about the impact of the new Delta variant. Manufacturers are also concerned about higher labour costs and parts shortages. There are also concerns about relatively low demand as the global economy normalizes. The numbers came a day after the German statistics agency released strong GDP data.
The price of crude oil tilted lower ahead of the Energy Information Administration (EIA) inventories numbers. Economists expect that the number of inventories declined by more than 2.68 million barrels of oil last week. This will be a smaller drawdown compared to the previous week’s 3.23 million barrels. On Tuesday, data by the American Petroleum Institute (API) showed that the US had a drawdown of more than 1.66 million barrels. Oil traders are also concerned about demand as the Delta variant spreads.
Global stocks were relatively muted as focus shifts to the upcoming Jackson Hole summit. In Europe, the Stoxx 600 index rose by less than 0.10% while the DAX declined by about 0.10%. The FTSE 100 and CAC 40 indices rose by about 0.15%. In the United States, futures tied to the S&P 500 and Nasdaq 100 hovered at their all-time high. The recent rally in European and American stocks has been because of the relatively strong corporate earnings and the expansion of vaccinations in the developed countries. The stocks are also tilting higher after the US House of Representatives passed the $3.5 trillion anti-poverty plan and the $1 trillion infrastructure plan.
NZDUSD
The NZDUSD pair retreated slightly even as the New Zealand government accelerated its vaccination program. The pair fell from a high of 0.6933, which is below this week’s high of 0.6965. The 30-minute chart shows that this decline is part of the formation of the pair’s cup and handle pattern. Meanwhile, the MACD and the Relative Strength Index (RSI) have been in a downward trend. Therefore, the pair will likely to rebound after completing the formation of the handle section.
EURUSD
The EURUSD pair declined after the mixed German sentiment data. It fell to 1.1735, which was the lowest level since Monday. On the 30-minute chart, the lowest point today was along the lower side of the channel shown in yellow. It is also slightly above the 50% Fibonacci retracement level while the Relative Strength Index (RSI) has declined. The pair will likely rebound, targeting the upper side of the channel at 1.1760.
SPX500
The S&P 500 index was little changed in the futures market. On the hourly chart, the index is at an important level since this level was along the highest point on August 16. The RSI has formed a bearish divergence pattern while the width of the Bollinger Bands has narrowed. The index will likely remain in this range ahead of the Jackson Hole summit and US GDP numbers that are scheduled for Thursday.
