Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Markets Are Calm Between Dramas

By Ken OdelugaMarket OverviewAug 22, 2018 14:33
Markets Are Calm Between Dramas
By Ken Odeluga   |  Aug 22, 2018 14:33
Saved. See Saved Items.
This article has already been saved in your Saved Items


Markets are in wait-and-see mode ahead of several ‘low-risk’ events.

DAX shrugs off Continental skid

One S&P 500 milestone and 1.9 Dollar Index percentage points later, the mini-EMFX currency crisis continues to recede into the distance. This offers breathing space for European shares, even if investors aren’t much in the mood for maximising the opportunity. There’s mixed slippage across Europe, with small upticks in almost every large market in the region. The DAX is even shrugging off a precipitous slide by Continental (after a profit warning). Note the underlying tone would look even more stable carving out the tyre maker’s contribution, plus lesser tumbles by rivals like Schaeffler and Michelin (PA:MICP). Fractionally lower Wall Street futures are par for the course after the U.S. benchmark hit a record. Slight caution ahead of another one (assuming no disasters) is also understandable. The S&P 500 needs to close higher to achieve its 3,453rd in a bull market, marking the longest one ever. The landmark could be set in one of the few in-between sessions for months.

Distraction tactics possible

While nowhere near as acute as currency anxiety, concern has fanned out to the host of less pressing fixtures remaining this week. Most have a low, if not negligible, probability of impacting riskier assets. China-U.S. talks already warranted a hefty discount before the U.S. President said he had “no time frame” for ending the trade dispute. The discussions themselves, scheduled for two days beginning on Wednesday, do carry some detonation risk. Mutual U.S./China tariff impositions scheduled for Thursday have a similar hazard level. Perhaps it would be best (for investors) if the President doesn’t feel too cornered, for now, as Mueller’s probe grinds forward. (See Manafort, Cohen, and the President’s pattern of what looks a lot like distraction tactics).

‘Academic’ Fed risk

Federal Reserve’s minutes are even more on the ‘academic’ side of event risk. It’s difficult to imagine new revelations after the statement spotlighted the most salient – “strong” – takeaway from the meeting quite well. Maybe it’s best to look at the accounts as a foreword to Jerome Powell’s opening address at Jackson Hole on Friday. Watch points for the minutes include a clearer definition of “neutral rate”, and a possible elaboration by Powell of whether the yield curve reflects the market consensus’ of that neutral rate. Comments on trade are also anticipated, after the subject went unmentioned in the Fed statement. And, what does “for now” mean? Investors have been trying to interpret how substantial Powell’s use of the phrase was, after he punctuated his view that gradual hikes are appropriate with it. This may be one instance of the market’s proclivity to over-interpret utterances by central bank chiefs. Idle hands.

Sterling, euro traders eye Jackson Hole

We’re still treating Fed minutes and the Powell speech as largely concerns for sterling and the euro. Both attempt rallies whilst the dollar consolidates. On balance, it looks misguided to chase the ‘possible start of a dollar bear market’ thesis. Currency relief could yet revive the dollar’s run. Profit taking on safe-haven buying is lifting USD/JPY to the next big figure, 111. At the same time, EUR/USD’s six-day advance—after the euro bounced almost exactly at a sensitive low first marked in July 2017—is at the brink of the upper descending trending trend of the year’s falling triangle. There’s no science here, but experience shows the structure tends to be bearish, even if the rate manages to break to the upside, as seems likely. (The relative strength index (RSI) is in a clean rally with lots of room till its upper bound). Sterling has more fundamental news to chew on. Both EU and key UK Brexit protagonists are expressing (highly conditional) optimism, even “confidence”, a far cry from near ‘no deal’ consensus of a few weeks ago. The most substantial development for sterling would be, if confirmed, any suggestion from Barnier’s office that more time could be offered at any stage. GBP/USD upside momentum is faltering perceptibly too though, having peaked at $1.2925 on Tuesday. A second attempt is underway and how that fares will be a good guide for the near term.

Technical analysis price chart: EUR/USD – daily intervals

EUR/USD Daily Chart
EUR/USD Daily Chart

Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient.

Any references to historical price movements or levels is informational based on our analysis and we do not represent or warrant that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, nor does the author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Original Post

Markets Are Calm Between Dramas

Related Articles

Markets Are Calm Between Dramas

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email