All Eyes on Powell
A better start to the week for most of the global equities indices tracked here. Dovish expectations ahead of Fed chairman Powell’s Jackson Hole speech late this week have seen the US Dollar on the back foot, allowing room for equities markets to trade higher here. Broadly speaking, the market is already pricing in some amount of tapering this year and with that in mind, the thinking is that it would take a firm hawkish surprise from Powell to affect any significant USD buying. In light of the rising risks from the Delta variant, such a development seems unlikely here meaning that, the risks into the meeting, appear skewed to the downside for USD, keeping equities on the bullish track. We heard from Dallas Fed president Kaplan last week that if the current surge in Delta infections continues, he might adjust his views on tapering. The market appears to judge this as likely being a broader view within the Fed which is colouring the price action ahead of the meeting. Elsewhere, news of the first fully FDA-approved COVID vaccine has helped lift sentiment somewhat. However, vaccine optimism is not uniform, which might explain why price action in European and Asian asset markets (where vaccination rates are lagging) has been weaker than in the US and UK.
Technical Views
DAX
The recent downside test of the 15743.01 level has seen buyers stepping back in to keep the DAX supported for now. With MACD and RSI indicators both positive, the outlook remains bullish while price holds above this level. Any break lower will turn focus to deeper support at the 15486.96 with the rising trend line in that area also.
S&P500
The recent downside test of the 4383.50 level, with the rising trend line support there also, has seen price bouncing firmly higher. The market has since taken out the 4475.25 level and is trading above. RSI is pointed higher here with MACD on course to turn positive, keeping the outlook firmly bullish in the near term.
FTSE
The correction from the recent test of the 7241 level has seen price trading back down to retest the broken bear channel top, ahead of deeper support at the 6968.7 level. With MACD and RSI both bearish here, there is risk of a continuation lower unless bulls can clear the 7137 level, putting 7241 back in focus.
NIKKEI
The latest downside break of the 27422.9 level saw price trading as low as the 26932.1 level before reversing higher. Price is now attempting to break above the bear channel top, with MACD and RSI both turned higher here. If we do break, 28356.6 is the next upside marker to watch.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.