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US Market Wrap: Stocks and Treasuries sold, while oil surges as Middle East tensions escalate
SNAPSHOT: Equities down, Treasuries down, Crude up, Dollar up, Gold down.
US500 4 HOUR: Remains on the defensive
Best hope for stocks would be crude oil backing off and/or a US CPI beat (lower) on Friday as a miss or even as per consensus reading would keep pressure on the bond market. Even a beat might see limited follow through given the sharp rise in oil prices this month and the impact on inflation.
Otherwise, US500 stays defensive as long as it trades below 7610-25, stronger bias if it stays below 7610 as there is a big void below it..
XAUUSD vs. BTCUSD
XAUUSD seems set to break a 6-day pivot around 4400 tomorrow (barring a surprise) and dependent on 4300 holding or risk an attack on the 4282 low. Upside limited unless 4375+ trades again.
BTCUSD: Trying to build momentum to the downside after failing to stay above 80K and dependent on 75499 holding (use 75K as well( or face a void below it.
Market Update; USD off its highs (1 hour charts)
Currencies react when respective central bank monetary policies diverge or lag. The ECB rate hike today has seen odds increasing for additional rate hikes while the BoJ is a near certainty toi hike next week with more hikes possible. ‘
The AUD, one of the strongest performers recently, is weakest on the FX board as it reacts to the risk off mood.
US500 4 HOUR: On the defensive
Firmer oil, higher bond yields and technicals weighing on US500 where the break of 7610, if it holds below, shows a big void (to around 7300) on the downside.
For bulls, this can still be treated as a retracement while short-term traders see it as a downtrend where a move back above 7610 would be needed to cool the risk.
US PREMARKET MOVERS: FCX, COO, AVAV, M, LEU, TENB
ES -0.2% NQ -0.8% RTY -0.3%
Risk off reaction to about as expected PPI, bond yields up
- US Core PPI (Aug MM) 0.2% vs. Exp. 0.3% (Prev. 0.3%)
- US Core PPI (Aug YY) 4.6% vs. Exp. 4.6% (Prev. 4.3%)
Source: Try Newsquawk free for 7 days
XAUUSD (GOLD) 4 HOUR: 6 days in a row
4400 has now traded 6 days in a row as XAUUSD has been unable to shake a focus from it.
So stay on guard as a break of this pattern would have potential to signal a directional move.
Range over this period has been 4375-4435 with range outside of it at 4341-4442.
Forex Market Snapshot: Calm before the storm
Key events are finally here:
ECB: Will it be a dovish hike, no forward guidance data dependent hike or hawkish hike?
US PPI: Theta was a time when PPI would be ignored in favor of CPI but in the current time there is a hypersensitivity to all inflation data.
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