International Trading



No data, key answers


Monday didn’t bring about any serious news, except some mergers stories which were hoped to boost a sentiment a little bit. However, after Friday’s slide, a relief on Monday didn’t last long and failed to negate some selling signals that appeared last week. With this in mind, the only hope for the bulls is that the expectations ahead of the data are low.


Yen gains, Nikkei on 16 month lows


A choppy trade on Wall Street didn’t help the Japanese equities, already under pressure from the weak local data (2nd quarter GDP and a persistent deflation) and a strong currency. As a result, the Nikkei225 dropped to the lowest level in 16 months, moving below the (very) key level of 9000 points. This area provided a support two times in the past and chances are for this to happen again. For instance, the week could end up with a hammer candle above the support. While this is possible, moods on the global markets do not help the case.

Meanwhile, the USDJPY turned below 85,00 during the Asian trade and remains close to the 15 years low of 84,70. Should the market sentiment further deteriorate, investors might want to test BoJ’s patience.


EURUSD – 1,2730 confirmed


The downward formation on the EURUSD we described yesterday is well on track. The market used a previous support as a resistance (very precisely, which doesn’t happen often) and turned lower. While levels of 1,2120/90 may be a mid-term target, a nearer support is at 1,2605.

OIL – a decline continues
Lack of buying power on equity markets and EURUSD could have had a decisive influence on the oil market. Brent’s price broke a lower boarder of a rising channel which previously encompassed a very regular upward ABC correction. That suggest a further downside potential with levels of 70,90 USD and 68 USD as key support.

Events to watch – US home sales, Richmond inedx
US used home sales data for July is the key release today (10.00 ET, 16.00 CET). The market expects a massive drop in sales from 5,37 to 4,68 mln annualized. This is still attributed to the tax relieves that ended in April. Initially buyers had to close the deals until June 30 (this deadline was eventually moved to Sep 30) and thus the expected drop in sales. Along the data, Fed’s Richmond activity index will be released (exp. 14 points). Usually the index doesn’t carry a lot of weight but after an unexpected drop in the Philly Fed, investors will pay attention. Canadian retail sales (8.30 ET, 14.30 CET, exp at +0,4% m/m) is one of the key events for the CAD investors this week.