News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Bearish
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Mixed
Gold
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bearish
USD/JPY
Bullish
More View more
Real Time News
  • The Indian Rupee may be at risk to the US Dollar as USD/INR attempts to refocus to the upside. This is as the Nifty 50, India’s benchmark stock index, could fall further. Get your $USDINR market update from @ddubrovskyFX here:https://t.co/3wsYlSxd26 https://t.co/z2qB9p8IgX
  • A proxy of #EmergingMarket capital flows hit its lowest since July, falling with the #SP500 after some divergence This is as #USD gained against its developing FX counterparts, highlighting potential risk of a spillover outwards Stay tuned for next week's #ASEAN fundy outlook! https://t.co/kAvpnb0EXO
  • 4 consecutive down weeks for the #SP500, last matched over a year ago #Fed balance sheet continues to gain very cautiously, now at its highest since the middle of June. Still, at slower pace than last week Focus shifts to US fiscal stimulus next week in the House of Reps https://t.co/f8zpSILm86
  • #Gold prices have broken lower and while the broader technical structure is constructive, the risk remains for a deeper correction before resumption. Get your $XAUUSD technical analysis from @MBForex here: https://t.co/7p3jPx6nQd https://t.co/nnCSdt6OV5
  • Forex Update: As of 20:00, these are your best and worst performers based on the London trading schedule: 🇬🇧GBP: 0.00% 🇳🇿NZD: -0.02% 🇯🇵JPY: -0.15% 🇨🇭CHF: -0.23% 🇦🇺AUD: -0.25% 🇪🇺EUR: -0.33% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/O8Qb7OHZza
  • Commodities Update: As of 20:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: -0.30% Gold: -0.33% Silver: -0.92% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/lEALo4Z1M9
  • The S&P 500 breakdown is testing the first major zone of support and we’re looking for a reaction. Get your S&P500 technical analysis from @MBForex here:https://t.co/JrTNmQ5c7g https://t.co/D79T1134P9
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.29%, while traders in EUR/GBP are at opposite extremes with 65.04%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/lzTHuIgzFQ
  • US Equities Update (Friday Close): $DJI +1.34% $SPX +1.60% $NDX +2.34% $RUT +1.59% $VIX -7.93%
  • Another turbulent week for the Pound with the currency falling 1.6% against the greenback. Get your $GBPUSD market update from @JMcQueenFX here:https://t.co/WjU4oYpmf7 https://t.co/hkow2om7I6
S&P 500 Bullish Break, Dollar Bearish Break Seeking out Momentum

S&P 500 Bullish Break, Dollar Bearish Break Seeking out Momentum

2020-08-06 05:00:00
John Kicklighter, Chief Strategist
Share:

S&P 500, Dollar, EURUSD, USDCAD Talking Points:

  • For some, the S&P 500’s clearance of 3,300 could qualify as a meaningful technical break of a large rising wedge, but is that enough for follow through?
  • Anticipation around a US stimulus deal and Covid vaccine continue to feed hope, while the economic calendar has provided a clear growth update
  • An extended Dollar slide tripped further technical signals for AUDUSD and USDCAD, but GBPUSD is still holding resistance ahead of the BOE

Another Nudge Higher from a Risk Leader that Tempts Conviction

For the third day in a row, risk assets edged higher, simultaneously urging speculative appetite while slowly undermining the already-lacking sense of conviction. For the majority of sentiment markers I like to follow, the past session was a low-boundary bounce in well established range. An exception was the S&P 500’s gap higher Wednesday. Technically, the jump cleared a rising wedge from March and essentially filled the gap that started the pandemic collapse. And yet, there remains an unmistakable lack of enthusiasm to amplify a break into a clear trend. So close to record highs, disappointed bulls can still be goaded higher; but sustaining lift is still a tall order.

Equities Forecast
Equities Forecast
Recommended by John Kicklighter
Get Your Free Equities Forecast
Get My Guide

Chart of S&P 500 with 50-Day Moving Average and 3-Day ATR Percentage of Spot (Daily)

S&P 500 Bullish Break, Dollar Bearish Break Seeking out Momentum

Chart Created on Tradingview Platform

One measure I like to frequently reference when doing a sanity check on conviction is gold. The precious metal isn’t always a primed haven, but it rarely plays the role of a full-blown speculative pacer. Nevertheless, gold pushed a fresh record high as the S&P 500 daydreamed of its own. We could say this reflects a distortion for the commodity, but I believe it is more likely evidence that sentiment is brash speculation seeking momentum. That said, this androgynous asset is also being stretched in pure market performance terms. Gold is up 13 percent in 13 days which puts it in as heavily distended a position as we have seen over the past decade.

Chart of Gold Overlaid with S&P 500 and 20-Day Correlation, 10-Day Rate of Change (Daily)

S&P 500 Bullish Break, Dollar Bearish Break Seeking out Momentum

Chart Created on Tradingview Platform

Stimulus and a Vaccine Still Play Better Hopes Than Boosters

As I’ve mentioned previously, it seems that there is as much enthusiasm (hope) built in anticipation of future improvements as there is tangible footing for bullish interests. US leaders have yet to find a compromise to offer fresh stimulus in replacement of the expired CARES Act. President Trump has said he would use an executive order to halt payroll taxes if Congress couldn’t settle a path, which suggests an infusion one way or the other. And yet, this expectation is likely priced into markets in their forward gaze, so it may prove hard to impress further lift.

Chart of US Economic Policy Uncertainty (Weekly)

S&P 500 Bullish Break, Dollar Bearish Break Seeking out Momentum

Chart from Federal Reserve Economic Database

Alternatively, the rapt attention around the Covid vaccine chase is drawing plenty of hope for relief as well as speculative opportunism. Having seen Gilead and Kodak rise and fall as traders crowded in to take advantage of their drive for a breakthrough, we shifted first place back to Novavax. Here too, the practicality that an approved drug will then need mass production and distribution within a time frame where the severe impact of a forced recession can be fully absolved. When reality takes back over for hope, I believe there is more to disappoint than impress.

Twitter Poll: ‘What Do You Think is Driving the Dollar?’

S&P 500 Bullish Break, Dollar Bearish Break Seeking out Momentum

Poll from Twitter.com, @JohnKicklighter Handle

A Range of Dollar Pairs on the Verge of a Break

Between the pressure of a steep pandemic curve and struggle for local stimulus, the return of bearish pressure around the Dollar draws little surprise. Where the ISM service sector report expanded further to help warm V-shaped recovery fantasies there was also a troubling ADP private payroll figure that fell far short of forecasts for 1.5 million jobs added in the month with just 167,000. That bodes poorly for Friday’s NFPs and can perhaps justify EURUSD’s rebound from 1.1700 former resistance-as-new-support. Yet, break leaning into progress looks to be the exception to the rule.

{{WEBINAR| 814013251 |Join Christopher Vecchio as he covers NFPs live!}}

Chart of EURUSD with Net Speculative Futures Positioning (Daily)

S&P 500 Bullish Break, Dollar Bearish Break Seeking out Momentum

Chart Created on Tradingview Platform

Another interesting technical break amid the Greenback slide would come on the behalf of USDCAD. The 1.3350/25 area we dropped through this past session has played a technical role for months. However, just beyond that threshold a much larger trendline support lingers around 1.3220. Even if we put pressure on that next line in the sand, I am reminding myself that few breaks are translating into ready trend as of late.

USD/CAD BULLISH
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -3% 4% 0%
Weekly -22% 39% -5%
What does it mean for price action?
Get My Guide

Chart of USDCAD (Daily)

S&P 500 Bullish Break, Dollar Bearish Break Seeking out Momentum

Chart Created on Tradingview Platform

Another ‘major’ that should draw close scrutiny heading into these final 48 hours of trade this week is GBPUSD. The pair didn’t make any earnest efforts to clear 1.3200 – a confluence of multi-year trendline resistance and high-level Fibonacci retracements – which comes as little surprise given the lack of Dollar conviction as well as the anticipation of Thursday’s Bank of England rate decision.

Chart of GBPUSD (Daily)

S&P 500 Bullish Break, Dollar Bearish Break Seeking out Momentum

Chart Created on Tradingview Platform

The policy meeting in the UK is interesting not for the policy meeting itself. Indeed, it is unlikely that the group does anything extraordinary – though fresh stimulus to head off added recession pressure from fears of a rebound in the pandemic curve and thereby recession is not out of the question. More certain is the update on economic forecast that comes from the quarterly report. Watch it closely.

GBP/USD BEARISH
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 9% -12% -2%
Weekly 19% -22% -4%
What does it mean for price action?
Get My Guide

GBPUSD Retail Speculative Positioning from IG

S&P 500 Bullish Break, Dollar Bearish Break Seeking out Momentum

Chart from DailyFX

Building Confidence in Trading
Building Confidence in Trading
Recommended by John Kicklighter
Building Confidence in Trading
Get My Guide

If you want to download my Manic-Crisis calendar, you can find the updated file here.

.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES