Daily Analysis: Stocks Slide as Yen Marches Higher

Tuesday Market Recap

Asset Current Value Daily Change
S&P 500 2352 -0.05%
DAX 12260 0.05%
WTI Crude Oil 50.55 0.60%
GOLD 1258.50 0.41%
Bitcoin 1139 1.15%
EUR/USD 1.0653 -0.16%


Stock markets are trading slightly lower today, led by the Japanese market, as the Bank of Japan might be the latest central bank that’s contemplating the end of its Quantitative Easing program (also known as money printing). The Japanese Yen gained ground against the major currencies overnight, and that weighed heavily on the Nikkei, as export-focused companies are negatively affected by the strong currency. US futures extended their losses from yesterday and European stocks are also lower, despite remaining relatively strong.

Gold is among the winners of the day so far, as the Shiny Metal is testing its recent highs near the $1260 level in the face of the relatively strong US Dollar. The slightly negative global sentiment is helping precious metals, the Yen and the Swiss Franc as well. WTI Crude Oil is still above the $50 per barrel level, holding on to its gains from last week. The Australian Dollar and the New Zealand Dollar are the losers of the day, as the Reserve Bank of Australia left its interest rate unchanged at 1.5% and released a cautious statement regarding the economy. The British Pound is also under pressure again as the construction PMI caused another negative surprise this morning.

Cryptocurrencies are very active once again, with trading volumes being elevated across the board. Amazingly enough, Ripple almost re-tested the 0.025 level yesterday after trading as high as 0.075 earlier on. Today the most active altcoin has been trading around the 0.035 level.  itcoin breached the $1150 level, as it continues to creep higher following the deep correction. Dash found support near the $60 level and it might be building a base after the heavy selling last week. Monero is still holding up above $20 while Ethereum fell another 10%, and it’s now near the $40 level, while Litecoin is consolidation near the $8 level.

Ripple/Bitcoin, 4-Hour Chart

Technical Picture

XLF (US Financial Sector ETF), 4-Hour Chart Analysis

Technicals deteriorated somewhat since yesterday, as the weaker indices failed to follow the lead of the DAX and the Nasdaq, and the S&P 500 slid below the crucial support/resistance zone near the 2355 level. The 2332 level is the next important support level for the most-watched benchmark if the current declining wave reaches below yesterday’s low at 2340 (see our investment recommendation). The financial sector had a negative day yesterday, and as we pointed out in last week’s review, banks have been leading the market in the last two and a half weeks. The $22.87-$23 support zone could be in the focus in the coming days.

Key Economic Releases on Tuesday

Time, CET Country Release Actual Expected Previous
6:30 AUSTRALIA RBA Rate Decision 1.50% 1.50% 1.50%
10:30 UK Construction PMI 52.2 52.5 52.5
14:30 CANADA Trade Balance -1 billion 0.7 billion 0.8 billion
 14:30 US Trade Balance -43.6 billion -46.7 billion -48.5 billion
16:00 US Factory Orders (monthly) 1.00% 0.90% 1.2%


Key Economic Releases on Wednesday

Time, CET Country Release Expected Previous
10:30 UK Services PMI 53.5 53.3
14:15 US ADP Employment Change 225,000 298,000
16:00 US ISM Non-Manufacturing PMI 57 57.6
16:30 US Crude Oil Inventories 0.9 million
20:00 US FOMC Meeting Minutes
Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.