Europe Dips Again as Markets Await the FED and Earnings

Monday Market Recap

Asset Current Value Daily Change
S&P 500 2465 -0.17%
DAX 12225 -0.12%
WTI Crude Oil 46.41 1.42%
GOLD 1255.00 0.07%
Bitcoin 2766 0.55%
EUR/USD 1.1641 -0.20%

Financial markets are very calm today with only European stocks showing activity, hitting new correction-lows in the low volatility environment. The worse than expected European PMI (a new 6-month low in the composite) readings are to be blamed for the continued weakness while the Euro is also hovering around its 2-year high against the Dollar. German automakers are still under pressure as rumors broke about a decade-long cartel between the major players of the country’s industry. US Stocks are virtually unchanged before Wednesday’s Federal Reserve meeting, with the major indices all hovering around their all-time highs, while the VIX hit a new all-time low last week.

DAX, 4-Hour Chart Analysis

The Dollar and the Great British Pound are the strongest amid the major currencies, as the market is in a “calm before the storm” state with several important economic releases being scheduled to the second half of the week. Commodity currencies are gaining ground on the Greenback, as oil, gold, and industrial commodities are all slightly higher today, despite the rebound in the Dollar. Interestingly enough, the Yen is also drifting higher against the Dollar, and although the negative correlation between stocks broke down recently, the strength in the traditional safe haven assets like gold and the Yen might signal troubles ahead for risk assets.

USD/JPY, 4-Hour Chart Analysis

Cryptocurrencies

The crypto market is looking bullish from a technical viewpoint, as the major coins are consolidating after the strong bounce last week. With the long-term picture still supporting more upside, the low-volatility correction could resolve the short-term overbought state, serving as a base for another leg higher later on this week. Dash is already making its move towards its previous highs, as it remains the strongest major besides Bitcoin. Ethereum is yet to move above the strong resistance zone that stopped the post-correction rally, while small cap coins are mixed after a negative start to the day.

DASH, 4-Hour Chart Analysis

Technical Picture

The NASDAQ retained its leadership among the global indices trading just a few points off its all-time highs despite the bearish international pressures today and the rebound in the Dollar. We expect volatility to pick up after today’s session, as the US earnings season will begin in earnest with today’s report by Google parent Alphabet (GOOG). With valuations still sky high in the US, the current trend might be a good chance for investors to reduce their holdings, traders could still ride the wave higher, as the short-term picture is definitely bullish, and a test of the 6000 level is likely now.

NASDAQ 100 Futures, 4-Hour Chart Analysis

Key Economic Releases on Monday

Time, CET Country Release Actual Expected Previous
2:30 JAPAN Manufacturig PMI 52.2 52.3 52.4
9:30 GERMANY Manufacturig PMI 58.3 59.1 59.6
9:30 GERMANY Services PMI 53.5 54.4 54.0
10:00 EUROZONE Manufacturig PMI 56.8 57.3 57.4
10:00 EUROZONE Services PMI 55.4 55.5 55.4
14:30 CANADA Wholesale Sales 0.9% 0.5% 1.0%
16:00 US Existing Home Sales 5.52 mill 5.59 mill 5.62 mill

Key Economic Releases on Tuesday

Time, CET Country Release Expected Previous
10:00 GERMANY IFO Business Climate Index 114.9 115.1
16:00 US CB Consumer Confidence 116.2 118.9
16:00 US Richmond Manufacturing Index 7 7

Featured image from Shutterstock

Author:
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.