Pre-Market: Emerging Markets Under Pressure Again

Risk assets are broadly lower today just after the US open, as emerging market currencies are back in the center of attention. The Argentinean Peso hit a new all-time low yesterday, as the country asked the IMF to accelerate the payment of the bailout funds, which caused a mini-panic in the currency’s market. The other vulnerable currencies also declined substantially, and the move continued today, with now the Turkish Lira falling as much as 5% compared to the majors and getting close to its historic low.

BRL (Brazilian Real)/USD, 4-Hour Chart Analysis

The Brazilian Real has also been hitting new lows while the Russian Ruble remained under pressure, and although the Chinese Yuan was helped by the dip in the Dollar’s value against the other majors, the whole segment is still clearly suffering. With the usually much more active and seasonally bearish September looming, selling pressure could intensify yet again, as there is no easy fix for the underlying problems.

Nasdaq 100 Futures/TRY, 4-Hour Chart Analysis

 As the end of the summer season is drawing closer in financial markets, the major trends of the coming months are already shaping up, with divergences still being very strong between the US and the rest of the world. US stocks extended the now officially longest bull market in history, with the Nasdaq and the SA&P 500 both hitting record highs again.

The Dow continues to lag the broader market somewhat, but compared to European and most Asian benchmarks, it’s still much stronger from a technical perspective, and the all-time high set in January is not far from the current level.

Dollar Bounces Off Lows after Inflation Data

EUR/USD, 4-Hour Chart Analysis

The core PCE index, which is the Fed’s preferred inflation measure came in at a monthly 0.2%, and hit the Fed’s target on a yearly basis. Although the Dollar fell significantly off its highs lately, helping the relief rally in emerging market assets and the surge in the US, the reserve currency is rallying today following the release, and that puts some additional pressure on risk assets. Personal spending was also in line with expectations in August, while unemployment claims were stable at 213,000, still hovering near multi-decade lows.

Copper Futures, 4-Hour Chart Analysis

Commodities are mixed in the risk-off environment, with copper drifting lower after a relatively strong start for the day, and the industrial metal is risking another leg lower in its ongoing downtrend, as it turned lower and breached the key long-term support/resistance level near $2.70.

While crude oil continues to drift higher towards the $70 per barrel level, with regards to the WTI contract, while Gold is trying to hold above the $1200 level. The precious metal is still relatively weak, and the Dollar’s slight bounce already pushed it well below its recent high, so a dip under $1200 could open up the way for a re-test of the recent major low.

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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.