Pre-Market: Nervous Start for the Week as Chinese Troubles Mount

Stocks markets are in the red across the board today before the opening bell on Wall Street, as Asian equities remain under pressure. China is in the epicenter of the decline, with the Yuan continuing its sharp decline and the Shanghai Composite falling to new lows as well, as the US-Chinese trade skirmish still dominates trading.

USD/Chinese Yuan, 4-Hour Chart Analysis

With the Yuan trading at the lowest level since September, the shadows of the deep 2015 correction are noticeable in stock markets. From a short-term perspective, US and European markets are holding up above key support levels, and today’s session could be crucial as a spike below primary support could unleash another wave of selling.

S&P 500 Futures, 4-Hour Chart Analysis

 All eyes will be on the 2700 level in the S&P 500 and the 6950-7000 zone in the Nasdaq 100 after last week’s failed rally attempts, while the DAX index is trying to hold its ground above the 12,000 level. Liquidity could be an issue this week for day-traders with the Independence Day celebrations possibly taking their toll on trading activity, despite the relatively busy economic calendar and the unusually eventful summer so far.

Manufacturing PMIs are being released today across the globe, and the Chinese Caixin measure came in slightly below expected, still showing some growth, while the UK release was better than expected. The US PMI is scheduled to come out later on today, with the consensus estimate being a still very strong 58.2 figure.

Dollar Edging Higher Thanks to Risk-Off Shift

AUD/USD, 4-Hour Chart Analysis

Forex markets have been active so far, as the USD gained ground compared to its peers, with emerging market currencies remaining under pressure, and the China-related pairs clearly underperforming. The New Zealand Dollar is trading at a new 2-year low while the Aussie is also on the verge of a major breakdown that could lead to a slip to 0.70 in the coming months.

Dollar Index (DXY), 4-Hour Chart Analysis

The Euro is a tad lower in the risk-off environment, but it’s holding on well above the June lows, as sentiment got very bearish towards the common currency, suggesting a possible longer consolidation phase after the steep late-spring selloff.

Short-term supply constraints continue to cause wild swings in the WTI crude oil contract, with the commodity already covering a 3% range today, while the segment is lower in general amid the Dollar’s rally. Gold fell below the key $1250 level today in early trading, while copper is hovering just above its 9-month, pushed lower by the China-related woes.

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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.