Risk sentiment flipped quickly to negative during the U.S. trading session, and with risk assets (including oil) down big, the fall in CAD/JPY is one to watch for short-term pips.
Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on AUD/USD as the Greenback strengthens, so be sure to check that out to see if there is still a potential play!
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
|
DAX: 13210.96 -0.25% FTSE: 5927.18 -0.23% S&P 500: 3511.14 -1.95% DJIA: 28785.80 -1.08% |
US 10-YR: 0.626% -0.026 Bund 10-YR: -0.497% -0.025 UK 10-YR: 0.234% +0.002 JPN 10-YR: 0.031% -0.012 |
Oil: 40.87 -1.54% Gold: 1944.10 -0.03% Bitcoin: 10850.00 -5.08% Ethereum: 412.00 -6.93% |
Fresh Market Headlines & Economic Data:
Stocks extend losses as tech shares struggle, with the Dow dropping more than 250 points
115,762 U.S. Job Cuts in August; Highest Number of Cuts Tracked in a Single Year on Record
IHS Markit U.S. Services PMI: Strongest expansion in business activity since March 2019
ISM Services PMI slipped to 56.9 in August vs. 58.1 in July
U.S. Trade Deficit Swelled to Biggest Since 2008 in July
U.S. second-quarter productivity revised sharply higher; fastest rise since 1971
Canada posts July trade deficit of C$2.45 billion vs. C$1.59 billion deficit in June
Rising euro stokes ECB worries over falling prices
Final Eurozone Services Business Activity Index: 50.5 in August vs. 54.7 in July
Volume of retail trade down by 1.3% in euro area; Down by 0.8% in EU
Barnier’s comments are misleading on Britain’s trade talks position, says PM’s spokesman
Euro zone public deficit levels unsustainable, ECB’s Wunsch says
Sharpest increase in U.K. service sector activity since April 2015
U.K. Races to Fix ‘Critical Gaps’ in Brexit Border Plan
Swiss consumer prices remained stable m/m in August; -0.9% y/y
Upcoming Potential Catalysts on the Economic Calendar
Fed Evans speech at 5:00 pm GMT
Australia Retail Sales at 1:30 am GMT (Sept. 4)
What to Watch: CAD/JPY
On the one-hour chart above of CAD/JPY, we can see the bears have taken over to easily break out of the minor consolidation pattern between 81.00 – 81.50. From there, momentum traders seem to be hopping on that break, so the question now is whether or not we’ll see a retest of the 80.50 handle before the rest of the session?
Well, with an extremely light calendar ahead, the odds are pretty good this theme will run through the rest of the U.S. session, and probably through the upcoming Asia session, barring a surprise news catalyst.
So, the odds are in favor of the bears at the moment, but a rising ‘highs’ pattern and previous support area around 80.50 could be a problem. Also, stochastic is signaling potential short-term oversold conditions, so it may be a good idea to either wait for a bounce up to the 81.00 handle and bearish reversal patterns to form before considering a short.
Or if you think this is just the beginning of a bigger move, watch for a break of the rising ‘lows’ pattern before considering a short swing position as it could draw in higher timeframe traders.
For the bulls, the rising ‘lows’ pattern could draw in short-term traders who may take profit from their shorts, or swing traders who feel today is just a pullback in a longer-term trend. The data was mixed between the leading and lagging economic updates, but arguably more net negative to lower the odds of a risk rebound soon. So if you’re bent on getting in long, wait for bullish reversal patterns at 80.50 before considering a long position.