Quick Recap
Stocks were quiet, oil rose, the Aussie dollar stayed above 76 cents, Sterling respected overhead resistance and the overall tone of quiet consolidation in global markets continued.
That's because this weekend's Jackson Hole meeting gives everyone an excuse to do nothing. But Monday could usher in a new wind through markets.
What You Need To Know
International
- Here's how you know last night was quiet. On one of the high-frequency newswires I look at each morning to catch up on the action overnight had a series of headlines which include (paraphrasing) stocks rise as markets await Jackson Hole and then later, stocks fall as markets await Jackson Hole. That is, the newswire was fitting the move to the headline not the other way around. So nothing material really went on.
- And that is largely because in this current wave of low volatility trade investors really have given themselves a free pass to enjoy the northern summer - Jackson Hole is just the latest excuse now the Olympics are over.
- For Traders though the big question is can this quiet period continue. My answer is of course yes, because this is a natural reaction to the awful volatility of the first 6 months or so of the year. It's natural that we then get a period of stability - traders are exhausted,position sizes are reduced, and as a result activity flattens out. But that is unlikely to last indefinitely. That's for the same reason that wild volatility doesn't persist. The question is when the break out comes - it could be soon. But remember volatility is two sided.
- We got more evidence that fears of the demise of the UK economy in the wake of Brexit may be overblown last night. Readers know I've held the view that Brexit is not likely to be the economy destroying event that many thought. Recently we've seen data point after data point support that view and last night the release of the CBI distributive trades survey which printed +9 from -14 previously and -5 which was the punditry's guess.
- So to the markets and the S&P 500, Dow Jones Industrial Average and Nasdaq 100 all slid a little overnight but less than 0.2%. The DAX was down 0.88% after the Ifo survey was weaker than expected. You might read some rubbish about this be an example of how Brexit is hitting Germany - can I just highlgiht that if it's not knocking the UK this is another example of people making stuff up.
- As watchers of my morning market video's know, I'm still focussed on an eventually retest of the breakout at 2135 to judge how strong this break higher really is.
Australia
- Here at home its all very quiet as earnings season wraps up. There were perhaps some signs in the Woolworths Ltd (AX:WOW) and Wesfarmers Ltd (AX:WES) results that the economy is slowing a little but overall just like everyone else the proximity of Jackson Hole is giving folks an excuse to do as little as possible.
- Yesterday's 20 point fall on the S&P/ASX 200 has given way to a 5 point gian in the SPI overnight. I'm still focussed lower - unless or until we get a run above 5580.
Forex
- A fairly quiet night all things considered. That's especially the case given US durable goods orders looked strong. Orders for goods built to last rose 4.4% from the month before, higher than the 3.4% increase expected by economists. That suggests the many calls we are continuing to hear from the Fed of a rate hike this year are more likely than not to be delivered. Last night Esther George, president of the Kansas City Fed, and Robert Kaplan from Dallas both said rates need to rise.
- So we wait for Janet Yellen - here is the DXY chart from my Reuters Eikon...support levels are obvious - what will Janet say?
- SO this morning we have the AUD/USD at 0.7622, Euro is at 1.1283, and USD/JPY is at 100.54. Interestingly GBP is still respecting the overall parameters of the wedge it is forming.
Commodities
- Iron ore dipped a little overnight, copper is still languishing at $2.07/08 a pound while Gold is drifting a little as well. It's at $1321 this morning. It's also looking like it could fall back toward $1305/12. If that level gives way there could be another $50 fall in the offing. I'm getting a little bearish gold.
- Crude Oil rallied last night even though the Saudi oil minister put the kybosh on a production freeze. Saudi Energy Minister Khalid Al-Falih told Reuters he did not believe any significant oil market intervention was necessary as demand for crude was "picking up nicely" around the world. Maybe it was the demnand comment that helped.
Today's key data and events (all times AEDT)
- Australia - Nil
- New Zealand - Nil
- China - Nil
- Japan - Tokyo CPI ex Fresh Food (YoY) (Aug), Tokyo CPI ex Food, Energy (YoY) (Aug), Tokyo Consumer Price Index (YoY) (Aug), National Consumer Price Index (YoY) (Jul), National CPI Ex-Fresh Food (YoY) (Jul), National CPI Ex Food, Energy (YoY) (Jul) (9.30am)
- Germany - Gfk Consumer Confidence Survey (Sep) (4pm)
- EU - Private loans (YoY) (Jul), M3 Money Supply (3m) (Jul), M3 Money Supply (YoY) (Jul) (6pm)
- UK - Gross Domestic Product (YoY) (Q2), Gross Domestic Product (QoQ) (Q2), Total Business Investment (QoQ) (Q2), Total Business Investment (YoY) (Q2), Index of Services (3M/3M) (Jun) (6.30pm)
- Canada - Nil
- US - Jackson Hole Symposium (24h); Gross Domestic Product Price Index (Q2), Gross Domestic Product Annualized (Q2), Personal Consumption Expenditures Prices (QoQ) (Q2), Core Personal Consumption Expenditures (QoQ) (Q2) (10.30pm); Markit PMI Composite (Aug) (11.45pm); Reuters/Michigan Consumer Sentiment Index (Aug) (12am); Baker Hughes US Oil Rig Count (3am); Fed's Yellen Speech (2pm)
Have a great day's trading
Greg McKenna
Chief Market Strategist AxiTrader
www.gregmckenna.com.au
Please note: I usually look at 2 or 3 charts each day. These will not always be the same charts and the above is meant to help guide traders thought processes not offer advice.
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