European Open: Beijing Targets Gamers, EUR/GBP Coils Below August High

China’s share markets were lower overnight as video gamers below 18 now face a 3-hour weekly limit as part of the latest government crackdown.

Charts (1)

Asian Indices:

  • Australia's ASX 200 index rose by 33.1 points (0.44%) and currently trades at 7,537.60
  • Japan's Nikkei 225 index has risen by 128.02 points (0.46%) and currently trades at 27,917.56
  • Hong Kong's Hang Seng index has fallen by -365.37 points (-1.43%) and currently trades at 25,174.17

UK and Europe:

  • UK's FTSE 100 futures are currently down -0.5 points (-0.01%), the cash market is currently estimated to open at 7,147.51
  • Euro STOXX 50 futures are currently up 2 points (0.05%), the cash market is currently estimated to open at 4,200.80
  • Germany's DAX futures are currently down -10 points (-0.06%), the cash market is currently estimated to open at 15,877.31

US Futures:

  • DJI futures are currently down -55.96 points (-0.16%)
  • S&P 500 futures are currently up 11.5 points (0.07%)
  • Nasdaq 100 futures are currently up 6 points (0.13%)


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Mixed trade for Asian indices

China’s equity markets fell on Tuesday after the government announced new rules which curbs citizens under 18 of playing more than 3 hours of video games per week. Tancent Holdings (0700.HK) fell over 2%, the China A50 traded -1.7% lower, the CSI300 fell -1.3% and the SSE composite trimmed -0.75%.

The ASX 200 is on track for its 11th consecutive bullish month, trading around 1.9% higher in August so far. Healthcare and technology sectors were the strongest of the session.

UK traders returns to their desks after a 3-day weekend and has gained 1.64% so far this month. Given the positive sentiment for equities following the Fed’s dovish stance at Jackson Hole, we see the FTSE’s potential to retest the 7200 handle.


Forex: New Zealand dollar pops higher

NZD was the strongest major (and only currency with any signs of volatility) overnight, and with no obvious driver. And this is despite business activity coming in softer for August, as New Zealand remain in lockdown. NZD/USD rose 0.6%, NZD/JPY was up 0.5% and NZD/CAD rose 0.57%. NZD/CHF hit our countertrend target by testing the upper trendline of its bearish channel. USD and CAD were the weakest majors.

EUR/GBP has been grinding lower overall on the daily chart, although the momentum shift following a false break of the April low earlier this month, now sees the cross amidst a countertrend move. Support has since been found above the 50-day eMA and prices are now coiling just beneath the August high in a potential continuation pattern. A break above 0.8594 assumes bullish continuation and brings the zone between the monthly R1 pivot, 200-day eMA and July high into focus.

The Conference Board release their consumer confidence survey at 15:00 BST, and it will be interesting to see if it plummets like the University of Michigan Consumer Survey did. If so, it could weigh further on the US dollar as it is another tick in the box for the Fed to delay tapering. 


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Commodities:

Copper is consolidating above the 50-day eMA but beneath 4.435 resistance. Like oil, we suspect a break higher although over the near-term remain unsure whether we’ll see a pause beforehand.

Gold rose around 0.3% overnight and printed a swing low at 1806.6. Whether this marks the corrective low remains to be seen but our bias remains bullish above 1800, and for a run towards 1830 - 1834.

WTI prices have rallied nearly 13% from the August low after finding support at the 200-day eMA. A gravestone Doji formed yesterday below 70.0 so it’s possible the rally may take at least a breather or retrace slightly. Yet given the dollar’s weakness then we currently anticipate prices to eventually break above 70.0.


Up Next (Times in BST)

You can view all the scheduled events for today using our economic calendar, and keep up to date with the latest market news and analysis here.


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