European Open: Volatility Takes a Breather Overnight, UK Retail Sales Up Next

Markets were a lot calmer during Asian trade after what was one of the most volatile sessions in FX markets this year.

Charts (3)

Asian Indices:

  • Australia's ASX 200 index rose by 10.5 points (0.14%) and currently trades at 7,369.50
  • Japan's Nikkei 225 index has risen by 34.15 points (0.1%) and currently trades at 29,047.07
  • Hong Kong's Hang Seng index has risen by 170.43 points (0.6%) and currently trades at 28,729.02

UK and Europe:

  • UK's FTSE 100 futures are currently up 8 points (0.11%), the cash market is currently estimated to open at 7,161.43
  • Euro STOXX 50 futures are currently up 2 points (0.05%), the cash market is currently estimated to open at 4,160.14
  • Germany's DAX futures are currently up 9 points (0.06%), the cash market is currently estimated to open at 15,736.67

US Futures:

  • DJI futures are currently down -210.22 points (-0.62%)
  • S&P 500 futures are currently up 33 points (0.23%)
  • Nasdaq 100 futures are currently up 5 points (0.12%)


Learn how to trade indices


Indices

The Nikkei 225 was a touch higher on Friday as tech stocks tracked the Nasdaq 100, which itself closed to a record high overnight. The ASX 200 was just a few points from its record high (despite a soft start) and is currently on track for a bullish outside day to close the week. The Hang Seng was the strongest performer, rising 0.55% Whilst China’s CSI300 is trading -0.64% lower. Ultimately, equities have avoided the levels of relative volatility seen across commodity and forex markets and, overall, can say that equity bulls have taken the hawkish FOMC meeting in their stride and could indeed be looking for fresh highs. And this makes sense as any potential rate hike is still year/s away and there is no actual talk of tapering just yet.

European futures have opened a touch higher with the STOXX 50 currently up by 0.7%, the DAX rising 0.03% and the FTSE up 011%. The FTSE 100 fell to a three-day low yesterday but found support at its 20-day eMA before paring losses. The weekly candle is on track for a bearish pinbar.   


FTSE 100 S/R Levels

  • R3: 7200 - 7204
  • R2: 7198
  • R1: 7169 – 7172.21
  • Pivotal: 7157
  • S1: 7143
  • S2: 7132 - 7138
  • S3: 7118 - 7122


FTSE 350: Market Internals


FTSE 350: 4089.67 (0.07%) Week to Date:

  • 256 (72.93%) stocks advanced and 77 (21.94%) declined
  • 20 stocks rose to a new 52-week high, 2 fell to new lows
  • 85.75% of stocks closed above their 200-day average
  • 19.94% of stocks closed above their 20-day average

Outperformers:

  • + 7.86%   -  Ultra Electronics (ULE.L) 
  • + 7.20%   -  BT Group  (BT.L) 
  • + 5.71%   -  Volution Group  (FAN.L) 

Underperformers:

  • -12.6%   -  Dr Martens  (DOCS.L) 
  • -9.40%   -  Hammerson  (HMSO.L) 
  • -9.04%   -  Anglo American (AAL.L) 


Forex:

The US dollar index (DXY) also retraced overnight by a marginal 0.02%, but it looks like it wants to turn higher for another attempt at new highs. There’s not a lot of market driving news scheduled after retail sales, so it’s likely to be down to how much short covering there is left as to how higher the dollar could travel before the week’s close. Famous last words, but we do not expect the same kind of volatility across FX markets like we’ve seen the past two days, especially if bulls and bears are closing out ahead of the weekend.

Barring a miraculous recovery, EUR/USD is on track for its worst week since October. Now trading beneath its 200-day eMA we suspect bears could seek to fade into minor rallies below 1.1950, although a key level of support today is clearly going to be 1.1900 (which it sits just 15 pips above at the time of writing).

UK retail sales is up at 09:30 BST, although we doubt it will maintain the momentum of a 42.4% annual rise seen in May. Although given the strength of the US dollar then a weaker than expected report could send cable lower still.

GBP/USD closed below 1.3900 yesterday although retraced through parts of the overnight session, et momentum is now turning lower ahead of today’s retail sales. A swing high has formed at 1.3945, so a break above it warns of a deeper correction. Until then, the bias remains for a retest of 1.3900 and potentially yesterday’s low.


Learn how to trade forex


Commodities: 72.0 could be pivotal for Brent futures

Metals retraced overnight against their overtly bearish moves seen the prior session, although the relatively light retracements are more likely to be traders squaring their positions up ahead of the weekend than anything more meaningful. Palladium rose 1.84%, platinum rose 1.5% whilst silver and gold rose 1.08% and 0.65% respectively.  

Oil prices were lower for a third day as WTI retested yesterday’s low yet remains above 70.0 ahead of the European open. Brent futures are also lower, although it has printed a bullish pinbar on the four-hour chart to show demand at 72.00.

If we switch to the hourly chart, we can see that the weekly pivot, 100-hour eMA and 72.00 are providing support. So we need to see prices recover from here to be confident the low is in place. However, bearish momentum from its 74.95 high is more aggressive than the bullish momentum that led prices to that high, so we are on guard for a break of yesterday’s low which could signal its next leg lower. And how the US dollar behaves today is likely to be a major part of which side of 72.00 brent closes on today.  


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.

More from Commodities

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.