MARKET BRIEFING – LONDON OPEN 27.08.2015
The Dow Jones Industrial Average index surged higher last afternoon, closing the day with the biggest single day gains since 2011.
The indicator was trading 627 points higher and after incurring substantial volatility during the day closed 619 points up, which amounts to 3.96 percent of the index increase. S&P 500 at the same time rose to 3.90 percent, lifting by 72.90 points to 1.940,51 level.
William Dudley, the President of the NY Federal Reserve has hinted in the yesterday’s speech at the press conference about the local and regional economy that the interest rate hike is still on the agenda, though with probabilities of the event occurring later than in September, as was previously projected by investors based on the Janet Yellen earlier communications.
The influential speaker has also reassured the auditory that the recent turmoil in China will not affect the US economy significantly.
“The decision to begin the normalization process at the September FOMC meeting seems less compelling to me than it was a few weeks ago,” he said.
“The stock market has to move a lot – and stay there – to have implications for the US economy. What we’re seeing is not a US problem. This is very different from the financial crisis.”
The indications of the hike delay, meaning that the credit costs will remain at the low levels for some time have calmed down the investors. The action is expected to affect positively the global markets, as the prospect of the investments outflow now seems to be reduced.
Nevertheless, Chinese markets continued on the way down, with even the Tuesday’s interest rate cut and further injection of 140 billion yuan by the government on Wednesday were incapable to support the situation. The Shanghai Composite closed down 1.3% yesterday, the fifth consecutive session towards the south.
The People’s Bank of China decided to cut interest rate for the fifth time in nine month so to induce banks for more funds availability to the public, as Chinese economic growth and manufacturing output are slowing down. The current official figures show the growth rate at 7 percent, whereas many analysts agree that the real figure will be closer to 5 percent.
European markets were tumbling as well, with the British FTSE 100 closing the day 102 points lower and 15 percent down from its record high. Germany’s DAX and Spain’s IBEX both lost 1.3 percent, while the French CAC dropped 1.4 percent.
The US Dollar index has opened this morning higher, trading up for the third consecutive day. The index is currently fluctuating around 95.35 level, rebounding from the Monday’s low of 92.52.
EURUSD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1.1464
Target 2: 1.11164
Projected range in ATR’s: 0.0141
Daily control level: 0.0980
GBPUSD
The intraday technical outlook
Trend 1 hour: Down
Target 1: 1.5571
Target 2: 1.5345
Projected range in ATR’s: 0.0113
Daily control level: 1.5615
USDJPY
The intraday technical outlook
Trend 1 hour: Down
Target 1: 121.17
Target 2: 118.57
Projected range in ATR’s: 1.3040
Daily control level: 116.80
USDCHF
The intraday technical outlook
Trend 1 hour: Down
Target 1: 0.9680
Target 2: 0.9410
Projected range in ATR’s: 0.0135
Daily control level: 0.9780
USDCAD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1.3428
Target 2: 1.3154
Projected range in ATR’s: 0.0130
Daily control level: 0.0137
AUDUSD
The intraday technical outlook
Trend 1 hour: Down
Target 1: 0.7221
Target 2: 0.7021
Projected range in ATR’s: 0.0100
Daily control level: 0.7360
GOLD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1143.58
Target 2: 1107.58
Projected range in ATR’s: 18.00
Daily control level: 1112.00
OIL
The intraday technical outlook
Trend 1 hour: Down
Target 1: 45.80
Target 2: 42.50
Projected range in ATR’s: 1.6471
Daily control level: 49.30
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