STATE OF THE MARKETS
As markets await earnings season. US stocks traded lower on the week open, with Dow (-0.16%), S&P500 (-0.02%) and Nasdaq (-0.36%), all in flat trading range as players await the earnings seasons kick-off this Wednesday. Breadth was negative as volume decline across NASDAQ (-72%) and NYSE (-59%) with more declining than advancing counters. The US 10Y yields benchmark was relatively unchanged at 1.67% as demand seemed to pick-up.
Crude was lifted above the $59.60/bl after news hit the wires that another Houthi rebels attacked a Saudi’s oil facility in the Middle East. Demand concerns however, keep price under offers below $61.50/bl. Ticking up yields, has kept Gold under pressure below $1,745/oz mark, after Swiss markets saw a flux of Dollar orders as New York closed.
In the Fx space, risk tone seemed mildly off as the safe haven Swiss seized the helm of demand across the board, while Yen eased in demand. Demand for King Dollar appeared positive as the Dollar Index spot and futures held the 92 mark. The Comdolls remain on offers as investors are skittish before the earnings results come to light this Wednesday. Euro Sterling remain range bound, though short term accounts suggest a pullback.
OUR PICK – USD/CHF
Bullish divergence in order flows. We have noticed a bullish divergence in the order flows of Swiss futures since last Wednesday; suggesting the USD/CHF pair might find a bottom soon for another leg up. Spot rate at this point in writing is around 0.9340s with higher bids than offers. A bullish outlook on earnings season would kick Dollar back in demand against safe haven Swiss and Yen, while pushing Euro lower, in our view. As technical suggest a dip to the 50% fib channel is still possible, we would re-enter as long as the exchange rate closed above 0.9180 on the daily.
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