With a parliamentary majority of just one, Liberal party leader Malcolm Turnbull today became the fourth consecutive Prime Minister to be removed from office. In fact, it’s been about a decade since any one of them managed to last their 3-year mandate. Treasurer Scott Morrison will take his place. The Australian dollar this morning was off 1.8 per cent from this week’s high against its US counterpart.
The Financial Times reports that today the People’s Bank of China has injected the equivalent of $22 billion into the banking system via loans to commercial banks. The Medium-term Lending Facility has offered 1-year money at an interest rate of 3.3 per cent to lend on to companies and local governments. This follows little progress on US-China trade talks in Washington over the last 2 days; no further talks have been scheduled.
DAX 30
Bearish momentum has eased very considerably as the market has become paralysed at 12400, towards the lower end of the range in force since April 2017.
SHORT TERM TRADER: Short at 12635; stop above 12650. Target 12200.
POSITION TAKER: Square.
FTSE 100
Looking slightly tired and top-heavy as we consolidate under 7600. Bearish momentum ought to increase on a weekly close below 7500.
SHORT TERM TRADER: Will re-sell on a close below 7500 today.
POSITION TAKER: Small short at 7799; stop well above 7800. First target 7400, then 7100.
S&P 500
US stock markets are choosing to ignore President Trump’s latest comments and instead will probably focus on this afternoon’s speech by Fed chair Jerome Powell at Jackson Hole, Wyoming. Interestingly the heads of the bank of Japan and the ECB are not on this year’s guest list.
SHORT TERM TRADER: Short at 2795; stop above 2880. Target 2600.
POSITION TAKER: Short at 2805; stop above 2900. Target 2555.
BRITISH POUND/US DOLLAR
The chart pattern of the last 3 days is known as an evening star, day 3 reversing day 1’s rally with a little doji between them. This is bearish but ought to occur at the end of a decent rally – which is not the case here. Maybe zero momentum is to blame.
SHORT TERM TRADER: Small long at 1.2740; stop below 1.2650. Target 1.3000.
POSITION TAKER: Square.
EURO/US DOLLAR
Clinging to the bottom of the symmetrical triangle (which we have re-drawn slightly) and momentum has increased by more than we had hoped. Rather worrying recent ECB data show foreigners selling a record amount of Italian sovereign debt for a second month in a row, €34 billion in May and €38 billion in June; a lot of this was bought by Italian banks and the biggest buyer of all, and has been the case in a very long time, the ECB.
SHORT TERM TRADER: Square for now.
POSITION TAKER: Square.
GOLD
Not nearly as clear as the chart pattern on cable, but gold also has an evening star formation over the last 3 days’ trading. A weekly close below 1180 might add to momentum which has been steadily bearish since mid-April.
SHORT TERM TRADER: Might sell at today’s close.
POSITION TAKER: Short at 1242; stop above 1200. Target 1140.
