Reuters reports that despite continued central bank intervention in the FX and bond markets, the Indonesian rupiah hit 14,777 to the US dollar, its weakest level since the 1997/1998 Asia crisis. That time around the problems started with excessive loans in Thailand to the property sector, then swirled through the region hitting South Korea, among others, then global fixed income markets taking down a few big hedge funds.
Friday Fitch ratings cut Italy’s outlook to negative from stable, and other ratings agencies are considering a downgrade – which currently stands just 2 steps from junk. In response finance minister Giovanni Tria said that the soon-to-be-presented budget will calm investors nerves, saying ‘’budget stability will be respected; the spread [over Bund] will narrow’’. However, Deputy PM Luigi Di Maio said, ‘’we can’t think of reassuring a rating agency and the markets, and stabbing Italians in the back. We will always choose the Italians’’.
DAX 30
Last week’s candle was a clear shooting star and the monthly chart has seen six weeks’ worth of right-shoulder building thus match time spent on the left one. Rather dreary but the monthly MACD continues to be decidedly bearish.
SHORT TERM TRADER: Short at 12635; stop above 12600. Target 12200.
POSITION TAKER: Square.
FTSE 100
The lowest weekly close since mid-April and below Fibonacci 38 per cent retracement support; not the end of the world, but perhaps an amber warning. August saw a small bearish engulfing candle and the monthly MACD has been a mess all year.
SHORT TERM TRADER: New short on Friday’s close at 7455; stop above 7655; First target 7300.
POSITION TAKER: Small short at 7799; stop well above 7700. First target 7400, then 7100.
S&P 500
The strongest weekly and monthly closes ever and the index remains stupidly overbought as it has been for the best part of 18 months. Labour Day holidays in the US and Canada today – then the end of summer.
SHORT TERM TRADER: Square
POSITION TAKER: Square.
BRITISH POUND/US DOLLAR
A hammer on the monthly chart adds a little weight to our view that the drop below 1.3000 was some sort of false break and that cable is still trying to form an interim base around here.
SHORT TERM TRADER: New little long at 1.2925; stop below 1.2700. Target 1.3275.
POSITION TAKER: Square.
EURO/US DOLLAR
Another major currency with a hammer on the monthly chart adds weight to our view that corrective US dollar strength so far this year might be over. It also coincides with the 50 per cent support area.
SHORT TERM TRADER: Cut myself out at a tiny loss.
POSITION TAKER: New long this morning at 1.1595; stop below 1.1485. Target 1.1785.
GOLD
Grim little picture whatever time frame one uses and whichever way one turns it.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
