At the beginning of the week USD/JPY fell hard and sudden, dropping from 119.70 to a low of 116.08 after information was released to public according to which S&P 500’s future contracts hit circuit breakers. Investors’ fear of a market crash has been translated into the trend. Along with the USD, the European markets also went down. Nasdaq’s futures also hit circuit breakers yesterday morning. The risk aversion sentiment falls well for the JPY, the circuit limit being extended to 7% this morning. Besides this safe haven approach, JPY is also backed-up by the fact that Fed is pushing further ahead the possibility of a rake hike.
After the recent storm in the financial markets created by the Chinese stock crash, PBoC (People’s Bank of China) announced yesterday a significant cut in the key rates in an effort to raise the long-term liquidity and also to jump-start the economy. The USD/CNY has been set yesterday at 6.3987, after a Monday fix of 6.3892.
Surprising for everyone, the German IFo (Information and Forschung – research in German) institute published a set of indicators that came up better than forecasted. The release refers to the Business Climate indicator, Expectations and the Current Assessment indicator, all of which pointing above the figures expected by analysts.
Staying in the indicators area, the US Consumer Confidence Index – the CCI – reached its highest level since January, coming in at 101.5 with an expected value of 93.4. Helping the Dollar is also the Services PMI (Purchasing Managers Index) reaching a little over the expected 55.1 at 55.2. On the other hand, the new home sales indicator didn’t reach the expected value, missing 0.502m and arriving at 0.507m.
USA’s benchmark, the WTI barrel (West Texas Intermediate) went up with over 3% yesterday and managing to recover a safe distance from the $39.00 threshold. After reaching a multi-year low at a little above $38.00, crude oil prices have bounced back to almost $40.00 with the help of PBoC’s rate cuts (both the benchmark rate and the RRR) pushing even further the already up-beat tone. European and US stock markets was a good support for the barrel of WTI to regain its strength. Even though the current price is at $39.64, WTI must break above the first resistance $46.94 level (high from Aug.3) to consolidate this uptrend. On the other side we have Tuesday low at $38.16 (Aug.25) and our next support is monthly low from February 2009 ($34.03 per barrel).
