STATE OF THE MARKETS

Markets mixed amid conflicting Feds. While Nasdaq (+0.13%) made new highs, Dow (-0.21%) and S&P (-0.11%) closed lower on Wednesday after Fed’s officials contradicted their FOMC statement during the congress testimony. In reaction, the currencies market has stalled for the past few days as Dollar (DXY) was on firm bid around 91.80 while the 10Y yields remain below 1.50%

Crude continued its tug of war around the $73/bl mark after EIA reports indicated that US inventories declined (7.6m bl) more than expected (3.9m bl) as summer travels picked up. Gold remains relatively unchanged around the $1,780/oz mark as investors digest Fed’s conflicting signals on inflation.

In the FX space, King Dollar, Sterling, Yen, and Loonie continue the lead in demand for medium to long term accounts as Aussie, Kiwi, Euro and Swiss continue to be on offer. In the short-term term accounts, Aussie seized the helm of demand from Loonie, as Dollar and Sterling returned to demand territories, ousting Euro to offers.

OUR PICK – EUR/JPY

Long to medium term sentiments turned short. Our FX sentiments model points to changing trend in the demand for Yen as Feds turned hawkish last week. As the Dollar could possibly strengthen from rate hike sentiments, Yen and Swiss holders are more likely to support the Greenback on bids. With the ECB is more likely to fall behind in tightening monetary policies, the Euro is more vulnerable especially against the higher yielding currencies. With stocks markets mixed, and no clear setups in commodities, we will turn to the FX markets for trading opportunities. With crowded orders in EUR/JPY, risk for a spike up remains; and we would re-enter if stopped out.

Disclaimer:

This article is for general information purpose only. It is not an investment advice or a solicitation to buy or sell any securities. Opinions expressed are of the authors and not necessarily of MFM Securities Limited or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.