Review for August 19: the market needs soothing. Forecast for Thursday, August 20

By | August 20, 2015

The situation is complicated for the stock markets leaked from Bloomberg: Agency published a pretty headline hints at the aggressive attitude of the Committee of Representatives. This put pressure on US stocks, however, when the protocol was released, it was too peaceful, making it possible to correct indices.

Now most economists expect the first rate hike in December (60%), while for the September serve only 40%. European and Asian benchmarks suffered losses in tandem all the same concerns about the state of the Chinese economy. Gold surged general fear to $ 1134.64 per ounce. Meanwhile, Brent traded near seven-month low of 46.81 dollars per barrel.

Chart of the day:

gold futures chart
Gold futures chart

Economic data of the previous day:

  • The Bank of China has poured $ 200 billion into the two state bank in an attempt to stabilize the country’s economy. Rumor Sunday Central Bank will reduce rates by 50 basis points
  • Germany adopted the third package of aid to Greece in the amount of 86 billion euros
  • US: July, the volume of building permits 1.119 million against 1.232 million
Forecast for Thursday, August 20
Stock market
The Greek Saga” comes to the finale, or to the intermission, and now the speaker of the German DAX (FDAX) depends more on the concerns about the state of the Chinese stock market. The slowdown in China with a corresponding fall in demand could threaten not had time to recover from the European economy. Nevertheless, the DAX had a good chance to recover again, as the “Greek theme” and the correction after the recent collapse. 
The other day the head of the IMF Christine Lagarde hinted that the fund is willing to write off the debt burden with Athens. Lagarde said that the obligations of Greece are too large for the country to deal with them yourself through the reforms, for which agreements have been reached. If these words are to be implemented in practice at the DAX will be a good chance to recover. However, the current it will clearly fall correction in the coming days, which means the area 10680 – attractive shopping with the immediate goal at around 10860.
Commodity and raw market
Brent was crushed by increasing the weekly index of commercial oil reserves in underground storage facilities of the United States that sent the asset below 48.00, but already there is tripped technical history – redundant warrant at the breakdown of the January low. However, a further drop is increasingly clear: The economic situation today is far from what we saw in the crisis of 2008, namely at the level of 2008 is now pushing asset. If a strong support around 45.60 will be passed, then the path only at 39.60.  

And this is unlikely to allow oil producers: shale projects can not exist in such levels. In the short term there is another factor which can support the demand for oil – approaching “hurricane season“. US National Hurricane Center says 60% chance of a tropical storm in the next two days. If the path of the hurricane will pass near the Gulf of Mexico, this may cause concerns about downtime in oil and, consequently, lead to a surge in demand for correctional Brent. The immediate goal on the way up can become now become a resistance level of 48.60.

Currency market
GBP / USD pair recently demonstrated interesting dynamics that can talk about large-scale change in market sentiment. The beginnings for the strengthening of the pound sterling laid Bank of England Governor Mark Carney, noting the inevitable rate hike. Published on Tuesday, inflation data although confirmed low levels of CPI, but pointed to the positive trend – increase in the index after a long fall. Recall that the labor market and inflation are the two main indicators, which will look at the decision of the Central Bank on the first rate increase. 

If the consumer price index confirms the upward trend in the next month, it could force the Bank of England to behave more aggressively. Today, we call attention to retail sales. Any positive data on current can cause spikes in demand for GBP / USD. The pair almost 8 weeks locked in the range 1,5430-1,5660. If the upper limit of the sample is confirmed, the next targets will be the levels 1.5720 and 1.5790, and the market is talking about the resumption of the bullish trend.

Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.

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