(Jing Ren – Orbex)
EUR/USD sees limited bounce
The US dollar retreated after PMI data showed a slowdown in business activity. However, the euro’s fall below parity and July’s low indicates that sellers are in control. As last month’s rally turned out to be a dead cat bounce, the path of least resistance would be down. After the RSI sank into oversold territory, 0.9900 from December 2002 saw some bargain hunting. Though the former demand zone around 1.0040 could be a tough level to crack. Renewed selling would send the single currency towards 0.9700.
GBP/USD breaks daily support
The pound bounces over upbeat services PMI. The pair had previously failed to clear the supply zone (1.2300) on the daily chart. The bears’ latest push below 1.1770 has invalidated the mid-July rebound. This is a confirmation that the downtrend could resume in the weeks to come, and the price action might be heading towards March 2020’s lows around 1.1400. 1.1720 is intermediate support in case of a brief consolidation. Stiff selling pressure could be expected at the support-turned-resistance at 1.1950.
NAS 100 struggles for bids
The Nasdaq 100 feels the pressure from signs of a slowing US economy. A break below the psychological tag of 13000 has put the bulls under pressure. 12800 on the 30-day moving average is another test of buyers’ resolve in the short term. 13080 has become a fresh supply area, and as the RSI recovers into the neutral area, renewed selling interest could cap a potential rebound. The bulls will need to reclaim 13400 before the index could secure a foothold again. Otherwise, it could be vulnerable to another round of sell-offs.
Could the US have a depression, EUR/USD .8800
(Clifford Bennett – ACY Securities)
The US economy is in serious trouble and heading south.
Yet, instead of hard analysis, most economists are providing platitudes to the USA in general.
The fixation on strong labor levels has completely mis-directed the gaze of many from the main stage. Which is consumers, lowest confidence since the 1950s. Retail sales, now flat. Declining services and manufacturing sectors. Sky high property prices that are extremely vulnerable to a sharp reversal scenario unfolding.
Today we saw the latest Manufacturing PMI which was the lowest in two years.
Still expansionary, but the downward trajectory of the PMI should be of concern to all. Recent factory and other manufacturing data series have even suggested contraction is already at play.
I keep trying to remind people that the Great Depression started with a manufacturing slow down. This time, the manufacturing slow-down stretches across China and Europe too.
The latest New Home Sales data showed yet another collapse in buying interest. While the rich have continued to shop and push up record price levels in some areas, for the United States as a whole, there has been a clear downward push in construction, borrowing and buying interest for some time. Those recent record price settings are looking very much like a feeble last small sky-rocket that having sparkled momentarily, can fall back to earth with a thud.
All of this data is compellingly worrying. There is no valley to look across to happy days on the other side. The US economic free call is gathering pace, rather than bottoming.
Watch out everyone. This is going to be ugly.
Who said Depression? I did.
Often, what happens is what no one expects. Hopefully only a recession, but never in modern times have the three largest economies in he world looked so simultaneously harried. There is no strong growth in another region to rescue the other this time.
The USA still has a safe-haven attraction to many a global investor. For this reason, and that increasingly US corporations will again be bringing funds home for safe keeping, mean the US dollar rally may yet be young. It is the ultimate investment hedging vehicle in the world at the moment.
The Euro, which I forecast last year would hit .9700 this year even before Ukraine, may now do even worse toward .9200 and .8800.
This is how panicked the global investment industry may become. That US dollar still looks good to me.