Stocks slide as dollar makes monthly highs

Even though the USD moved lower during the FOMC meeting minutes, it quickly managed to recover most of the losses According to the Fed’s official report the central bank seems confident it could start tapering its QE program in 2021, at a later stage however. The Fed’s participants agreed that the economy had made progress toward lower unemployment and price-stability goals since the start of the asset purchasing program in December. The Fed’s short-term outlook for inflation was revised higher as a result of incoming data, but the staff continued to expect that this year’s rise in inflation would prove to be transitory. From a more cautioned perspective, the Fed’s participants agreed that the spread of the Delta variant may temporary postpone the full reopening of the economy and create some difficulties for the employment market. Moving forward, during Tuesday’s Asian session, the Dollar Index climbed to a new monthly high pushing most of its counterparts lower.On a separate note the US housing market data for July sent mixed signals on Wednesday as the Building Permits figure rose more than expected while the Housing starts figure dropped more than expected. We tend to note that economic data from the US had been questionable in the past days yet the Dollar prevailed and came out stronger.

The British Pound gained against the USD on Wednesday, even though the UK Inflation data was weaker than both previous and expected readings. Yet, during today’s Asian session the pair reached a new monthly low reversing the gains.

On the other hand, Major US stock markets dropped for the second day in a row on Wednesday, while the selloff may have been extended during the FOMC meeting minutes release. Among the top stocks that slid on Wednesday was Apple Inc. (#AAPL) that lost -2.55% and closed at $146.36. Apple is currently dealing with resentment over its new plans to monitor messages and images on its devices. Apple’s decision to do this could be interfering with user privacy issues yet the company’s real intentions is to safeguard against child sex abuse. On a more optimistic note, Barron’s noted that demand for iPhones has increased substantially in China during recent months.

USD/JPY continues to be in an upward trend line formed since the 17   of August after a bounce on the currently noted (S2) 109.20 support. The currency pair’s ascendance has also forced it above the (S1) 109.80 while if the bullish momentum continues then the most probable target for traders could be at the (R1) 110.35. Possible levels we have noted even higher are the (R2) 110.80 and the (R3) 111.50 which could be targets in the scenario of a more aggressive run higher. The RSI indicator below our chart has moved towards the 70 line but has not clearly tested it indicating some take profits may have taken place at the moment which maybe holding the price action lower. Overall USD is moving in a wider sideways motion between the (R2) 110.80 resistance and the (S3) 108.75.

WTI prices continue to slump

WTI’s price was down for the fifth day in a row on Wednesday steepening the downward trend it had formed since the start of August. Despite the fact that the weekly EIA stockpiles reading indicated a considerable drawdown of -3.234M barrels for the week ending 13   of August, WTI was down as traders focus on the spread of the Delta variant in different countries including the US. At this point updates on the variant seem to have more impact on Oil prices as opposed to weekly metrics. One of the Oil stocks that followed the fall in Oil prices was Chevron Corp (#CVX) that was down -4% and closed the session at $96.7.

The Oil correlated CAD lost against the greenback on Wednesday despite Canadian inflation data being solid and surpassing expectations. The currency pair moved to a new monthly high during Thursday’s Asian session.

Technically WTI continues to be in a downward trend line which we have highlighted with the downside channel on our chart. At the moment WTI is trading nearby the (S1) 63.50 support. With a possible move below the (S1), WTI’s price could move to test the (S2) 61.95 support or even the (S3) 60.60. In the opposite direction a resurgence higher could possibly direct the commodity towards the (R1) 65.35 level. If the buying persists then traders could aim higher for the (R2) 66.85 or even the (R3) 68.70. The RSI indicator below our chart has moved below the 30 level implying an oversold market is present.

Other economic highlights today and the following Asian session:

Today during the European session we get Norges Bank Interest rate decision and the accompanying press conference by Governor Olsen. Later in the US session we get the US weekly initial jobless claims and the Philadelphia Fed Manufacturing Index for August. In the Asian session on Friday we get the Japanese Inflation data for July.

Graphique de l’USD/JPY H4 

Support: 109.80 (S1), 109.20 (S2), 108.75 (S3)

Resistance: 110.35 (R1), 110.80 (R2), 111.50 (R3)

WTI H4 

Support: 63.50 (S1), 61.95 (S2), 60.60 (S3)

Resistance: 65.35 (R1), 66.85 (R2), 68.70 (R3)

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