US Treasury Bonds reach 15-year highs

The US Treasury bonds reached 15-Year highs yesterday, indicating a growing demand for US Treasury bonds. In Yesterday’s American session the Philadelphia Fed Manufacturing figure for August came in greatly higher than expected, indicating a resilient manufacturing industry in the US, which in turn could provide some leeway for the Fed should the decide to continue in their aggressive interest rate hike path.Over in the UK, we note the lower than expected retail sales rate, indicating a deterioration in the UK economy, as they came in greatly lower than what was anticipated. In the commodities markets, India announced a bilateral agreement with the UAE, allowing the purchasing of oil to be settled using each country’s respective currency.

In the US equities markets, we note that Walmart’s (#WMT) earning’s exceeded expectations, sending the stock price higher following the earnings release. In today’s early Asian session, we highlight the CPI print for Japan, indicative of easing inflationary pressures on the Japanese economy. Yet, the Yen’s exchange rate with the dollar may be reaching levels that could facilitate an intervention by the BOJ as was hinted last week. Therefore, despite the dollar gaining on the Yen, we may see a reversal should the BOJ intervene. Furthermore, China according to Bloomberg has told State Banks to escalate Yuan intervention, potentially indicative of the seriousness of China’s economic woes with the Government applying pressure on local prefectures to protect the Chinese economy from further fallout.

EUR/USD appears to be moving in a sideways fashion, with the pair now appearing to be moving between the 1.0838 (S1) support and 1.0927 (R1) resistance levels. We maintain a neutral outlook for the pair and supporting our case is the RSI indicator below our 4-Hour chart which is currently near the figure of 50, implying a neutral market sentiment, in addition to the narrowing of the Bollinger bands which imply low market volatility. For our neutral outlook to continue, we would like to see the pair remaining confined between the 1.0838 (S1) support level and the 1.0927 (R1) resistance level. For a bearish outlook, we would like to see a clear break below the 1.0838 (S1) support level with the next possible target for the bears being the 1.0740 (S2) support base. On the other hand, for a bullish outlook, we would like to see a clear break above the 1.0927 (R1) resistance level with the next possible target for the bulls being the 1.1040 (R2) resistance ceiling.

WTI appears to be fluctuating around the $80 psychological level, with the commodity currently resting on the 80.00 (S1) support level. We maintain a bearish outlook for the commodity from a fundamental level. Yet on a technical level, it could appear to be moving in a sideways fashion due to the RSI indicator below our 4-Hour chart currently registering a figure near 50, implying a neutral market sentiment. For our bearish outlook to continue, we would like to see a clear break below the 77.00 (S2) support level with the next possible target for the bears being the 74.00 (S3) support base. On the other hand, for a bullish outlook, we would like to see a clear break above the 81.75 (R1) resistance level, with the next possible target for the bulls being the 84.10 (R2) resistance ceiling. Lastly for a neutral outlook, we would like to see the commodity fluctuate around the 80.00 (S1) level and failing to break above the 81.75 (R1) resistance or below the 77.00 (S2) support base.

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In today’s European session we highlight the Eurozone’s final HICP rates for July, following by Canada’s Producer Prices rate for July, which are due to be released during the American Session. We also note an easy going Asian session on Monday, with no major financial releases being expected.