Trading Market Commentary August 31, 2017


Commentary on US  Market 

US market largely ignored the Foreign exchange volatility yesterday and appeared to be living off of the rejuvenating numbers from Wednesday's strong ADP report, coupled with optimism for Friday's Non-Farm Payroll release. Equities held steady for the majority of the day with once again the broader NASDAQ and S&P500 at the forefront.

The NASDAQ Composite is just short of its all-time high level at this point, and considering the positive momentum, a breakout to fresh highs appears baked in the cake. The Heavy-Tech benchmark is now near the 6000 level once again after having a lengthy and volatile correction which finished on Thursday having a clear breakout of the predominant pattern.

The NASDAQ Composite rallied 60 points or 1.0%  to 6,429, while the S&P500 Index gathered 14 points or 0.6%  to 2,472, and the DJIA (Dow Jones Industrial Average) progressed 60 points or 0.3%  to 21,952 in relatively heavy volume on the day.

Commentary on European Markets

European equities markets continue to be under pressure, in spite of the drop in the Euro Dollar within the last few days, which can mean difficulties for in the up coming weeks. 

The fundamental equities gained some ground, aided by the single currency continues to relinquish a recent up side move right after reported data that showed ECB (European Central Bank) players had been getting worried about the currency's latest rise.

Early on numbers from the Europe made it easier for markets to recover lost momentum. Inflation number of 1.5% in August which has been the highest in 4 months. Retailer sector helped drive all primary Indexes stronger on a day while trading markets were ready for a bit of good news.

Regrettably, the German economic engine saw different domestic numbers following it's unveiled Retail Sales for month July, which was lower than anticipated. As the German DAX30 Index and the French CAC40 Index went up by 0.4% and 0.6%, respectively, the U.K.'s FTSE100 Index rose 0.9% for the day. 

Commentary on Asia-Pacific Market

Asia-Pacific stock markets across the region completed a mixed session on Thursday however it was a solid day for the Nikkei225 with closing up 0.7%. Talk in Japan was very much focused on Theresa Mays three day visit and also the potential rumors surrounding UK-Japan massive trade deal. 

There seemed to be a feeling that Thursday's trading session came across as a rebalancing following the North Korea event particularly with a great deal economic data emerging during in the day and also the news reports upon the conclusion of the BREXIT discussions.

The Aussie's ASX200 rebounded 0.8%, however, did see the AUDUSD currency dropping 0.4% following a release of China’s PMI (Purchasing Managers' Index) numbers. Even though the manufacturing index did better than expected, we were treated to a more substantial loss of the service sector: 53.4 in comparison to 54.5 previously released. 

Both the Shanghai and HK's Hang Seng Indexes finished lower just that large cap Index having played out much better recently handed back more yesterday. India's SENSEX traded well on Thursday following a much slower growth rate than estimated. Posting a 5.7%, this is lower than the earlier 6.1% quarter - the manufacturing had been a key let downer.

Commentary on Currency and Commodity Market

The latest boost in the EURUSD pair has not gone not noticed among central bankers and politicians, and the perhaps most prominent currency pair’s climb to 1.20 prompted a reaction yesterday from the European Central Bank which said that the risk of a too strong currency must be checked.

However, it took just a few hours for the US Treasury Secretary Steve Mnuchin to respond to the risks of a too strong US Dollar, as the currency market reacted with an off the wall trading session towards the verbal intervention. 

The EURUSD pair is currently trading at 1.19 and 1.18 range. With the latest reversal day in the Greenback, a likelihood of odds support a rally in the US Dollar, most notably due to the extreme negative sentiment towards the US currency.  

The British Pound (GBPUSD) trades lower towards the month end bearish reversal level of 1.2811, while the market has observed Japanese Yen trading in a relaxed position of a 110 handle throughout the day. 

Yellow metal returned to its robustness after a pullback towards $1300 level, validating the latest critical breakout in the precious metal market, while crude oil also showed signs of life on Thursday after many days of dismal performance, entering the euphoria with a gain of 2.4%.

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