Opening Bell: Dollar, Gold, Futures Pause Ahead Of Jackson Hole; Bitcoin Slips
Investing.com | Aug 25, 2021 08:36AM ET
- The debate on what the Fed may announce at Jackson Hole heats up
- Oil eased
- Yields waver
- On Thursday US GDP and initial jobless claims are published.
- The ECB releases the account of its monetary policy meeting on Thursday.
- US personal income and spending data for July is released on Friday.
- The STOXX rose 0.1%
- Futures on the S&P 500 were unchanged
- Futures on the NASDAQ 100 were little changed
- Futures on the Dow Jones Industrial Average were little changed
- The MSCI Asia Pacific index rose 0.1%
- The MSCI Emerging Markets index rose 0.3%
- The Dollar Index was little changed
- The euro fell 0.1% to $1.1744
- The Japanese yen fell 0.1% to 109.77 per dollar
- The offshore yuan was little changed at 6.4733 per dollar
- The British pound was little changed at $1.3721
- The yield on 10-year Treasuries was little changed at 1.29%
- Germany’s 10-year yield advanced one basis point to -0.46%
- Britain’s 10-year yield advanced two basis points to 0.55%
- Brent crude fell 0.1% to $70.97 a barrel
- Spot gold fell 0.6% to $1,792.74 an ounce
Key Events/h2
Futures on the Dow, S&P, NASDAQ and Russell 2000 as well as European shares were little changed in pre-US market trading on Wednesday, despite aggressive dip-buying of Chinese technology stocks yesterday which helped push the S&P and NASDAQ indices to new records during Tuesday's New York session.
The dollar and gold seem to be treading water ahead of the Federal Reserve's Jackson Hole symposium which starts tomorrow.
Global Financial Affairs/h2
In Europe, the STOXX 600 rose slightly at the open. During the Asia session, the Hang Seng Tech index stalled after a powerful rally yesterday. As prices rose, it seemed investors started to recall the risk of China's ongoing tech crackdown for which there is yet no sign of easing.
Ahead of this weekend's Jackson Hole event, a variety of market analysts are predicting opposing outcomes. Goldman Sachs thinks an announcement regarding tapering the US central bank’s bond buying program is likely.
Others expect Fed chair Jerome Michael Burry , of Scion Asset Management, which had bet heavily on long long-term Treasuries as of the end of June, thinks they're set to fall.
For now, yields on the US 10-year Treasury note turned slightly lower, as traders bought yesterday’s dip.
If rates climb back above 1.35%, they will complete a bottom, taking them back to 1.5%, for another test of that level. If that area is breached, we expect yields to keep climbing as Treasuries fall—making Burry, best known for his partiicipation in The Big Short—a lot of money.
If yields continue to find resistance below the previous falling channel, which failed to support the trading pattern, Treasuries will only rise. We'll have to wait and see what Powell announces, or doesn’t, this weekend.
The dollar faces the same test. If the Fed tapers sooner, that will boost the greenback; ongoing quantitive easing will continue to weigh on the USD.
The global reserve currency is in a vice between the support of its two rising channels—the shorter one since the Aug. 1 bottom and the longer one since the June 23 low—and the resistance of the Mar. 31 high. That high was surpassed on Aug. 19, establishing a rising peak and trough formation and a double-bottom which increases the odds of a continued uptrend.
Gold is also being pushed and pulled between supply and demand over different timeframes.
The yellow metal completed a falling flag, bullish after the preceding surge. However, it has also found resistance by a Death Cross right at the top of a falling channel. If the price continues to fall today, it could form an Evening Star.
Bitcoin found support at the bottom of a rising channel after yesterday’s sharp selloff.
We consider this a buying-dip after a bullish pennant. The cryptocurrency also bested the 200 DMA, and the 50 DMA crossed over the 100 DMA which painted a broad picture of improving pricing.
Crude oil slid after its largest two-day rally since November, as investors assess the demand outlook amid the ongoing coronavirus pandemic.
Technically, WTI’s rise is within a falling channel that is challenging a potential Descending Triangle top.
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