Is it too soon to mention the Hindenburg Omen again, a subject that we discussed last week? Probably, especially given the fact that all the conditions and parameters haven’t been met yet. However, the DJIA has closed down three days in succession, a first for this year and the drop has been quite substantial. The DJIA closed down 0.84% on Wednesday to fall back through the critical 15000 level, this represents a 542 points fall from the yearly high and a circa 250 pip drop on the day from the daily high. Another index worth keeping a weather eye on is the dollar index, which having touched the 200 SMA over the past two days, finally breached that critical level on its way through support once again in the afternoon’s trading session. So why the fall? We’re genuinely unsure…
Search as hard as we could we just couldn’t find any macro events in the N.Y. session that burst the recent balloon in equities, they’ve just gone ‘pop’. Now technical traders will be claiming divine wisdom that the market is simply undergoing a technical retracement to perhaps fibonacci levels as profit taking emerges, and to be fair that could be the phenomena we’re currently witnessing, as opposed to a sudden loss in sentiment. But what this correction will have done is spooked the private investor and those individual investors who joined the 2013 party too late will becoming nervous as to this three day loss extending further. For forex traders the dollar experienced a rout…
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Cable finally pushed through the 200 simple moving average the momentum pushing it through R1 to set a fresh three month high pushing through the key psyche level of 1.57000 to reach a high of 1.57015, whilst EUR/USD set a new three month high reaching a daily high of 1.33606.
The selling rout on the dollar continued across to dollar yen, reaching a ten week low, at 96 the fall is steep from the plus 100 levels witnessed earlier in the year. Dollar fell to print to a nine week low versus the Swissie (Swiss franc) at 9200. Yen continued to appreciate versus all its major peers.
Economic calendar events that could affect market sentiment and trader decisions
The fundamental policy events ranking as high impact on Thursday are mainly centered on the American economy. Retail sales for the month of May are predicted to grow modestly by circa 0.3% month on month. The expectation is that the rolling weekly unemployment claimant count will rise from 346k to 354k. This lack of progress on jobs numbers could once again lend support to the theory that the American recovery is in many ways a “jobless recovery”, relying on increased value of assets as opposed to a genuine economic recovery reaching right down to alter the longer term unemployed figures.