It’s been a choppy day of trade, with much of Asia and Europe treading water while the US is expected to open marginally higher.
It’s clear that investors already have an eye on the Jackson Hole Symposium later in the week and we’re perhaps seeing some apprehension and anxiety ahead of that. I’m not entirely sure where that has come from because they’ve been perfectly happy to bat away hawkish warnings in recent weeks and if anything, the data has turned slightly in their favour.
It may simply be a case of profit-taking after a good run in case the message finally gets through and causes a wobble in the markets. Equally, we could just be seeing markets being set up for a strong end to the week if Chair Powell says anything remotely dovish that excites traders once more.
Positivity in PMIs not going to last
Outside of the US, it doesn’t seem there’s much to be optimistic about. European PMIs this morning, while marginally beating expectations in some cases, were pretty poor. The flash services PMIs for France and the euro area just about remained in growth territory but the trend suggests that’s only a matter of time.
The UK services PMI was a positive surprise, falling only a touch from 52.6 to 52.5 against expectations of a much steeper decline. Unfortunately, not only was the manufacturing PMI frankly appalling, the performance of the far more important services sector is highly unlikely to last. A recession is coming, regardless.
Steady after Friday’s tumble
Bitcoin has stabilised a little in recent days following Friday’s sharp plunge. It appears to have run into support just above $20,000, around the same level it did back in late July. It’s also around the 61.8% retracement of the June lows to the August peak. As appears to be the case elsewhere, we may be seeing traders adopting caution ahead of Powell’s Jackson Hole appearance. A break below $20,000 could be a major blow.
For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.
His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.
Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
