After another brief period of respite, it seems as though the dollar bulls are beginning to flex their muscles once more an the next upside break is being eyed.. Treasury yields re beginning to pull higher again and the trade weighted dollar index is also marking gains. This comes after the Bank of Japan did nothing on their monetary policy, opting to stand pat on their -0.1% negative deposit rate, the yield curve targeting of the 10 year FGB yield around zero and the 80 trillion yen of stimulus. However, with the yen having weakened sharply in recent weeks , the BoJ has slightly upgraded its economic assessment. The market has subsequently started to run for a weaker yen once more and this could be a feature of today’s trading.
Equity markets are a little more cautious after several weeks of gains, with Wall Street only mildly higher (S$P 500 +0.2% at 2263), whilst the Nikkei is higher again (Nikkei +0.5%). European markets European markets are marginally lower in early moves. Gold and silver are being dragged lower again by the renewed dollar strength. Oil is beginning to look far more cautious.
There are no major announcements due on the economic calendar today.
Chart of the Day – Silver
The bears remain in control and rallies remain a chance to sell. The big bear candle from Thursday’s session which broke the price below the key support at $16.14 is a big impact on the chart. The momentum indicators are negatively configured and with further downside potential on the RSI and Stochastics whilst the MACD lines have just crossed negatively again. The pressure on the support at $15.77 which was the key June low continues. Friday’s mildly positive candle has done little to improve the outlook, whilst yesterday’s decline just adds to the pressure. The hourly chart shows that the old support band $16.14/$16.25 is a band of resistance now and rallies that are helping to unwind momentum are a chance to sell. Expect further pressure to test Thursday’s low at $15.82 and the key June low at $15.77, with a breakdown opening $14.75. I am a seller into strength.
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