Equities Trade in the Green on Global Stimulus Bets

RISK APPETITE CONTINUES TO IMPROVE DUE TO EASING HOPES

The dollar traded higher against most of the other G10 currencies on Monday and during the Asian morning Wednesday. It lost ground only against NOK, while it was found virtually unchanged versus NZD. The main losers were CAD, GBP and JPY in that order, while the currencies which underperformed the least were AUD and EUR.

DJIA — TECHNICAL OUTLOOK

After getting held again at its short-term tentative upside support line drawn from the low of June 3rd, the Dow Jones Industrial Average moved higher, getting closer to its key resistance area near the 26420 barrier. But in order to examine further upside in the near term, we would need to see a break above that barrier first. From the shorter-time perspective, although it seems that the current path could be set towards the 26420 level, there is a chance to see a small correction back down before another leg of buying. As long as the index is trading below the 26420 level, we will stay cautiously bullish.

RBA MINUTES REVEAL DISCUSSION OF UNCONVENTIONAL MEASURES

Staying in the central bank world, during the Asian morning today, we also got the minutes from the latest RBA policy meeting. The message was the same as the one we got from the meeting statement, namely, that members remain willing to continue easing monetary policy if needed. What appeared interesting to us is that members reviewed the experience of other advanced economies with unconventional easing measures, such as negative rates and buying government bonds, and noted that a package of measures tended to be more effective than measures implemented in isolation.

EUR/AUD — TECHNICAL OUTLOOK

In the beginning of August, EUR/AUD spiked higher, reaching the area near the 1.6785 level, from which the pair reversed and is now drifting lower. We notice that on the 4-hour chart, EUR/AUD is forming somewhat of a falling wedge formation. These, of course tend to eventually break to the upside, but until we see a clear break through the upper side of it, we will continue targeting lower levels, while moving inside of that pattern.

AS FOR THE REST OF TODAY’S EVENTS

From the UK, we get the CBI industrial trends orders for August, with the index expected to have risen, but to have stayed into the negative territory. Specifically, it is expected to have risen to -25 from -34. Later, from the US, we get the API (American Petroleum Institute) weekly report on crude oil inventories, but as it is always the case, no forecast is available.

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