Indices Continue To Slide, UK And CAN Retail Sales

Indices Continue To Slide

Most of the major indices across the globe closed in negative territory yesterday, apart from the S&P 500 and Nasdaq. At the beginning of their trading session, the US indices moved lower, as fears over the Fed potentially tapering the stimulus program at the end of the year, grew larger. Market participants are worried that the reason the US economy seems to be performing well right, despite all the covid-related issues, is because investors know that they have Fed’s support, which may continue helping boosting the economy. However, as we all know, that support is not meant to last forever and the market will have to adjust to that eventually. The question here is, how painful would the cost of that adjustment be? The recent decline, which we are seeing in equities, for now, might be considered as a temporary correction, before another possible upmove.

DJIA — Technical Outlook

Despite declining heavily this week, the DJIA index continues to trade above a medium-term tentative upside support line taken from the low of January 31st. Even if the price slides a bit further south, as long as that uspdie line continues to provide support, we will remain positive, at least with the near-term outlook.

US Initial And Continuing Jobless Claims

In terms of good economic data, yesterday, the US initial jobless claims finally managed to beat its forecast and came out at 348k against the 363k, which was initially expected. This kept slight positivity in the market, not allowing the US indices to sell off too much. But good news was not coming from the US continuing jobless claims indicator, that came out at 2820k, showing a slightly increase from the initially forecasted 2800k figure. The fact that there are still plenty of people continuing to claim unemployment benefits and it seems that the country is struggling to get back to pre-pandemic numbers.

GBP/JPY — Technical Outlook

GBP/JPY continues to its journey south, while trading below a short-term tentative downside resistance line taken from the high of August 12th. Even if, at some point, we see a reversal back to the upside, if that downside line continues to provide resistance, we will remain bearish, at least for now.

As For The Rest Of Today’s Events

Later on in the day, Canada is also expected to release its retail sales numbers, but for June instead, and only on a MoM basis. The core figure is believed to have improved significantly, going from -2.0% to +4.4%. The headline one is expected to rise from -2.1% to +4.4%. If the actual readings show up even better than the forecast, this may help stabilise the declining Canadian dollar, which has been under bearish pressure due to falling oil prices.

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