Daily Market Review — 25/08/2015
The Main Event of the Day Is German GDP Report
Yesterday’s trading session was called “Black Monday”. Markets around the world experienced high volatility yesterday, which was caused by another drop in Chinese main stock index, which lost about 8.5%. This is how traders react to a slowdown of the world’s second largest economy, which in turn puts pressure on the currencies of developing countries, as well as commodities. As for the EUR/USD, it rose by 350 points, reaching the level of 1.1700, stopped only by the closing of the long positions for this pair. This reaction is caused by fears that the Fed will shift the timing of the first rate hike from September to December. Today, market participants’ attention will be drawn to the publication of the final data of Germany’s GDP, scheduled for 06:00 (GMT).
Resistance: 1.1713, 1.1767, 1.1873
Support: 1.1524, 1.1417, 1.1242
During yesterday’s session the Japanese currency experienced significant strengthening. Although it was influenced by the publication of data on the index of leading indicators in Japan, which went somewhat better than forecast, the main reason was different. The main impact on the dynamics of the pair had information about sell-off in the stock markets in China. Recall that in times of financial and political crises, the Japanese currency is used as a safe-haven asset. Traders also used the Japanese currency as an asset with low interest rates to finance purchases of higher-yielding assets. As a result, the Japanese currency was able to jump to 116.18 yen per USD. Today, market participants will not only monitor the economic statistics from the United States, but also the situation in the Chinese economy.
Resistance: 120.10, 121.27, 121.80
Support: 119.09, 118.23, 116.18
Yesterday’s the major US stock exchanges experienced an unprecedented fall. Yesterday China’s main stock index fell more than 8%, which was the biggest drop since 2007. Investors around the globe are concerned about the slowdown in the Chinese economy, as well as signs of capital outflow from the country. This, in turn, casts doubt on the prospects for global growth. Besides, the situation in the Chinese stock market is undermining unprecedented measures of the Chinese government to support the domestic economy. Also, do not forget that oil quotes are constantly going down, which negatively affects the stock markets.
Resistance: 4102.71, 4196.33, 4366.22
Support: 4027.59, 3995.23, 3906.24
Light Sweet Crude Oil
During yesterday’s trading session the quotes of “black gold” has once again updated the six-year low, which was due to another fall of the Chinese stock market. This situation has raised fears over a slowdown not only in the Chinese economy, but in the world economy in general. Recall that China is the second largest consumer of raw materials and slowing down its economy may cause a decrease in demand for the asset. In addition, it is worth noting that, according to the oil service company Baker Hughes, the number of active rigs in the US last week have once again increased by 2 units. This steady growth is observed for five consecutive weeks.
Resistance: 39.03, 39.83, 40.45
Support: 37.76, 37.50, 37.00