Holiday update – Wednesday 18th August 2021

Mark NugentAugust 2021, Daily Alert

Holiday update – Wednesday 18th August 2021

Tuesday

After I wrote to you yesterday, we saw Eurozone GDP (on target) and US Retail Sales (miss), followed by Fed Chair Powell, who stated that it is not yet clear if the COVID-19 Delta variant will have important effects on the economy and that the Fed is in the process of fully putting away its tools designed for actual emergencies. Is he being a bit sniffy?

Sentiment was risk-off with equities and the US 10-year yield down and both the USD and JPY indices up. I placed a Japan225 long trade via a pending order which has been triggered. Stop loss of 1x ATR and 2% risk. I placed a second order, WTI long, also via a pending order at the top of yesterday’s small down candle. It is yet to be triggered.

Now

The Reserve Bank of New Zealand kept the interest rate unchanged at 0.25% vs expectations for a 25bps hike, due to the recent imposition of level 4 restrictions on activity across New Zealand and general uncertainty around Covid. However, the Bank was seen as bullish as they projected a hike by year-end and another 100bps of increases in 2022.

In terms of trading, any improvement in sentiment will pull up equities from yesterday’s lows. WTI is slowly rising from a solid support area.

Later

The major risk event is the FOMC Minutes at 7pm BST. We also have Canadian CPI and the Australian Unemployment Rate and Employment Change.

I’ll be back tomorrow.