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Global Markets Remain Subdued


Global markets remain subdued, but they are holding a mildly positive tone coming into this morning’s action. The June Japanese leading economic index was in-line with estimates, while there were reports that China’s Ningbo container port would reopen after operations were suspended by a COVID outbreak. Asian shares had mixed results with gains in the Shanghai Composite and South Korean Kopsi and modest losses by the Japanese Nikkei and Hong Kong Hang Send indices. The latest German IFO survey came in lower than forecasts. European stock markets were generally posting mild early gains and were led to the upside by the UK FTSE-100 and French CAC-40. The North American session will start out with a weekly private survey of mortgage applications, followed by July durable goods which are forecast to have a moderate downtick from June’s 0.9% reading. San Francisco Fed President Daly will speak during afternoon US trading hours. Earnings announcements include Autodesk, Salesforce.com and Snowflake after the Wall Street close.

S&P 500: The market experienced new all-time highs yesterday, but also experienced a very small range for the day. Traders await new news which might provide further support, but recent economic data has been mixed and traders will continue to react to less than ideal economic news. Afghanistan is taking the lead on international news, but the economic impact does not seem significant. Traders are also monitoring virus updates as the market seems to have priced in a near term peak in cases, and declining hospitalizations ahead. Near term support for September E-mini S&P comes in at 4462.75, with 4527.75 as next upside target.

Other US Indexes: Traders await Jackson Hole news but short-term, there seems to be talk that there is enough evidence for a slower economy to allow the Fed to hold off on tapering, and this has helped drive the Dow up from last week’s lows. Support is at 35,145, with 35,949 as next upside target. The NASDAQ has already reached its swing target with the steep run off of Thursday’s low. Money flow has been a very positive influence and with so much liquidity in the market, NASDAQ buyers have been very active. The next upside target is 15,446. 


DOLLAR: The Dollar has found its footing with mild early gains, but it remains within an inside-day range that is far below last Friday’s multi-year high. Global equity markets remain well supported this morning which may be keeping further gains in check, but the Dollar may need to have more clarity on Fed tapering from Fed Chair Powell Friday before it can regain strong upside momentum. However, today’s durable goods reading may give the Dollar a boost it can avoid a negative monthly result. Near-term support is at 92.75 as the Dollar will likely need a downshift in risk appetites to lift well clear of Tuesday’s 1-week low.

CANADIAN DOLLAR: The Canadian dollar appears to have run out of upside momentum as it is finding mild pressure early in today’s trading. This week’s sharp updraft in energy prices has been a source of carryover support, so the Canadian dollar could reach a new 1 1/2 week high if today’s EIA report is positively received by the market. Near-term support is at 78.95 as the Canadian dollar should remain fairly well supported as long as global equity markets maintain a positive tone.


Treasuries have kept within fairly tight ranges, but that has not prevented Bonds and Notes from reaching 1-week lows early in today’s action. While global markets have remained subdued for a second session in a row, they continue to hold onto a mildly positive risk tone that has weighed on Bond and Note prices. Yesterday’s 2-year note auction showed strong demand with a bid to cover well above the 6-month average, and that has been a source of early pressure on Treasuries this morning as that could bode well for today’s 5-year note auction results. While the reopening of the Ningbo port in China and full FDA approval of the Pfizer vaccine are signs of progress, the shift towards a “virtual” Jackson Hole Fed Symposium shows that the spread of the Delta COVID variant remains a front and center issue for the Fed. As a result, Bonds and Notes may need to see surprising strong US data results today and tomorrow in order to have a sizable downside move in front of Friday’s critical speech from Fed Chair Powell. The North American session will start out with a weekly private survey of mortgage applications, followed by July durable goods which are forecast to have a mild downtick from June’s 0.9% reading. San Francisco Fed President Daly will speak during afternoon trading hours.

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