USD Down, Risk Assets Up Despite Softer Yuan
The market sentiment has been negative in recent weeks, keeping risk assets on the defense, mainly due to the economic troubles in China, but also due to a less dovish FED. As a result, the US dollar has been making decent gains but today it experienced a slight retreat as investor sentiment improved, especially in the tech sector. This comes after a decent start to the week. While US futures initially remained steady, they have now shifted higher, with S&P 500 futures up by 0.6% and Nasdaq futures up by 0.8%. European indices, on the other hand, are making up for some ground lost yesterday, with gains of more than 1% across various indexes.
EUR/USD surged to a peak of 1.0930 but encountered resistance from sellers at the 100-day moving average at that critical level. As a result, it has retreated below 1.0880. Meanwhile, USD/JPY is hovering around 145.70 levels, after falling to 145.50 earlier. This can be attributed in part to slightly lower yields on long-term Treasuries today, which has introduced a bit of uncertainty into the market. Although we are following the price action in bonds since this market often behaves independently during US trading sessions.
Despite the Yuan’s relative weakness, even in light of China’s efforts to stabilize its value, commodity dollars have reversed higher today and have managed to disregard this concern, at least for the time being. Gold moved above $1,900, gaining around $18 from last week’s lows, but it has been finding resistance at the 200 SMA on the H1 chart and it is starting to reverse lower again now, following the price action in the Euro. We are short on Gold from last night, while opening another sell AUD/USD signal a while ago, since the overall trend remains bearish for risk assets and this retrace seems to be coming to an end.
AUD/USD Live Chart
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