The U.S. dollar is lower against most major pairs on Friday. The greenback was waiting for U.S. Federal Reserve Chair Powell’s speech at the central bank summit in Jackson Hole but in the end no new information was provided. Chair Powell reiterated the data dependency of the central bank and shared his optimism regarding inflation. The market is already pricing in two US rate hikes in 2018 and the somewhat dovish remarks from Powell did not add support to the U.S. dollar.
China is buying our oil and that could be Iran’s worst nightmare. It seems that the Chinese trade talks went nowhere, but despite that fact, China’s demand for U.S. crude oil might rise anyway. According to Reuters “China’s Unipec will resume purchases of U.S. crude oil in October after a two-month halt due to the trade dispute between the world’s two largest economies.”
A double zig-zag can be in progress on the USD Index down from the 96.98 level. We specifically see sub-wave c) of y in play which can look for support and a bullish reversal near the 95.90/95.70 region.
We’ve reached the stretch run for the dog days of August. Once again there is a mixed market. Just an hour into the new week the Dow Jones Industrial Average is up 109 points and the Nasdaq is down about 10.
Asian equities were trading mixed on Monday after a nervous last week, which saw wild swings in global equities and emerging market currencies. News that officials from Beijing are heading to the U.S. on Wednesday to restart trade negotiations is likely to provide some stability, however, don’t expect much to the upside as these talks are considered low level and won’t likely translate into immediate decisions.
The S&P 500 traded perfectly down to major three-star support on Friday and stabilized. As beautiful as the technicals were, (discussed in the ‘Technical’ section below) the bounce from major three-star support caught a tailwind from positive news on U.S.-China trade talks. It was reported that they are paving a path to resolve the trade dispute by November.