Lukman Otunuga - Research Analyst, ForexTime.com
Anxiety continues to ripple through the financial markets as global developments concerning the lack of clarity on the timing of a US interest rate hike, anxieties over China entering a deep economic downturn, emerging market weakness and continual growth concerns in Europe, Japan and Asia are all weighing on global sentiment.
A risk-off trading environment which has been the product of market instability continues to punish the value of the Sterling which could still be exposed to further pressures against its trading partners. There has also been negative PMI data from the UK economy this month, and these factors are pushing back UK interest rate expectations with this also contributing to the GBP pressure. The GBPUSD has traded to four and a half month lows and remains technically bearish on the daily timeframe. With prices currently residing below the daily 200 and 20 daily SMA, a breach below the 1.5150 support may open a path to the next relevant support at 1.5000.
In the commodity division, Gold has experienced a sharp change of direction and fallen to the downside as a result of positive comments from members of the Federal Reserve that US interest rates can still be raised in 2015. The precious metal which hit a one-month high last week, has given back those gains and more with prices trading around the 1124.0 level as of writing. With market instability and investor anxiety creating erratic moves within Gold, more direction for the metal may be provided once market participants digest the key data releases regarding the developments in Asia, Europe and the America this week.
Some stability can be seen within WTI with support at $44.00 holding since the start of September. A recent drop in US oil inventories inspired some bullish momentum within WTI, but prices have still declined back to the gravitational $44.00 regions. The next major catalyst which may promote a further decline in WTI might be soft economic data from China signalling a decline in demand. Technically WTI remains bearish on the daily timeframe with the next relevant support based at $42.00.
Equities as of whole have taken a hit as a result of the weakened global sentiment. In the European equity division, the FTSE100 has really caught my attention. Mining stocks have plummeted following another weak PMI from China last week, which has resulted in the FTSE100 encountering an aggressive sell-off. Prices have breached the psychological 6000 support with this index remaining technical bearish on the daily timeframe. Any additional pressures received from weak China data this week or even selling in the commodity markets as a whole may result in a further decline to the next relevant support at 5850 on the FTSE100.
The EURJPY remains technical bearish on the daily timeframe as long as prices can keep below the 135.50 resistance. Prices are trading below the daily 20 SMA and the MACD has crossed to the downside. The next relevant support is based at 133.00.
The GBPCHF is technically bearish on the daily timeframe. Prices are trading below the daily 20 SMA and the MACD has crossed to the downside. As long as prices can keep below the 1.5000 resistance, there may be a decline to the next relevant support at 1.4650.
The CADJPY experienced a breakdown below the 89.50 support. As long as prices can keep below the 93.00 resistance, there may be a decline to the next relevant support at 88.00
The GBJPY remains bearish on the daily timeframe as long as the 184.50 resistance holds. Lagging indicators such as the MACD point to the downside and the candlesticks reside below the daily 20 SMA. The next relevant support is based at 180.50.