Market Meltdown: Stocks Plunge as Investors Panic Amidst Interest Rate Surge.

Introduction

In the dynamic world of finance, every twist and turn on the stock market rollercoaster is closely watched by investors, analysts, and traders alike. This week, the market has once again taken a sharp dive, sending shockwaves through major indices. Let’s dive into the details and explore what’s been driving these tumultuous market moves.

A Bumpy Ride: Nasdaq’s Tumultuous Fall

The Nasdaq, often seen as a barometer of tech stocks, took a staggering hit, plummeting by 3.4% over the course of this week. Meanwhile, the Dow managed to salvage a mere 0.84%, and the S&P followed suit, dropping 0.77%. The Nasdaq, unfortunately, experienced yet another day of turmoil, shedding over 1% in a single day and ending up 1.07% in the red. This marks its most substantial three-day drop since February. This negative trend has rattled investors, making an already challenging week even more distressing.

Interest Rates and Treasury Yields: The Culprits Behind the Chaos

The market’s current state of unease is largely attributed to mounting concerns about the trajectory of US interest rates. The persistent rise in US treasury yields, a daily occurrence lately, has only added fuel to the fire. Notably, the benchmark 10-year note reached its highest level since October, underscoring the magnitude of these shifts. In response, the DXY, a measure of the dollar’s strength, surged to a two-month high overnight. However, traders remain cautiously optimistic, considering the mounting discussions surrounding potential currency interventions that could lead to abrupt corrections.

Wrapping Up the Trading Week on a Quiet Note

As we approach the weekend, market sentiment remains predominantly negative. The events lined up for the final trading day aren’t anticipated to sway this prevailing sentiment. The spotlight shines on the UK retail sales data, set to be released during the London session. Forecasts predict a 0.6% decline from the previous month. Yet, all eyes are also on the market activity and news reports, especially in the foreign exchange (FX) market. Speculation about dollar interventions has sparked rumors, contributing to choppy and erratic trading conditions as the weekend approaches.

Asia Session Recap: Dollar’s Dance and Pending Actions

During the Asia session, the dollar index (DXY) showcased a dance between 103.00 and 103.30, largely influenced by the absence of noteworthy news events. However, anticipation brews for increased trading activity during the Europe and US sessions.

Looking Ahead: Europe & US Session Anticipation

Later in the day, as the afternoon sun paints the trading landscape, the release of the Eurozone’s Consumer Price Index (CPI) and the UK’s retail sales figures could trigger a surge in trading activity. All eyes are on these crucial data points as the week comes to a close.

Insights into the Japanese Yen (JPY)

While today doesn’t hold major news events for the Japanese Yen, insights from recent months shed light on its performance. Japan’s national core Consumer Price Index (CPI) has fluctuated between 3.1% and 3.4% over the past five months. July’s data aligned with expectations, clocking in at 3.1% year-over-year (YoY). This number, though lower than the previous month’s 3.3% YoY, offers leeway for the Bank of Japan to maintain its ultra-dovish monetary policy stance, potentially contributing to yen weakness.

Central Bank Notes: Japan’s Monetary Outlook

• The bank remains committed to Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control to achieve a 2.0% price stability target.
• Yield curve control entails a negative interest rate of -0.1% on policy-rate balances and Japanese government bond purchases to stabilize 10-year JGB yields around +0.5%.
• Temporary deceleration in inflation is expected, followed by moderate acceleration, buoyed by improved output gap and inflation expectations.
• Gradual economic recovery is anticipated in Japan.
• The next meeting is scheduled for September 22, 2023.

What Lies Ahead for the Euro (EUR)?

Amidst today’s developments, the Eurozone’s Consumer Price Index (CPI) takes the spotlight. The headline CPI has shown a steady decline since last November, while the core reading experienced a slight uptick in June, rising from 5.3% YoY to 5.5% YoY. Projections for July’s figures align with these levels. A softer reading could potentially open the door for future interest rate hikes by the European Central Bank (ECB).

Central Bank Insights: ECB’s Path Forward

• The ECB raised the three key interest rates by 25 basis points.
• Slight adjustments in economic growth projections have been made.
• The Governing Council commits to maintaining sufficiently restrictive interest rates to achieve the inflation target, adapting as needed.
• Rate decisions hinge on data, encompassing inflation outlook, economic data, underlying inflation dynamics, and the strength of monetary policy transmission.
• The next ECB meeting is slated for September 14, 2023.

Unveiling the Canadian Dollar’s (CAD) Trajectory

In the realm of the Canadian Dollar, notable indices—the Industrial Product Price Index (IPPI) and the Raw Materials Price Index (RMPI)—have witnessed a recent decline. However, the latest estimations for July indicate an upward trajectory. Particularly striking is the RMPI’s impressive 2.1% month-over-month (MoM) increase. As a result, the USDCAD is retracing its overnight high of 1.3550, with the potential for further decline if these indices surpass expectations.

Canadian Monetary Landscape: The Path Forward

• The Bank of Canada raised the overnight rate target to 4.75%.
• Canada’s economy outperformed expectations in Q1 2023, boasting a GDP growth rate of 3.1%.
• While CPI inflation is projected to ease to approximately 3.0% over the summer, concerns linger about inflation hovering above the 2.0% target.
• The next Bank of Canada meeting is scheduled for September 6, 2023.

Global Market Snapshot: Peaks and Plunges

A snapshot of global markets reveals a mixed bag of performance:

Asian Stock Markets

• Nikkei: -0.62%
• Shanghai Composite: -0.25%
• Hang Seng: -0.57%
• ASX: +0.03%

European Equities

• DAX futures: -0.83%
• CAC 40: -0.94%
• FTSE: -0.71%

US Stock Market

• Dow Jones: -0.84%
• S&P 500: -0.77%
• Nasdaq 100: -1.17%

Keeping an Eye on Commodities

Commodity prices are undergoing their own dance:

• Gold: $1892.91 (+0.05%)
• Silver: $22.45 (+0.29%)
• Brent Oil: $84.12 (-0.01%)
• WTI Oil: $80.48 (+0.10%)

News & Data Highlights

Key news events and data releases for the day:

• JPY National Core CPI (YoY) (Jul)
  • Actual: 3.1%
  • Forecast: 3.1%
  • Previous: 3.3%
  • Time: 05:00
• GBP Retail Sales (MoM) (Jul)
  • Actual: -1.2%
  • Forecast: -0.5%
  • Previous: 0.7%
  • Time: 11:30
• EUR CPI (YoY) (Jul)
  • Time: 14:30
• EUR Core CPI (YoY) (Jul)
  • Forecast: 5.5%
  • Previous: 5.5%
  • Time: 14:30
• CAD RMPI (MoM) (Jul)
  • Forecast: 0.0%
  • Previous: -1.5%
  • Time: 18:00

GBPUSD

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 1.2734, suggesting a Sell sentiment.
• EMA 20: The 20-day EMA displays 1.2723, reinforcing a Buy indication.
• EMA 50: With a value of 1.2755, the 50-day EMA aligns with a Sell recommendation.

Simple Moving Average

• SMA 5: The 5-day SMA shows 1.2745, indicating a Sell sentiment.
• SMA 20: The 20-day SMA records 1.2709, supporting a Buy stance.
• SMA 50: The 50-day SMA stands at 1.2748, signifying a Sell indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, displays a reading of 49.54, suggesting a Positive signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Negative condition.

Resistance And Support Levels

• Resistance: The resistance level is identified at 1.2780
• Support: The support level is observed at 1.2703

Summary And Trade Suggestions

Based on the technical analysis, GBP/USD presents a Sell outlook. Traders may consider entering a short position, considering the indicators, moving averages, and oscillators.

Trade Suggestion:

• Entry Point: 1.2672
• Take Profit: 1.2587
• Stop Loss: 1.2734

EURUSD

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 1.0879, indicating a Sell signal.
• EMA 20: The 20-day EMA is at 1.0913, signalling a Sell sentiment.
• EMA 50: The 50-day EMA currently sits at 1.0956, suggesting a Sell indication.

Simple Moving Average

• SMA 5: The 5-day SMA shows a value of 1.0878, reinforcing the Sell recommendation.
• SMA 20: With a value of 1.0923, the 20-day SMA also supports a Sell sentiment.
• SMA 50: The 50-day SMA registers at 1.0959, affirming a Sell indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 37.59, signifying a Negative signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Neutral stance.

Resistance And Support Levels

• Resistance: The resistance level is observed at 1.0911.
• Support: The support level is identified at 1.0852.

Summary And Trade Suggestions

In summary, the technical analysis of EURUSD points towards a Sell sentiment. Considering the indicators, moving averages, and oscillators, it seems favourable for traders to enter a short position.

Trade Suggestion:

• Entry Point: 1.0828
• Take Profit: 1.0763
• Stop Loss: 1.0884

AUDUSD

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 0.6407, indicating a Sell signal.
• EMA 20: The 20-day EMA is at 0.6459, signalling a Sell sentiment.
• EMA 50: The 50-day EMA currently sits at 0.6537, suggesting a Sell indication.

Simple Moving Average

• SMA 5: The 5-day SMA shows a value of 0.6404, reinforcing the Sell recommendation.
• SMA 20: With a value of 0.6467, the 20-day SMA also supports a Sell sentiment.
• SMA 50: The 50-day SMA registers at 0.6555, affirming a Sell indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 33.21, signifying a negative signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Neutral stance.

Resistance And Support Levels

• Resistance: The resistance level is observed at 0.6452
• Support: The support level is identified at 0.6388

Summary And Trade Suggestions

In summary, the technical analysis of AUDUSD points towards a Sell sentiment. Considering the indicators, moving averages, and oscillators, it seems favourable for traders to enter a short position.

Trade Suggestion:

• Entry Point: 0.6369
• Take Profit: 0.6269
• Stop Loss: 0.6447

USDJPY

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 145.68, indicating a Sell signal.
• EMA 20: The 20-day EMA is at 145.16, signalling a Buy sentiment.
• EMA 50: The 50-day EMA currently sits at 143.86, suggesting a Buy indication.

Simple Moving Average

• SMA 5: The 5-day SMA shows a value of 145.79, reinforcing the Sell recommendation.
• SMA 20: With a value of 145.29, the 20-day SMA also supports a Buy sentiment.
• SMA 50: The 50-day SMA registers at 143.45, affirming a Buy indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 61.16, signifying a Buy signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Negative stance.

Resistance And Support Levels

• Resistance: The resistance level is observed at 145.84
• Support: The support level is identified at 145.05

Summary And Trade Suggestions

In summary, the technical analysis of USDJPY points towards a Buy sentiment. Considering the indicators, moving averages, and oscillators, it seems favourable for traders to enter a long position.

Trade Suggestion:

• Entry Point: 146.53
• Take Profit: 148.41
• Stop Loss: 145.10

S&P 500

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 4398.11, indicating a Sell signal.
• EMA 20: The 20-day EMA is at 4449.21, signalling a Sell sentiment.
• EMA 50: The 50-day EMA currently sits at 4490.36, suggesting a Sell indication.

Simple Moving Average

• SMA 5: The 5-day SMA shows a value of 4400.09, reinforcing the Sell recommendation.
• SMA 20: With a value of 4457.44, the 20-day SMA also supports a Sell sentiment.
• SMA 50: The 50-day SMA registers at 4517.40, affirming a Sell indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 30.09 signifying a Sell signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Negative stance.

Resistance And Support Levels

• Resistance: The resistance level is observed at 4410.10
• Support: The support level is identified at 4374.43

Summary And Trade Suggestions

In summary, the technical analysis of S&P 500 points towards a Sell sentiment. Considering the indicators, moving averages, and oscillators, it seems favourable for traders to enter a short position.

Trade Suggestion:

• Entry Point: 4359.15
• Take Profit: 4318.39
• Stop Loss: 4388.02

BRENT CRUDE OIL

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 83.71, indicating a Buy signal.
• EMA 20: The 20-day EMA is at 84.51, signalling a Sell sentiment.
• EMA 50: The 50-day EMA currently sits at 84.14, suggesting a Sell indication.

Simple Moving Average

• SMA 5: The 5-day SMA shows a value of 83.57, reinforcing the Buy recommendation.
• SMA 20: With a value of 85.01 the 20-day SMA also supports a Sell sentiment.
• SMA 50: The 50-day SMA registers at 84.90, affirming a Sell indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 43.06, signifying a Neutral signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Neutral stance.

Resistance And Support Levels

• Resistance: The resistance level is observed at 84.56
• Support: The support level is identified at 83.21

Summary And Trade Suggestions

In summary, the technical analysis of Brent Crude Oil points towards a Sell sentiment. Considering the indicators, moving averages, and oscillators, it seems favourable for traders to enter a short position.

Trade Suggestion:

• Entry Point: 82.73
• Take Profit: 81.38
• Stop Loss: 83.70

GOLD

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 1893.05 indicating a Sell signal.
• EMA 20: The 20-day EMA is at 1903.88, signalling a Sell sentiment.
• EMA 50: The 50-day EMA currently sits at 1919.73, suggesting a Sell indication.

Simple Moving Average

• SMA 5: The 5-day SMA shows a value of 1892.86, reinforcing the Sell recommendation.
• SMA 20: With a value of 1903.89 the 20-day SMA also supports a Sell sentiment.
• SMA 50: The 50-day SMA registers at 1925.26 affirming a Sell indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 32.96, signifying a negative signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Neutral stance.

Resistance And Support Levels

• Resistance: The resistance level is observed at 1895.03
• Support: The support level is identified at 1883.54

Summary And Trade Suggestions

In summary, the technical analysis of gold points towards a Sell sentiment. Considering the indicators, moving averages, and oscillators, it seems favourable for traders to enter a short position.

Trade Suggestion:

• Entry Point: 1875.24
• Take Profit: 1858.00
• Stop Loss: 1889.92

ETHEREUM

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 1721.14, indicating a Sell signal.
• EMA 20: The 20-day EMA is at 1791.40, signalling a Sell sentiment.
• EMA 50: The 50-day EMA currently sits at 1825.53, suggesting a Sell indication.

Simple Moving Average

• SMA 5: The 5-day SMA shows a value of 1729.99, reinforcing the Sell recommendation.
• SMA 20: With a value of 1810.69, the 20-day SMA also supports a Sell sentiment.
• SMA 50: The 50-day SMA registers at 1828.02, affirming a Sell indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 19.02, signifying a Sell signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Positive stance.

Resistance And Support Levels

• Resistance: The resistance level is observed at 1719.48
• Support: The support level is identified at 1659.17

Summary And Trade Suggestions

In summary, the technical analysis of Ethereum points towards a Sell sentiment. Considering the indicators, moving averages, and oscillators, it seems favourable for traders to enter a short position.

Trade Suggestion:

• Entry Point: 1632.95
• Take Profit: 1573.59
• Stop Loss: 1682.42

Conclusion: Navigating Choppy Waters

As the trading week comes to a close, the financial world remains on edge, navigating through turbulent waters. The confluence of rising interest rates, fluctuating CPI data, and changing monetary policies has contributed to the volatile landscape. Investors and traders are bracing themselves for the road ahead, seeking opportunities amidst uncertainty. Amidst this backdrop, one thing remains certain—the financial world’s ability to adapt and thrive in the face of adversity.