Stocks were once again dealt a setback yesterday but it could’ve been worse. Some late dip buying helped to salvage losses in Wall Street but that still makes it five out of six days now that equities have ended on the wrong side in August. It is a bit of a check amid the turn of the month and what I would call summer time sadness, but we do have the US CPI report coming up tomorrow and that could perhaps turn things around for equities.
In FX, there isn’t really much to work with besides the dollar keeping somewhat firmer on the week especially against the yen. Other dollar pairs are rather rangebound now but be mindful of EUR/USD as it holds near a test of its 100-day moving average at 1.0925 currently. Besides that, there is AUD/USD which after the double-top near 0.6900 is now contesting key daily support at 0.6500. From double-top to double-bottom? Or is there going to be a major breakdown?
All the usual drivers aside, China worries may yet start to factor more into the bigger picture outlook here.
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