Yesterday, the US
ISM Manufacturing PMI missed forecasts although it wasn’t such a big miss
as it was still in the range of estimates, but it was nonetheless a miss and the market reacted accordingly. I’d
say that one bad report amid a series of good ones shouldn’t be enough for a
change in the trend, especially considering that the final reading of the S&P Global US Manufacturing PMI released a bit earlier showed an even greater improvement. The ISM report though, should set aside the inflation fears
which should be good news for the stock market as long as we don’t have more worrying data on the growth side.

S&P 500
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that the S&P 500 bounced recently around the 5200 level where we had
the confluence
of the trendline
and the 50% Fibonacci
retracement level. That’s where the buyers piled in on the last day of the
month fading the weakness from the month-end flows. The sellers will need the
price to break below the trendline to turn the bias more bearish and start
targeting a drop into the 5000 level.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the price recently probed above the downward counter-trendline but
couldn’t really extend the rally into new highs. The 5313 level will be the
spot to watch as a break above it should see the buyers increasing the bullish
bets into a new all-time high. The sellers, on the other hand, should wait for
a break below the major trendline to get a bit more conviction for a correction
lower.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see more clearly the recent price action with the S&P 500 now consolidating
between the major trendline and the 5312 level. There isn’t much to do in the
middle of this “range” as the erratic moves could give false signals. If we get
another drop into the major trendline though, some late buyers could take it as
an opportunity to step in with a better risk to reward setup. The red lines
define the average daily range for today.

Upcoming
Catalysts

Today we have the US Job Openings data. Tomorrow, we have the US ADP and the
US ISM Services PMI. On Thursday, we get the latest US Jobless Claims figures,
while on Friday we conclude the week with the US NFP report.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

The dollar is trading to the highs for the day against the other major currencies outside of the yen and franc. EUR/USD is now down 0.3% to 1.0868 while GBP/USD is down 0.4% to 1.2758 on the day. Commodity currencies are bearing the brunt of the pain with AUD/USD in particular now down 0.8% to 0.6635 and erasing all of its gains from yesterday.

The drop also sees sellers looking to seize back near-term control on a push below the key hourly moving averages. The confluence of the 100 (red line) and 200-hour (blue line) moving averages is at 0.6640-43.

Meanwhile, USD/CAD is also marked higher by 0.5% to 1.3695 on the day and NZD/USD down 0.4% to 0.6160 currently.

It’s an all out flight to safety in European morning trade thus far. Equities are keeping on the defensive with European indices down roughly 1% across the board. S&P 500 futures are down by 0.6% currently.

Going back to FX, USD/JPY is now down 0.7% to test the 155.00 level. The pair is down by more than 140 pips since Asia trading.

This article was written by Justin Low at www.forexlive.com.

At the same time, it is reported that the BOJ has no intention to surprise bond traders. I mean, not to say that taking such a step is entirely surprising. They will likely do so while reaffirming that they have the flexibility to step back in again, should market conditions dictate them to do so.

In any case, this was always going to be the next move before they get to raising interest rates again. The latter looks to be on the cards for July potentially next.

This article was written by Justin Low at www.forexlive.com.