Dow comes further off record high as EUR/JPY and natural gas top out too
Dow slips further ahead of US earnings season as EUR/JPY and natural gas decline too.
Macro Update
US equities take a breather:
The S&P 500 and Nasdaq 100 eased slightly from record highs, while the Dow Jones slipped 0.5% as investors locked in profits ahead of the upcoming third-quarter (Q3) earnings season.
Earnings season in focus:
Major US banks, including JPMorgan and Goldman Sachs, will kick off reporting next week. Analysts expect S&P 500 earnings to rise 8.8% year-on-year (YoY) for the quarter.
Fed policy outlook:
New York Fed President John Williams signalled that additional rate cuts may be appropriate this year. Markets now assign a 95% probability to a 25-basis-point cut at the late-October meeting.
Asian markets mixed:
Asian equities mirrored Wall Street’s softer tone, with Hong Kong and Australia trading lower, while South Korea outperformed. Japan’s Nikkei 225 fell 0.7% after recently touching record highs.
Commodities ease:
Gold held near $3,970.00 an ounce after briefly topping $4,000.00, while Brent crude oil slipped below $65.00 per barrel as Israel’s ceasefire with Hamas eased geopolitical tensions.
Dow Jones comes off record high
The Dow Jones Industrial Average has been trading below last week's 47,049 record high all of this week and on Thursday slipped through its August-to-October uptrend line at 46,458.
The 11 September high at 46,137 is probably next in line.
Further, more significant, support lies between the 5 September high at 45,770, the August peak at 45,757 and the previous week's low at 45,667. Only if this area were to be fallen through, may a retracement toward the July peak and early September low at 45,296-to-45,017 ensue.
Resistance may now be seen around the 23 September high at 46,714.
Dow Jones daily candlestick chart
EUR/JPY comes off 35-year high
EUR/JPY's sharp rally, which has taken it to ¥177.93, close to its August 1978 low at ¥178.14, is giving way to some profit taking.
A minor retracement towards the ¥176.00 region may thus be witnessed.
Were a rise above the ¥177.93 high to occur soon, though, the August 1978 low at ¥178.14, the August 1991 low at ¥178.37 and the December 1990 high at ¥178.45 would be next in line.
EUR/JPY daily candlestick chart
Natural gas futures come off October peak
Over the last few sessions, US natural gas futures have been swiftly coming off their 315.3 October peak with the 8 September high at 281.6 representing the next downside target. between it and the late July-to-September highs down to 276.4 sits good support.
Resistance can be seen along the 200-day simple moving average (SMA) at 301.1.
Natural gas daily candlestick chart
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