Indices within the red

The risk-off tone set in Asia continued overnight as traders absorbed the fallout and evacuation of Afghanistan, weak China data and therefore the rise in COVID-19 cases. Retail sales also disappointed to further show lack of confidence from consumers (which, if Friday’s weak consumer sentiment was anything to travel may need been dollar bearish) although firmer industrial production softened the blow anyway.


But the pattern was simple; sell equites, metals, risker currencies and buy bonds, USD, CHF and JPY. The S&P 500 fell -0.71% to an 8-day low, although recouped around 2/3rd of its early losses after finding support at the 20-day eMA and printing a bullish hammer on the daily chart. 7 of its 11 sectors were within the red, led by consumer discretionary and materials sectors and 70% of its stocks declined. The Nasdaq 100 shed -0.9% with FAANG stocks falling -1.9%.


The ASX 200 extended losses although found support round the 7506.30 high. Sentiment favours a weak start today with next support sitting around 7448, with potential resistance at 7538 and 7582.



New Zealand announced a 3-day lockdown thanks to one case detected case in Auckland yesterday, which just could also be a record in terms of rock bottom threshold for a government to act. and therefore the way the New Zealand dollar tumbled in response suggests this single case may even prevent RBNZ from hiking rates today – an occasion which markets had already priced in. The 1-month OIS (overnight index swap) fell from around 0.523 on Monday to 0.44 by Tuesday’s close, which suggests the probability for a +25 bps hike has fallen from approximately 109% to 76%. So it still appears likely, just not the ‘dead cert’ it seemed to be yesterday.


The US dollar was the strongest major on safe-haven flows, with slightly hawkish (less dovish) comments from Powell overnight saying he’s not certain the Delta outbreak will hamper the economic recovery. Although JPY ad CHF pairs also stand overall.


So, this places NZD/JPY into focus for today’s RBNZ meeting. The daily chart has seen bearish momentum accelerate out of a corrective channel and fall just in need of the July low. Prices have recovered slightly above the 75.27 – 75.58 support zone, and this area may tempt cheeky longs should RBNZ plow ahead and lift rates as originally expected. But, if the yen remains bid thanks to safe-haven flows and RBNZ pull the plug on a hike today (and not hint at a hike any time soon) then we could see NZD/JPY break below 75.27


Commodities broadly lower:

The Thomson Reuters CRB commodity basket fell -1.8% to a 5-day low, excluding energy it had been still -1.6% lower for the day.


Copper futures fell -1.2% to a 1-month low because the Afghanistan fallout and China data dented sentiment for the bronze metal.


Platinum futures remains below the 20-day eMA and rolled over from the 1021 – 1038 resistance zone mentioned in yesterday’s report. Our bias remains bearish below 1038 although last week’s high could even be wont to fine tune risk management.


Gold broke its 5-day streak to shut marginally lower by -0.12% and formed alittle Doji on the daily chart. The stronger dollar acted as a headwind but we were sceptical of an extended bullish run whilst it traded below 1789 – 1800 resistance, so we remain neutral for now.


Silver printed alittle bearish candle within the 23.78 – 24.00 resistance zone. Should risk-off sentiment prevail we suspect it'll be the ‘next shoe to drop’ behind platinum.