Oil drops, PMI data in focus

PMI and new home sales to be watched today


PMI and new home sales to be watched today

A string of PMI data released today from Japan, France, Germany and the Eurozone will set the tone for the market sentiment this week. What remains a big question to the market is whether Japan’s manufacturing PMI flips back to expanding territory after five months of contraction. 

Tonight’s US new home sales number is an important indicator of overall economic health in the US. Given the recent strong Housing Starts and jobs reports, the housing market’s momentum is picking up with support from new jobs created and low mortgage rates. The consensus forecast of the number of new homes sales for July is 580,000, as compared to 592,000 in the previous month. 

Hawkish comments from the Fed’s vice chairman sent US dollar higher on Monday. Simultaneously, Japanese stocks rose 0.32% on a falling yen on the same day. Federal members will meet in Jackson Hole this coming Friday and Yellen’s speech will be closely monitored for any indication of future policy decisions. 

The Dollar Index eased gains on Monday following a rebound from a six-week low. Japanese yen strengthened to 100.15 against USD this morning, sending pressure to Japan equities again. 

Equity eases gains as oil falls

Equities continued to ease gains as oil prices plunged on Monday.  WTI October contract for crude oil closed at US$47.38 or 3.5% lower last night with momentum remaining weak this morning. The immediate support level can be found at around US$45.88 while the next resistance level is near the US$52.77 area. 

Hang Seng Index dropped from year-to-date high after hitting a key resistance level at 23,200. The immediate support level could be found around 22,200 area. Shanghai Composite lost 0.75% on Monday, as profit taking activities continued after the announcement of Hong Kong-Shenzhen link last week. 

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