Stocks rise cautiously and USD steadies with service sector data due
S&P500 => The index rises towards 3950
BTC/USD =>The cryptocurrency remains below $20k
AUD/USD => The pair rises over 0.68
S&P500 rises ahead of services PMIs
The S&P 500 futures rose yesterday modestly higher as the cash markets remained closed for Labor Day public holiday.
The index is holding steady after suffering 2.5% losses last week amid rising expectations of a hawkish Fed. However, those hawkish Fed bets eased slightly following the non-farm payroll report. Today the S&P500 futures are edging higher as the market mood improves, helped higher by China announcing further stimulus.
Attention will now turn to the ISM services PMI, which is expected to show strong growth, in sharp contrast to the S&P Global services PMI which is expected to confirm a deep contraction.
| US ISM services PMI | Expected: 55.5 (1.2) | Previous: 56.7 |
Where next for S&P500?
The S&P 500 found support at 3902 round number and is consolidating here after falling from 4325.
The price trades below the 20 & 50 sma and the RSI is below 50, supporting further losses. Sellers need to break below 3900 to extend the bearish run to 3810, the May 20 low, and 3720, the July 14 low. Buyers will look for a move over 4026 the 50 sma and September high to rise towards 4100.
BTC/USD consolidates as support at 19,600 holds
Bitcoin edged lower yesterday, continuing last week’s losing streak, and remained below the key 20k psychological level.
The big question is will the uncharacteristically weak summer mean that September, a typically bearish month, will be even more painful for Bitcoin? While some believe that another crypto crash could come with the Ethereum Merge event, others consider that the Merge has been fully priced in. The reality is most likely somewhere between those two positions.
Expectations surrounding the Federal Reserve’s next moves have been a key driver of Bitcoin across the summer. As aggressive Federal Reserve rate hikes rise, BTC/USD often came under pressure. Today attention is on the US ISM services PMI which could influence 75 basis point rate hike expectations and Bitcoin.
In the UK, the announcement of Liz Truss as the new PM has brought a level of uncertainty to the outlook for cryptocurrencies. It remains to be seen what policies, if any, will be applied to the digital currency sector.
Support held at 19,600, keeping buyers optimistic. A break below here could open the door to $18000. Meanwhile, a move over 20k could spark a decent recovery.
AUD rises after RBA lifts rates
AUD/USD traded -0.15% lower in the previous session sticking within a fairly tight range as investors digested a stronger than forecast Chinese service sector PMI data together with a risk-off market mood.
Overnight RBA raised interest rates by 0.5%, in line with expectations taking the OCR to 2.35%. The RBA has raised interest areas at the past four straight central bank meetings as it continues to fight against high inflation. Strong consumer demand has enabled the RBA to hike aggressively, even as the housing market cools significantly. Looking ahead, US ISM services PMI will drive the pair in the US session.
Support can be found at 0.67 (round number) and 0.6680 (2022 low).
Resistance for the pair can be seen at 0.69 (50 sma) and 0.6940 (20 sma).
