ASX 200 futures reach a record high, Nikkei tussles with its 200 EMA

The US dollar index fell for a third day ahead of tomorrow’s highly anticipated FOMC meeting, where the Fed are expected to cut rates by 25bp and reveal their updated forecasts. USD/JPY briefly fell below 140 to a 14-month low early in the European session, before recovering back to 140.80. EUR/USD rose to a 6-day high and closed comfortably above 1.11. AUD/USD also reached a 6-day high during the mild risk-on session.

The S&P 500 rose for a sixth day and trades just -0.55% from its all-time high. The Dow Jones rose for a fourth day and closed at a record high. Yet the Nasdaq 100 bucked the trend to close the day -0.47% lower. Nikkei 225 futures are down by -0.3% after meeting resistance at its 200-day EMA on Friday. ASX 200 futures reached a record high on Monday after rising for a fourth straight day.

Events in focus (AEDT):

US retail sales will be a key focus for traders ahead of the FOMC meeting, to see if the positive figures from last month roll over and continue to support the soft-landing scenario. Retail sales rose a healthy 1% in July, its fastest monthly increase since January 2023. They also increased 2.6% y/y, which is hardly a recessionary signal. Similar figures will make it difficult for me to expect a 50bp Fed cut and therefore could support risk.

Canada’s inflation figures could help confirm whether the BOC will cut rates again at their next meeting. CPI slowed to a 40-month low of 2.5% in July.

• Public holiday in China
• 10:30 – SG non-oil exports
• 11:30 – SG trade balance
• 12:30 – SG unemployment rate
• 14:30 – JP tertiary industry activity
• 19:00 – EU and DE ZEW economic sentiment, ECB McCaul speaks
• 22:30 – US retail sales
• 22:30 – CA CPI
• 23:00 – ECB Elderson speaks
• 23:15 – US industrial production, capacity utilisation, manufacturing production

ASX 200 technical analysis:

The SPI 200 futures market (ASX 200 futures) reached a record high during overnight trade on Monday. Its 0.65% rise during the overnight session should see the ASX 200 cash market gap higher today and reach its own record high. The question is then whether it will be able to hold onto early gains and extend its lead, or will it have second thoughts around its milestone level and retrace lower?

It is something traders will need to monitor. But if we see prices gap higher then close the gap, bears could seek to fade the move and target around 8050 (near the weekly pivot point). Alternatively, bulls could step aside and seek dips around support levels once a pullback has materialised.

Nikkei 225 futures technical analysis:

On Friday the Nikkei 225 futures market failed to hold above its 200-day EMA before pulling back, and the losses were sustained on Monday. Yet the 2-day decline is relatively small compared to Thursday’s bullish candle, and I suspect prices are preparing for another leg higher.

Note the strong support around the 35k area, and it looks like prices are trying to mean revert to the 200-day average at 37,240.

The 4-hour chart shows a falling wedge pattern, a bullish reversal pattern which targets the base near the cycle high. Also note that the 50% retracement level sits near a weekly VPOC (volume point of control) around 35,900, making the 36k area a potential area of support for dip buyers.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

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