Wednesday, July 31, 2019

DOWJONES - 31 July 2019


Fundamental Highlights

Ahead of today’s critical FOMC meeting, US indices traded lower on Tuesday amidst US-China trade uncertainty. Just as the two nations resumed a new round of trade talks, President Trump aggravates the situation and dents market sentiment by criticizing China’s trade practices in a series of tweets. Separately on economic data, US personal spending and income rose modestly to match expectations while the PCE figure rose 0.1% in June to confirm soft inflation and uphold expectations for a rate cut from the FED. Today, the US publishes its measure of non-farm payrolls for July which will be in focus ahead of the critical interest rate decision. Markets have been expecting a rate cut of 25 basis points and if not met could lead to a sell off. Moreover, the policy statement will garner attention as it reveals future monetary policy plans amid positive economic readings from the US. It is worthy to note that the Dow Index’s member Apple beat earnings expectations and could provide the index with support during the day.

Technical Analysis

The Dow ended 0.09% lower at 27198 on Tuesday. However during the day, the index failed to trade above 27250 and slumped to an intraday low of 27035 before reversing its losses. Should the index fail to trade above 27250, we should see price trade lower with a sustained move below 27170 near the 20-period MA required to indicate selling pressure and targeting the lower half of the Dow’s range. Alternately a sustained move above 27250 should lead the Dow higher with its next target at 27335. Today’s interest rate decision may result in high volatility and lead the Dow to exit its range-bound price action.

Support: 27170/27070
Resistance: 27250/ 27335

Chart (H4)