Dollar/Yen at nine month lows

Rivkin Investment Team

US equity markets closed slightly lower on Tuesday, with the Dow Jones Industrials Average (DJIA) dipping 38 points (-0.36%) to close at 10,636.38, while the S&P500 finished the session 0.48% weaker, closing at 1,120.46, for a loss of 5.40 points.

From the S&P500, health care and oil and gas were the only sectors to post gains on Tuesday, closing up by 0.87% and 0.21% respectively. The biggest falls were from the basic materials (-1.62%), consumer services (-1.09%), and financials (-1.08%) sectors.

Looking at the current technical picture of the Dow Jones, and prices have retraced 61.8% of the April to May decline (Wave A Pink). Although prices have probed above previous resistance from the June highs at 10,594.16, with bearish divergence in place, we believe additional upside is limited. While the rally of the past month has carried higher and lasted longer than we expected, this doesn’t change our view that upside price action is corrective, and the dominant trend remains down.

The ASX SPI200 (September 10) futures dipped just 4 points in overnight trade, to be currently at 4,533.

To the currencies, and the US dollar was largely weaker on Tuesday, with the US Dollar Index dipping by 0.326 points (-0.4%) to close at 80.612. Money continues to move into the Japanese yen, which gained 0.83% on Tuesday to close at 85.79, the lowest level since November 2009. The British pound and Euro were also stronger, gaining by 0.42% and 0.39% against the USD.

The Australian dollar declined against all the majors overnight, to be currently buying 91.27 US cents, 69.08 Euro cents, 57.21 British pence, 78.30 Japanese yen.

The CRB Commodity Index dipped 0.22 points (-0.079%) to close at 276.63.