ISM and S&P Manufacturing PMI figures eyed

The US ISM and S&P Manufacturing PMI figures for August are set to be released during today’s American session. According to economists, the S&P Manufacturing PMI figure is expected to deteriorate from 49.6 to 48.0 whilst the ISM Manufacturing PMI figure is expected to improve from 46.8 to 47.5, yet when looking at the bigger picture, both indicators of the manufacturing sector of the US economy are expected to remain in contraction territory and thus should they come in as expected or lower, it could potentially weigh on the dollar. On the flip side, should they come in higher than expected it may provide support for the dollar, as it could imply an improvement in the US manufacturing sector. Over in Europe, Volkswagen announced yesterday per Bloomberg, that it is considering closing plants in Germany for the first time in history. The announcement appears to be in regards to the company’s major cost-cutting measures in order to protect the future of the company. Overall, the potential closing of factories in combination with a potential clash with Germany’s largest and strongest workers’ union may spell trouble for the company’s stock price. Over in the Airline industry, a recent report by Bloomberg states that Cathay Pacific Airways has canceled multiple Airbus SE A350 flights after detecting a component failure with one of the possible issues being with the flexible hoses supplying fuel to the engine. As a result, Rolls-Royce which is the company that manufactures these engines saw their stock price decrease.   

EUR/USD appears to be moving in a sideways fashion, after failing to break below the 1.1040 (S1) support level. We opt for a sideways bias for the pair and supporting our case is the break above our downwards-moving trendline which may imply that the pair’s downwards motion may have been interrupted. However, the RSI indicator below our chart currently registers a figure below 40, implying a bearish market sentiment. Nonetheless, for our sideways bias to continue we would require the pair to remain confined between the sideways moving channel defined by the 1.1040 (S1) support line and the 1.1100 (R1) resistance line. On the flip side for a bearish outlook we would require a clear break below the 1.1040 (S1) support line with the next possible target for the bears being the 1.0980 (S2) support level. Lastly, for a bullish outlook we would require a clear break above the 1.1100 (R1) resistance line with the next possible target for the bulls being the 1.1150 (R2) resistance level.

Volkswagen appears to be moving in a sideways fashion after failing to clear break above the 98.75 (R1) resistance line. As such we opt for a sideways bias for the company’s stock price and supporting our case is the RSI indicator which currently registers a figure near 50, implying a neutral market sentiment. Yet, we should note that the upwards moving trendline which was incepted on the 13^th of August remains intact. Nonetheless, for our sideways bias to continue we would require the company’s stock price to remain confined between the 95.55 (S1) support line and the 98.75 (R1) resistance level. On the flip side, for a bearish outlook we would require a clear break below the 95.55 (S1) support line with the next possible target for the bears being the 91.85 (S2) support level. Lastly, for a bullish outlook we would require a clear break above the 98.75 (R1) resistance line with the next possible target for the bulls being the 102.35 (R2) resistance level.

Other highlights for the day

Today we note on the monetary front the speeches of ECB’s Buch and Campa and BoE Deputy Governor Breeden. In the American session, we get Canada’s S&P Global Manufacturing PMI figure for August and the US ISM manufacturing PMI figure for the same month, while ECB’s Board Member Af Jochnick speaks. Tomorrow in the Asian session, we get from Australia and Japan the final Composite and Services PMI figures for August and Australia’s GDP for Q2 as well as China’s Caixin Services PMI figure for August.      

EUR/USD 4H Chart

• Support:  1.1040 (S1), 1.0980 (S2), 1.0920 (S3)
• Resistance: 1.1100 (R1), 1.1150 (R2),  1.1200 (R3)

Volkswagen Daily Chart

• Support: 95.55 (S1), 91.85 (S2), 87.35 (S3)
• Resistance: 98.75 (R1),  102.35 (R2),  106.40 (R3)

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