Yen and Dollar staged a strong rebound in early US session after stocks unexpectedly tumbled deeply. DOW was once down as much as -431 pts and it’s down nearly -1% at the time of writing. Slightly weaker than expected ISM services shouldn’t be that big an impact. However, both ISM manufacturing and services employment were back in contraction in June.
There might also be speculations that Fed would be forced to tightening the tap a bit, as global central banks are starting to do so. Speculation might have intensified after RBA’s tapering and speculation of RBNZ rate hike, given that BoC has already cut down bond purchases.
China’s way of crackdown on technology companies is also a source of concern. Ride-hailing giant Didi has just had a massive IPO lost week, but the Chinese government was quick to launch a so-called cyber security investigation, forcing the app down the shelves. Two smaller recent listings, Full Truck Alliance and Kanzhun are also believed to be under review.
Technically, DOW’s steep pull back today doesn’t alter the near term bullish path yet. As long as 34186.13 support holds, it will still more likely to break through 35091.56 high to resume larger up trend. However, break of 34186.13 will likely extend the consolidation pattern with another falling leg towards 33271.93 support, in the less bearish case.
