Rumours overnight that Trump’s ship continues to sink with his economic advisor Gary Cohn set to resign. Trump also looks set to abandon plans to form an advisory council on how to spend $1tn on infrastructure … yes you cant script this. Add the terror attack in Barcelona and the market cashed in their chips. VIX popped and S+P fell 1.46%. Save haven flows saw bonds rally taking US 10yr yields to 2.18% the low for the week. With no data or event risk for Friday the market will watch equity markets for clues. S+P has good support at the 100 DMA at 2417. Breaking this will really hit risk hard and imagine the risk crosses especially short AUD/YEN and KIWI/YEN will be the play of the day.
ECB minutes overnight also saw references to the strong Euro and risk of “overshooting.” Market now worried that guidance on tapering may be delayed from the Sept meeting to Oct. Will keep Euro now in check topside. Technically Euro looks like a top formation being formed. Nice neckline at 1.1680/90 region. Break and close below here and a trip down to trend line support sub 1.1600 looks realistic. Risk off trading will weigh on EUR/YEN which also will weigh on Euro. Short term traders can look to sell at market 1.1720+ with stops above 1.1770 looking for a break of the neckline and momentum lower.