It looks like the bump higher during month-end last week was just that. Equities are starting to feel nervous again, with concerns surrounding Nvidia and tech resurfacing. It was brushed aside briefly after the earnings last week but added worries about global growth is perhaps also piling on top of things. The S&P 500 fell by a little over 2% yesterday but still held just above 5,500.

That will be a key line in the sand to watch in the days ahead. A break there will start to draw in more Fib retracement levels as outlined above. However, the more important technical level to watch on any pullback will be the 100-day moving average (red line). That is now seen at around 5,368.

So far today, risk trades are still staying on the defensive. S&P 500 futures are down 0.5% and Nasdaq futures down 0.8%. The market looks to be wanting to kick and scream again in asking for the Fed to cut by 50 bps this month.

10-year yields in the US also fell by over 8 bps yesterday and is now at 3.83%. For some context, it was sitting as high as 4.49% on the first day of July.

As for market pricing on the Fed, we’re seeing traders step up their bets for a 50 bps move next. The odds for that fell to around ~26% in August but is now back up to ~41% today. Will Powell & co. give in and pacify market players? Or will they stick with a 25 bps move and risk more kicking and screaming in markets?

The Bank of Canada decision today will be one to watch for any surprises. And it will also act as a bit of a test for risk appetite in September as such. There won’t be the ADP employment data today (it is due tomorrow due to the shorter week) but US JOLTS job openings will also come under scrutiny in the day ahead.

Those will be key risk events for stocks and the overall risk mood on the day.

This article was written by Justin Low at www.forexlive.com.