Headlines:

• USD/JPY at three-week highs as buyers look for further upside
• The dollar looks set to end the month as the weakest major currency
• Eurozone July preliminary CPI +5.3% vs +5.3% y/y expected
• Eurozone Q2 preliminary GDP +0.3% vs +0.2% q/q expected
• A little bit of this and that for the ECB today
• Germany June retail sales -0.8% vs +0.2% m/m expected
• Germany June import price index -1.6% vs -0.7% m/m expected
• Italy Q2 preliminary GDP -0.3% vs 0.0% q/q expected
• UK June mortgage approvals 54.66k vs 49.00k expected

Markets:

• AUD leads, JPY lags on the day
• European equities slightly higher; S&P 500 futures up 0.1%
• US 10-year yields down 0.6 bps to 3.962%
• Gold flat at $1,958.00
• WTI crude up 1.0% to $81.42
• Bitcoin up 0.2% to $29,391

It’s a pretty tame start to the new week, although not so much if you are a Japanese yen bull. The currency itself continues to suffer from the post-BOJ hangover, falling further today by over 100 pips.

USD/JPY was already higher in Asia around 141.70 before extending gains to 142.50 in European trading. That also comes amid a more positive risk mood in markets, recovering after an early setback in US futures – which are now higher.

The aussie and kiwi are also beneficiaries of that, aided by China stimulus news. AUD/USD is up 0.9% to 0.6705 currently and sitting at the highs for the day. Meanwhile, NZD/USD is up 0.6% to clip the 0.6200 mark.

The dollar is seen steadier across the board with just light changes against the euro, pound and franc. The ranges for the day are still rather narrow for those currency pairs, with European traders a little more guarded ahead of month-end trading later.

In terms of data, euro area core inflation remains sticky and Q2 GDP beat estimates by the slightest. But all in all, it offers up a mixed picture and one that the ECB can spin however way they would want still for now.

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

The earnings season continues with Apple and Amazon leading the charge this week. They will release their earnings after the market close on Thursday. The Nasdaq index has seen an increase of nearly 36.8% this year, while the S&P 500’s is up 19.3%. More than half of the companies listed on the S&P 500 had reported their second-quarter earnings by Friday, with 78.7% of them surpassing analysts‘ expectations, as per data from Refinitiv reported by Reuters.

The major companies reporting this week by data include:

Monday, July 31

• Sofi

Tuesday, August 1

• Uber
• Pfizer
• Caterpillar
• Merck
• Altria
• AMD
• Starbucks

Wednesday, August 2

• CVS
• Humana
• Kraft Heinz
• PayPal
• Shopify
• Qualcomm
• Unity

Thursday, August 3

• Warner Bros. Discovery
• ConocoPhillips
• Expedia
• Moderna
• Amazon
• Apple
• Coinbase
• Airbnb
• Draft King’s

This article was written by Greg Michalowski at www.forexlive.com.

Last week, the Fed hiked by 25 bps as expected and left everything
unchanged. The market was more focused on the press conference to see if Fed
Chair Powell would hint to the next policy move. Unfortunately, Powell just
repeated that they are data dependent and that all options are on the table for
the September meeting. Since the FOMC meeting, the data has been supporting the
soft-landing narrative as the US Jobless Claims beat expectations once again and
the US PCE and the Employment Cost Index missed forecasts.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq
Composite bounced again on the red 21 moving average and it’s
now eyeing the key 14649 resistance. A break
above that level would open the door for the all-time high, but the sellers are
likely to step in aggressively there.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we have a divergence with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, the price pulled back to the trendline and
bounced as the buyers stepped in to target the breakout of the resistance.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we
also had the 50% Fibonacci
retracement level near the trendline, so the buyers
had some good confluence there.
This is clearly a bull market, so the sellers are likely to lean on the 14649
resistance with a defined risk above the level to target a bigger pullback or
wait for the price to fall below the trendline to pile in and extend the fall
into the next major trendline.

Upcoming
Events

This week is packed with several top tier economic
indicators. We start tomorrow with the US Manufacturing PMI and the US Job
Openings data. Moving on to Wednesday, we will see the latest US ADP report. On
Thursday, the market will be focused on the US Jobless Claims and the US ISM Services
PMI. We then conclude on Friday with the main event of the week: the US NFP
report.

This article was written by FL Contributors at www.forexlive.com.

At one point after the US CPI report this month, the dollar looked like it was bound for a major breakdown. But as USD/JPY found its footing for a rebound, so did the dollar and that correlation was also highlighted at the time already here. The dollar is still set to end the month as the weakest among the major currencies but it really could’ve been a lot worse.

As the month draws to a close, dollar buyers will be happy with the fact that they avoided a much uglier scene – especially against the euro and pound. Against the yen itself, the BOJ played a helping hand in USD/JPY on its latest jump since Friday. As such, the pair is „only“ down 1.3% on the month so far.

So, what’s next moving forward for the dollar?

It’s going to be all about the data, specifically big data as highlighted here. The first of which is the US non-farm payrolls and labour market report coming up at the end of this week.

In the bigger picture though, what matters will be the Fed’s take on inflation and if we have seen a peak in interest rates already. There is certainly a suggestion that policymakers are looking to adopt that view, but it isn’t a given just yet.

For now at least, market pricing is definitely siding with that and so the dollar will go according to the flow in that regard.

But all else being equal, confirmation of a Fed pivot will not bode well for the dollar’s prospects. However, the saving grace for the greenback is that the US economy is continuing to surprise with stronger data while other key economies look to be flagging.

Europe is seeing credit conditions tighten significantly and dark clouds are starting to hover over the economy ahead of Q3 and Q4. Meanwhile, in the UK you have the cost-of-living crisis still to contend with alongside risks of stagflation building.

And when you consider rate differentials, the dollar is still in a good spot as well with many major central bank also looking to pivot alongside the Fed.

The RBA, who is meeting tomorrow, may not hike again and the ECB could be on a similar path as well. And in the case of the BOJ, sure they are letting yields push higher, but they’re not exactly capitalising on higher inflation to leave behind their ultra loose monetary policy – something which they might regret.

So, the dollar definitely still has a couple of redeeming qualities. So, unless we are due a hard landing in the US (which implies the Fed will have to cut rates sooner rather than later), the dollar might still find some backing or at least reason to not depreciate too rapidly.

Fed funds futures are showing that traders are anticipating the first rate cut to either be in March or May next year. If that pricing is wrong and the Fed is going to hold rates higher for longer while waiting on inflation to fall further (since the economy can take it), that is one tailwind that markets should really consider for the dollar.

In some sense, it is similar to this story right here. At the time, traders were seeing the Fed funds rate fall to 4.30% by December. For some context, that pricing is now seen at 5.37%.

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

Almost
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These
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Provider
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This article was written by FL Contributors at www.forexlive.com.