Headlines:

• Euro falls further as German PMI disappoints heavily
• Bond yields hold lower after European PMI woes today
• Germany July flash manufacturing PMI 38.8 vs 41.0 expected
• France July flash services PMI 47.4 vs 48.4 expected
• Eurozone July flash services PMI 51.1 vs 51.5 expected
• Even the details don’t make for good reading on today’s PMI data from Europe
• UK July flash services PMI 51.5 vs 53.0 expected
• China’s Politburo: Domestic demand is insufficient, economic recovery will be ‚tortuous‘
• What are the expectations ahead of the major central bank decisions this week?

Markets:

• NZD leads, EUR lags on the day
• European equities slightly lower; S&P 500 futures up 0.2%
• US 10-year yields down 4.3 bps to 3.795%
• Gold up 0.4% to $1,967.18
• WTI crude up 0.6% to $77.56
• Bitcoin down 2.1% to $29,252

The highlight of the session was the rather poor and disappointing PMI readings in Europe and the UK today. Things were quieter in the run up to that before the French report disappointed and then the German report somehow managed to be worse. That took the euro for a tumble before the pound joined in as the UK report was also sluggish.

EUR/USD was holding around 1.1140 before falling to 1.1120 initially, then sliding further to a low of 1.1066 earlier before keeping closer to 1.1100 now. The drag on the currency came alongside that of regional bond yields, as markets get a little more worried about recession risks.

The fall in bond yields is helping to keep a bid in the Japanese yen at least. USD/JPY was holding around 141.30-40 early on in Asia before falling further to a low of 140.85 and is keeping thereabouts now.

As for the pound, it fell from 1.2850 to around 1.2810 against the dollar, before paring losses now to 1.2850 levels again as the greenback loses a bit more ground.

The dollar itself was steadier early, before keeping a fair bit more mixed after the barrage of PMI data. But is now holding slightly lower on the balance of things with USD/JPY leading the drop.

The overall risk mood is keeping steadier despite some mixed tones in Europe. US futures are keeping more optimistic, so that should at least help with some positivity ahead of the Wall Street open later.

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

After a big rally following
the miss in the US CPI report, the market’s momentum showed signs of waning as
it approached a crucial resistance level and started to pull back. Despite
this, the data remains supportive of the soft-landing narrative, with last
week’s US Retail Sales and Jobless Claims beating expectations.

As we approach the FOMC
rate decision, some investors might be engaging in profit-taking or adopting
defensive positions, potentially contributing to the current market pullback.
Nevertheless, if the data keeps on showing a resilient economy, we should see
the dips in the Nasdaq Composite being bought.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the price has
started to pullback from the 14448 level as the market couldn’t sustain the
bullish momentum into the FOMC meeting this week. We have a strong support level at
the previous 13862 resistance. In fact, we can see that we will have the confluence with the
red 21 moving average which
provided great support the last time.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we will also
have the confluence with the 50% Fibonacci retracement level
and the trendline that
defined the ascending triangle pattern.
That’s where we should expect the buyers to step in with a defined risk below
the trendline and target the 14649 resistance. The sellers, on the other hand,
will want to see the price breaking lower to pile in and extend the fall into
the 13174 support.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see more
closely the key support to watch. This is where the fight between buyers and
sellers will decide where the price will go next. A bounce should lead to 14649
resistance, while a break lower should lead to 13174.

Upcoming
Events

Throughout this week, a
series of market-moving events will hit the market. Commencing
today, all eyes will be on the US PMIs, and depending on whether the data
surpasses or falls short of expectations, we could see a market rally or a
decline. On Wednesday, the Fed is expected to hike by 25 bps, bringing the FFR
to 5.25-5.50%. This decision shouldn’t have a big impact on the market given
that it’s widely expected.

On Thursday, we will see the
latest US Jobless Claims, wherein positive data is expected to lead to a rally,
while a negative outcome might lead to a selloff. Concluding the week, the
attention will turn to the US PCE and ECI reports, with the market seeking
softer numbers to validate the soft-landing narrative.

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

Here’s a snapshot of bond yields at the moment:

• 10-year German bond yields down 5.5 bps to 2.373%
• 10-year French bond yields down 5.3 bps to 2.935%
• 10-year UK gilt yields down 8.5 bps to 4.194%
• 10-year Treasury yields down 3.2 bps to 3.807%

The drag today comes largely off the back of the softer PMI readings in the euro area and the UK earlier. As high inflation continues to stay rampant across major economies, an added economic downturn is making things more difficult for central banks. Recession risks are on the rise and that’s not providing much confidence on the outlook in the months ahead.

What is even worrying is that as major central banks continue to tighten, they may risk breaking something down the road. Remember this argument here?

As for today, the Japanese yen is among the beneficiaries of the heavier bond yields. USD/JPY was hovering around 141.30-40 levels earlier but has now fallen to fresh lows of the day – down 0.5% to 141.10. Price fell short of testing the 142.00 mark and 61.8 Fib retracement level at the end of last week, but key support is still seen closer to 140.00 at this point:

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

The miss in the US CPI report has given Gold some
support as the market repriced interest rates expectations on the more dovish
side. The US data though kept on surprising to the upside and the latest US Jobless Claims showed yet
again that the labour market is still very strong, which is something that
keeps the Fed wondering if more rate hikes could be required to bring inflation
sustainably back to their target. This is a headwind for Gold, and if we keep
seeing good data and the Fed remains hawkish, we could see more lows for the
yellow metal.

Gold Technical Analysis –
Daily Timeframe

On the daily chart, we can see that Gold has
eventually reached the 1984 resistance level
where the sellers were waiting to position for another low. The short-term bias
now is bullish as the price has broken out of the downward trendline and the moving averages are
crossed to the upside. The buyers will need to break above the 1984 resistance
to get back full control and target the 2076 high.

Gold Technical Analysis – 4
hour Timeframe

On the 4 hour chart, we can see that the rejection
from the 1984 resistance has led to a fall below the upward trendline and the
downside crossover of the moving averages. This is a bearish signal and we can
expect Gold falling to the 1934 support if the price fails to break above the
1965 level.

Gold Technical Analysis – 1
hour Timeframe

On the 1 hour chart, we can see that we
have a key resistance level at 1965 where the sellers are likely to pile in to
extend the fall into the 1934 support. The buyers, on the other hand, will need
the price to break above the resistance level to pile in and target the 1984 resistance
first, and upon a breakout, the 2076 record high.

Upcoming Events

Lots of top tier economic events are
scheduled for this week starting with the US PMIs today. Better than expected
data should put some pressure on Gold as the market may reprice interest rates
expectations on the more hawkish side. Conversely, lower than expected readings
should support Gold as the dovish pricing is likely to increase. Moving on to
Wednesday, the Fed is expected to hike by 25 bps although this is already
priced in and it’s unlikely to lead to sustained moves. On Thursday, another US
Jobless Claims report will show if the labour market is still strong, and if
that’s the case, we may see some bearish reaction in Gold, while worse than
expected data should provide a tailwind. We conclude the week with the US PCE
and ECI reports on Friday.

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

• Will continue to implement prudent monetary policy
• Will adjust and optimise property policies at appropriate time
• Will keep yuan exchange rate basically stable
• External environment is complex and severe
• Will actively expand domestic demand conditions
• To also boost consumption of household products, promote tourism
• Will stabilise trade and foreign investment, enliven capital market to boost investor confidence

It’s safe to say that the post-Covid recovery hasn’t gone according to plan in China. In fact, it has been quite the opposite as domestic demand has basically sort of died. That has been a real issue over the last few months and local authorities are continually trying to do something about it.

But so far, their measures have not really panned out. We’ll have to see what Xi has up his sleeves next but just keep all this in mind when viewing the Chinese economy and their policy steps for the remainder of the year.

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