The US
economic data keeps on showing a resilient economy and as a consequence the
higher for longer stance becomes more and more certain which is making Treasury
yields to rally. This has been supporting the USD as we’ve been seeing a
divergence in the data with the other major economies. The recent Retail Sales data
showed also that consumer spending remains strong and it might either lead to
more inflation or keep inflation high for longer.

On the other hand, the BoE
hiked by 25 bps as expected as the UK CPI missed expectations across the board and UK employment report showed a mixed picture with both
the unemployment rate and wage growth higher. The central bank seems to be
leaning more on the less hawkish side as a key line in the statement was
tweaked to indicate the propensity for a “higher for longer” stance rather than
keeping with additional rate hikes. This week we got the employment report showing even more wage growth
despite the unemployment rate ticking higher again and the UK CPI beat expectations pointing to a stagflation.
The BoE will hike by another 25 bps in September but things are looking ugly
for the UK.

GBPUSD Technical
Analysis – Daily Timeframe

On the daily chart, we can see that we have a
strong support zone
around the 1.2593 level where we have also the 38.2% Fibonacci retracement level.
In fact, we can see that the price has bounced twice from there which might end
up being a double bottom. The moving averages are crossed
to the downside and the bias remains bearish as the price continues to print
lower highs. If the support gives way, we are likely to see a fall into the
1.2310 swing low level.

GBPUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we have a
strong downward trendline that’s
been acting as a reliable resistance for the sellers. In fact, we can see that
after the initial spike after the UK CPI data, the sellers piled in again and
the price fell to the levels seen before the CPI release. The buyers will want
to see the price breaking above the trendline to have even more conviction on
the upside and target the 1.2847 resistance.

GBPUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
might have a bullish flag
forming around the trendline. Today’s US Jobless Claims should give the
direction as a break to the upside is likely to lead to a rally into the 1.2847
resistance, while a break to the downside should trigger a selloff into the
1.26 handle.

Upcoming Events

Today we will see the latest US Jobless Claims. This
is a key report as the market is particularly focused on the labour market
data. A miss should weaken the USD in the short term as the market will have
another confirmation that the Fed may be done with rate hikes. On the other
hand, a beat should trigger another hawkish repricing and support the
greenback.

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

Well, it’s not like it had helped that much but the yuan did bounce back towards the closing stages of onshore trading today. That is helping with the mood in the aussie and kiwi a little with the former paring losses on the day against the dollar now.

Unless something changes from a fundamental perspective, Chinese authorities will have to do more in order to keep the pressure off the domestic currency. For now, it could help to stem the bleeding but where’s the fiscal aid? How are things supposed to turn around for the economy? How long can they keep burying all the issues and keep propping up the yuan and local stocks?

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

• Will keep liquidity reasonably ample
• Will keep yuan exchange rate basically stable
• Will fend off systemic financial risks
• Will keep prices basically stable
• Will adjust, optimise property policies in a timely manner

These are all very bland and generic stuff from the PBOC. They aren’t anything different than what we have heard before. In other words, they aren’t going to vary on their approach. And we all already know where this path leads towards.

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

The US
real yields keep on rising non-stop and given the inverse correlation with
Gold, we saw the precious metal falling non-stop as well. The economic data
continues to show a resilient economy even after the second most aggressive
tightening in history and this makes the market wonder if the Fed might need to
do more. Overall, there are more bearish drivers for Gold than bullish ones at
the moment, and we should keep seeing the downtrend continue unless the data
starts to point towards a recession.

Gold Technical Analysis –
Daily Timeframe

On the daily chart, we can see that Gold has
reached the 1893 low. This is where we can expect the buyers to step in with a
defined risk below the level to target a bounce into the 1934 resistance. If the
price breaks lower though, the sellers should pile in even more aggressively
and target the 1805 swing low level.

Gold Technical Analysis – 4
hour Timeframe

On the 4 hour chart, we can see that the price has
been diverging with the
MACD for
quite a while now. This is generally a sign of weakening momentum often
followed by pullbacks or reversals. In this case, if we see a bounce, the
pullback should end at the trendline where we
can expect the sellers piling in to target a break below the 1893 low. If the
price breaks higher though, it will confirm the reversal and the buyers should
extend the rally into the 1934 resistance.

Gold Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see more
closely the setup with the trendline and the Fibonacci
retracement levels for confluence.
That’s the resistance area to watch as we either get a rejection or a breakout.

Upcoming Events

The only big event left for this week is
the US Jobless Claims report
today. Given that we are at a key support it looks like a clear setup. If we
get a big beat, Gold is likely to break lower and fall. On the other hand, if
we get a big miss, Gold should rally as treasury yields should fall after such
a big rally.

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