• Dollar mostly little changed so far today
• Stocks erase early gains as risk mood stumbles once again
• Yuan misery to end the week for China
• Germany August final CPI +6.1% vs +6.1% y/y prelim
• Another report highlighting China’s ban on iPhones to local governments, state-owned firms
• China vice premier Zhang Guoqing to visit Russia next week
• Japan PM Kishida reportedly will reshuffle Cabinet on 13 September

Markets:

• NZD leads, JPY lags on the day
• European equities lower; S&P 500 futures down 0.2%
• US 10-year yields down 1 bps to 4.252%
• Gold up 0.2% to $1,923.44
• WTI crude up 0.7% to $87.48
• Bitcoin down 0.6% to $25,840

It was a quieter session as traders are not left with much to work with towards the end of the week.

There wasn’t any major data in Europe and so, there was only the risk mood and bond market musings to really trigger any broader moves. We saw yields just holding slightly lower after yesterday’s bid, so that didn’t provide much of an impact with the dollar keeping steadier across the board.

But we at least did see equities relinquish their early gains, falling lower as the selloff this week stays the course. European indices opened with slight gains but saw their fortunes turn around and are now down around 0.2% to 0.4% on the day.

The euro, yen, and pound were all little changed against the dollar with EUR/USD keeping near the 1.0700 mark amid large option expiries. USD/JPY stuck around 147.30-40 levels mostly after recovering from its drop in Asia trading.

Instead, it was the antipodeans that are seeing some decent moves at least with AUD/USD up 0.3% to near 0.6400 and NZD/USD up 0.5% to just above 0.5900. The gains aren’t anything to shout about considering the drop in both pairs this week but it is a bit of a relief despite a significantly weaker Chinese yuan today – which fell to its lowest levels since 2007/08.

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

US:

• The Fed hiked by 25 bps as
  expected and kept everything unchanged at the last meeting.
• Fed Chair Powell reaffirmed their data dependency
  and kept all the options on the table.
• Inflation measures
  since then showed further disinflation.
• The labour market
  displayed signs of softening although it remains fairly solid.
• Overall, the economic data started to surprise to
  the downside lately.
• This week the ISM Services PMI and Jobless Claims
  surprised to the upside.
• The Fed members are leaning more towards a pause in
  September rather than another rate hike.
• The market doesn’t expect the Fed to hike at the
  September meeting, but there’s now a 50/50 chance of a hike in November.

New Zealand:

• The RBNZ kept its official cash rate unchanged at the
  last meeting while stating that it will remain at the restrictive level for the
  foreseeable future to ensure that inflation comes down back to target.
• The recent New Zealand inflation and employment data surprised to the upside but
  the PMIs are in contraction with the Services PMI recently plunging into contraction.
• The wage growth has also missed
  expectations and it’s something that the central banks are watching closely for
  second round effects.
• The New Zealand Retail Sales beat expectations although remains
  deeply negative.
• The RBNZ is expected to keep the
  cash rate steady at the next meeting.

NZDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the bearish
momentum in the NZDUSD pair seems to be waning as the pair started to chop
around below the 0.5987 level. The bearish bias though remains intact as the
price has not yet broken the most recent lower high around the 0.60 handle and
the moving averages are
crossed to the downside.

NZDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we continue to
have a massive divergence with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, the target should be the 0.6117 level, but the price
should first take out the 0.60 handle before rallying all the way up to the
0.6117 level.

NZDUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we
recently took out the resistance around
the 0.5895 level. We might see the buyers piling in here with a defined risk
below the level to target the 0.5930 resistance first, and eventually the 0.60
handle. The sellers, on the other hand, will want to see the price falling back
below the 0.5895 level to invalidate the bullish setup and position for another
fall into the lows targeting a break lower.

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

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

The move here is largely to try and bolster support before next year’s voting, in which Kishida looks likely to face strong opposition to his position as prime minister. This is also seen as a move to try and ensure public confidence amid doubts creeping in about the government’s handling of the economy, so let’s see what he has planned.

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

The greenback is pretty much flat against the euro, yen, and pound while keeping little changed against the franc and loonie. It is only the aussie and kiwi which are slightly higher in trading today but the gains there aren’t anything too significant. AUD/USD is still down 0.8% on the week and NZD/USD is down 0.5% on the week so far.

EUR/USD is stuck around 1.0700 with large option expiries at the figure level also in play. Meanwhile, USD/JPY is not really moving too much after recovering from its earlier fall in Asia. 10-year Treasury yields are down 1.8 bps to 4.244%, so that is at least keeping any upside moves at bay for now.

In the equities space, we are seeing a softer mood overall as noted here. That is something to watch out for especially for risk currencies as a further softening in sentiment could eventually spill over and drag the aussie and kiwi back lower.

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