• Will the Jackson Hole event be bearish for stocks?
• Bundesbank says wage growth has slowed down in Q2
• Eurozone July final CPI +2.6% vs +2.6% y/y prelim
• Dollar on troubled shores so far this week
• Eurozone June current account balance €51.0 billion vs €36.7 billion prior
• European equities open marginally higher to kick start the day
• What are the main events for today?
• Eurostoxx futures +0.1% in early European trading
• Germany July PPI +0.2% vs +0.2% m/m expected
• Switzerland July trade balance CHF 4.89 billion vs CHF 6.18 billion prior
• Gold breakout holds more tentative for now
• The Trump-Harris debate for 4 September will no longer take place
• Not too much on the agenda in European trading later today

Markets:

• NZD leads, EUR lags on the day
• European equities mostly flat;
  S&P 500 futures slightly higher
• US 10-year yields up 10 bps to
  3.875%
• Gold
  up 0.8% to $2,523.80
• WTI
  crude up 0.38% to $73.87
• Bitcoin
  up 1.8% to $60,562

It was
another slow session due to the lack of key economic releases. The sentiment in
the markets remains mostly positive as everyone’s looking forward to Fed Chair
Powell’s speech on Friday expecting a pre-commitment to a rate cut in
September.

In the FX
market, the major pairs are basically flat on the day with the USD remaining on
the backfoot amid the risk-on sentiment. Equities continue to benefit from the
prospects of rate cuts into resilient growth as that should boost economic
activity.

Gold has
been another notable mover in the past few days as it reached a new all-time
high. The Fed’s monetary policy trajectory is one of the main drivers of the
precious metal as it influences real yields.

The recent crude oil
weakness, on the other hand, has been a head-scratcher but I can see the
pricing out of the geopolitical risk premium as the main reason as lots of time has passed
and we haven’t got any Iran retaliation.

Bitcoin should
be another major beneficiary of the easing cycle into resilient growth as it’s
basically digital gold on steroids.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

While it’s true that the market didn’t perform well in the following couple of months, the context today is much different.

In 2022, it goes without saying why it was different. The Fed was still in the middle of its hiking cycle and Powell delivered a very hawkish message.

In 2023, it wasn’t actually the Jackson Hole event that triggered the weakness. It was first the hot CPI on Thursday 14th and then the much more hawkish than expected FOMC on Wednesday 20th.

Even without those two catalysts in 2023, the market diverged pretty strongly from real yields and eventually it just caught up to the reality before bottoming out and resuming the rally into the December’s Fed pivot.

Right now, we are actually entering the easing cycle with resilient growth which is a strong tailwind for stocks as that should depress real yields and boost economic activity.

So, while we can’t know for sure how the market’s going to perform in the next couple of months, I’d say that this time a rally is more likely.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

The Russell 2000 last Thursday managed to break above a key resistance zone
following strong US Jobless Claims and Retail Sales data. The market
continues to fade the “growth scare” we got at the beginning of August and it’s
now looking forward to the Fed’s rate cuts. In fact, the rate cuts into resilient growth should
boost economic activity and risk sentiment which should be a strong tailwind
for the small cap stocks.

Russell 2000
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that the Russell 2000 got a boost last Thursday following the strong US
Jobless Claims and Retail Sales data triggering some key breakout on the lower
timeframes. The buyers piled in more aggressively and will now target a new
cycle high. The sellers will need the price to deliver some downside breakout
on the lower timeframes to start looking for new lows.

Russell 2000 Technical Analysis – 4 hour
Timeframe

On the 4 hour chart, we can
see that we got the breakout of the strong resistance around the 2110 level last Thursday
which increased the bullish momentum. We now have an upward trendline defining the current bullish
momentum.

If we were to get a
pullback, we can expect the buyers to lean on the trendline to position for new
highs with a better risk to reward setup. The sellers, on the other hand, will
want to see the price breaking lower to start piling in for new lows.

Russell 2000 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have another minor support zone where the buyers will likely lean
onto in case we get a pullback. The sellers, on the other hand, will want to
see the price breaking below the support to position for a drop into the major
trendline. The red lines define the average daily range for today.

Upcoming
Catalysts

On Thursday we get the US Jobless Claims figures and the US PMIs.
On Friday we conclude with Fed Chair Powell speaking at the Jackson Hole
Symposium.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

The German central bank noted that negotiated wage growth in Q2 was seen at 3.1%, as opposed to the 6.2% reading in Q1. However, they note that they expect a „temporary rise“ in German inflation towards the end of the year due to base effects. That just means that the economic recovery will be delayed further.

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

Copper has been on
a sustained downtrend since reaching its peak in May. More recently we’ve been
seeing some life coming back into the market with an increase in the bullish
momentum last week as the mining giant BHP said
on last Tuesday that it had started removing workers on strike at its
Escondida copper mine in Chile.

In the big picture, stable global growth and major central banks cutting
rates into resilient economies should be bullish drivers for the copper market and
more expansionary policies from Chinese officials might give an even stronger boost.
The timing though is the trickiest part.

Copper
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that copper pulled back into a key level at 4.24 where we can find the confluence
of the previous swing high, the trendline
and the 38.2% Fibonacci
retracement level. This is where we can expect the sellers to step in with
a defined risk above the level to position for a drop into the 3.80 level. The
buyers, on the other hand, will want to see the price breaking higher to pile
in and position for a rally into the 4.68 level next.

Copper Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that in case we get a pullback from the 4.24 resistance,
the buyers will likely lean on the upward trendline around the 4.14 level to
position for a break above the resistance with a better risk to reward setup.
The sellers, on the other hand, will want to see the price breaking lower to
increase the bearish bets into the 3.80 level.

Copper Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor support zone around the 4.19 level. We can expect the
buyers to lean on it to position for a break above the key resistance, while
the sellers will look for a break lower to pile in for a drop into the
trendline around the 4.14 level. The red lines define the average daily range for today.

Upcoming
Catalysts

On Thursday we get the US Jobless Claims figures and the US PMIs.
On Friday we conclude with Fed Chair Powell speaking at the Jackson Hole
Symposium.

This article was written by Giuseppe Dellamotta at www.forexlive.com.