• USD/JPY eases lower alongside bond yields on the day
• Gold takes aim at key resistance as the weekend approaches
• What are the main events for today?
• Fed’s Goolsbee: You don’t want to tighten any longer than you have to
• UK July retail sales +0.5% vs +0.5% m/m expected
• Eurozone June trade balance €22.3 billion vs €13.9 billion prior
• Never underestimate the power of US the consumer

Markets:

• JPY leads, USD and CAD lag on the day
• European equities higher; S&P 500 futures down 0.2%
• US 10-year yields down 5.9 bps to 3.867%
• Gold up 0.6% to $2,469.79
• WTI crude down 2.9% to $75.86
• Bitcoin up 2.9% to $58,287

There wasn’t any major headline catalysts on the session but the dollar is giving back quite a decent chunk of its gains following the US retail sales data yesterday.

USD/JPY in particular is down over 120 pips to near the 148.00 mark, with lower bond yields weighing. 10-year Treasury yields are down nearly 6 bps to 3.867% and that is keeping the yen more bid during the session.

In the last three days, traders could look to US data for some sense of reprieve on the economic calendar. But today, they have to look to themselves to pull things back up now. S&P 500 futures were up 0.2% early on but are now down 0.2% as we look to North America trading.

Going back to major currencies, EUR/USD is up 0.2% to just under 1.1000 with large option expiries keeping a lid on things there. GBP/USD is up 0.4% to 1.2905 while USD/CHF is down 0.6% to 0.8675 currently.

The dollar is struggling alongside the loonie, which is perhaps weighed down by weaker oil prices on the day. WTI crude is down nearly 3% as the rejection from $80 continues to stay the course this week.

In other commodities, gold is once again closing in on the key resistance region of $2,475-80 as buyers are teasing a breakout before the weekend comes.

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

The dollar is now ceding quite a bit of ground in trading today, reversing the nudge higher after the US retail sales yesterday. It comes alongside a shove lower in Treasury yields. 10-year yields are now down 5.5 bps to 3.871% and that is weighing on the greenback. At the same time, US futures are also looking shaky as S&P 500 futures are also down 0.1% currently.

Going back to USD/JPY, the drop comes as price action stalls at the 38.2 Fib retracement level of the swing lower since July – seen at 149.42.

It’s going to be a tricky session for the dollar to navigate as traders will have to look to themselves to keep up the form from trading yesterday. There won’t be much on the economic calendar to help unlike in the past few days.

Looking to other dollar pairs, EUR/USD is up 0.2% to 1.0990 with large option expiries holding the pair near 1.1000. Meanwhile, GBP/USD is up 0.4% to test 1.2900 and USD/CHF down 0.6% to 0.8675 currently.

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

• Will make great efforts to enhance the sustained upward trend of the economy
• It is necessary to stick to goals and not to take a relaxed approach
• Need to expand domestic demand more vigorously, focus on boosting consumption
• Will explore new growth points for foreign trade
• To make differentiated policy support based on the needs of different groups of people

Once again, it’s all pretty words and the challenge for Beijing will be to implement all of this on the ground level. That will be what investors are looking for in terms of shoring up confidence. Since peaking in 2021, Chinese stocks have plunged considerably amid the government’s handling of the pandemic and there hasn’t been much to convince of a revival in domestic demand just yet.

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

• This is not what an overheating economy looks like to me

Given the latest jobs report earlier this month, I don’t think anyone thinks that the economy is overheating. But from the retail sales data yesterday, it’s not that bad either. Anyway, this just reaffirms that the Fed is trying to ease into a pivot to cut rates next month.

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

There is a bit of a flag pattern forming in gold as price action continues to sit near fresh record highs this week. There was an attempt to breach the key resistance region around $2,475-80 on Wednesday but buyers cooled off after. And after a slight setback, they are quickly turning things around again as we get closer to the weekend now.

As the Fed looks to cut and yields are weighed lower, the simple case is for a bullish argument for gold. That being said, the technicals are another thing. There has been almost no semblance of a pullback since the surging run higher in March this year.

Sure, there was a bit of a consolidation from mid-April to end-June. However, it’s not exactly a retracement of any sort. For some context, gold rose by a little over 13% over the course of 2023. Meanwhile, it is up nearly 20% already in just 2024 currently.

There are reasons to stay bullish in gold in the long-term and also some reasons to expect a pullback from a technical perspective.

But perhaps price action and price patterns make for the simplest argument for gold at the moment.

And that is to go with the break of the flag pattern above. That is either on a topside run above $2,475-80 or a push back lower below $2,400 to threaten the 100-day moving average (red line) near $2,362 currently.

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