• US July NFIB small business optimism index 93.7 vs 91.5 prior
• The risk mood continues to hold up, eyes on US PPI data later
• Germany August ZEW survey current conditions -77.3 vs -75.0 expected
• IEA makes no change to 2024 world oil demand growth forecast in latest report
• European equities open on a more positive note as risk mood breathes easier for now
• Spain July final CPI +2.8% vs +2.8% y/y prelim
• What are the main events for today?
• Eurostoxx futures +0.2% in early European trading
• Japan’s Nikkei extends recovery bounce, closes above 36,000
• UK June ILO unemployment rate 4.2% vs 4.5% expected
• FX option expiries for 13 August 10am New York cut
• UK labour market report in focus in the session ahead
• USD/JPY stays in recovery mode for now, eyes on US data later

Markets:

• NZD leads, JPY lags on the day
• European equities lower;
  S&P 500 futures +0.16%
• US 10-year yields down 13 bps to 3.902%
• Gold
  down 0.35% to $2,463
• WTI
  crude up 0.24% to $79.84
• Bitcoin
  down 0.97% to $58786

The main
highlight in the European session was the release of the UK jobs report where
we saw a notable improvement in the unemployment rate although the data
continues to suffer from reliability issues.

We’ve also
got the German ZEW survey which surprised to the downside posting the biggest
decline in the past two years. In contrast, the situation indicator for the
eurozone improved marginally.

The focus
will now switch to the US PPI figures and Fed’s Bostic, but the main event
comes tomorrow when we will get the US CPI report.

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

From
major financial institutions to individual investors, participants in the $7.5
trillion per day forex market rely on
dedicated intermediaries to access this vast and complex ecosystem. Operating
behind the scenes but fulfilling a vital role, forex brokers have become the
crucial conduit between regular traders across the world and the fluid currency
markets they aim to speculate in.

More
than just transaction processors, the best forex brokers enhance overall market
functionality. By aggregating massive flows of buying and selling interest,
they provide the underlying liquidity for efficient pricing and swift trade
execution. At the same time, brokers make participating in the global currency
markets easy for traders – by offering online interfaces, analytics, margin
trading and tight dealing spreads.

By
centralizing access and order flows, forex brokers have connected millions of
traders to the thrilling world of currency speculation – enabling anyone to
capitalize on movements in EUR/USD, GBP/USD and other fluctuating exchange
rates. Let’s examine how these behind-the-scenes players make borderless
currency trading possible.

Defining Forex Brokers

Forex
brokers are financial institutions that provide retail and institutional
traders access to the global currency markets. Rather than trading directly
with a market maker, traders conduct currency transactions through a brokerage
platform and interface.

How to
find the best broker? To find out the answer, go here: https://www.earnforex.com/forex-brokers/.

The core
functions of retail forex brokers include:

1. Providing trading platforms and software.
2. Streamlining access to live market prices.
3. Managing customer accounts and processing trades.
4. Offering leverage and other trading services.

By
acting as market middlemen, brokers spare traders from directly accessing the
interbank market. This makes trading more convenient and organized for regular
currency speculators.

Enhancing Market Liquidity

The
gigantic daily turnover in the forex market is underpinned by the constant flow
of buy and sell orders between participants. This order flow is essential for
maintaining market liquidity.

Forex
brokers play a crucial role in aggregating the orders of retail speculators and
channeling this liquidity into the wider interbank market. Without brokers
serving as conduits for currency demand, liquidity in the market would be
severely impacted.

Brokers
enhance liquidity in several key ways:

Channeling
retail order flows. In effect, through consolidating buy and sell orders from
hundreds of thousands of ordinary traders, brokers offer a constant stream of
transactions for market makers and other liquidity suppliers to offer. This
increases the extensiveness of tradable prices.

Bridging
margin trading. Brokers allow clients to trade on margin hence increasing
the trading volumes. The majors brokers provide leverage of up to 500:1 which
amplifies the order flows.

Streamlining
access. In this
capacity, brokers increase their involvement in the forex market by making
currency trading possible at any time of the day through online platforms. More
parties mean more demand, or in other words, more liquidity.

Adding
proprietary liquidity. A large number of brokers are also market makers, which
means they execute customer orders from their own stock to supplement the
market.

Due to
efficiency of the broker in collecting and transmitting orders, the forex
market is highly liquid, which is essential for the fast trades with minimal
effect on the prices.

Driving Price Discovery

Price
discovery refers to the efficient determination of actual asset prices based on
the dynamics of supply and demand. Deep liquidity is vital for effective price
discovery.

By
funneling the aggregated positions of millions of traders into the wider
market, forex brokers drive price discovery across currency pairs. The huge
collective order flows they generate shape prevailing market rates across major
and exotic currency pairs.

When
brokers transmit a surge of buy orders for a specific currency, it exerts
upward pressure on the price, enabling efficient price discovery. The same
dynamic applies to sell orders.

Beyond
influencing near-term price swings, the longer-term positions and strategies of
broker clients ultimately impact currency valuations across the globe. For
instance, a major shift toward long Euro positions at leading US brokers
transfers into euro appreciation over time.

By
reflecting the real-time demand of global traders, brokers help incorporate new
information into currency prices, making them key players in price discovery.

Benefits Brokers Offer Traders

By
serving as indispensable market intermediaries, forex brokers unlock several
benefits for regular currency traders:

Convenience. Brokers offer 24/7 online
trading access without requiring traders to directly participate in interbank
markets. This makes forex trading easy and convenient even for retail
participants with limited capital.

Liquidity
Access. Through
brokers, traders gain access to the phenomenal liquidity of the wider forex
market – enabling swift order fills and limited price slippage. Brokers
aggregate positions to enable institutional-grade liquidity.

Leverage.
Brokers
provide traders the ability to trade on margin, amplifying their purchasing
power in currency markets. Leverage of 50:1, 100:1 or even 500:1 is available,
supercharging potential gains.

Competitive
spreads. By
harnessing aggregated liquidity, brokers can offer tighter dealing spreads to
customers – as low as 0.1 pips for major pairs. This unlocks cost savings for
active traders.

Analysis
tools. Brokers
offer an array of trading analysis tools, from charts to signals, which allow
traders to base decisions on rich market data.

By
delivering these advantages, forex brokers help level the playing field for
retail participants, enabling them to effectively speculate in the world’s
largest financial market.

Conclusion

Forex
brokers fill a vital role in currency markets by serving as conduits between
individual traders and the wider interbank ecosystem. By streamlining access
and aggregating substantial liquidity, they enable efficient price discovery
and provide traders with the infrastructure to implement strategies.

In a
market characterized by enormous daily turnover, brokers enhance liquidity
depth, tighten spreads, and improve participation, leading to
smooth-functioning currency trading. For regular traders seeking to speculate
on movements in EUR/USD, GBP/USD, and other major pairs, forex brokers are
indispensable partners.

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

Fundamental
Overview

The S&P 500 bounced
strongly from the lows last week following the good US Jobless Claims figures as the data quelled some of
the fears around the labour market after the weak US NFP report.

That’s been also evident
from the market pricing for rate cuts as expectations for a 50 bps cut in
September kept on being pared back with now a 25 bps move seen as more likely.
Moreover, the Japanese markets shouldn’t be a problem anymore given that the
Japanese officials made it pretty clear that they won’t proceed with more
tightening given the recent volatility in the markets.

All of the above
contributed to a more positive risk sentiment in the market with the focus now
on the US CPI report tomorrow where benign figures will likely give the bulls
some more support.

S&P 500
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that the S&P 500 bounced around the swing low level at 5200 and extended
the gains following the good US jobless claims figures. The price is now
approaching a key resistance
around the 5430 level where we can also find the 61.8% Fibonacci
retracement level for confluence.

This is where we can expect
the sellers to step in with a defined risk above the level to position for a
drop back into the lows. The buyers, on the other hand, will want to see the
price breaking higher to increase the bullish bets into the major trendline
targeting a breakout.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the price recently broke above the strong resistance around the 5366
level and extended the gains as more buyers piled in. The price action has been
tentative though as we head into the US CPI report tomorrow.

If we get a bigger
pullback, the buyers will likely lean on the upward trendline
around the 5270 level to position for a rally into the major downward
trendline. The sellers, on the other hand, will want to see the price breaking
lower to increase the bearish bets into the lows.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see more clearly the recent price action. There’s not much we can glean from
this timeframe as market participants will wait for a catalysts or the price
reaching the key levels. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we get the US PPI data. Tomorrow, we have the US CPI report. On
Thursday, we get the US Retail Sales and Jobless Claims figures. Finally, on
Friday, we conclude the week with the University of Michigan Consumer Sentiment
survey.

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

That’s the highest reading since February 2022 but it still sits below the 50-year average of 98. That’s the 31st straight month that it holds below said threshold now. Looking at the details, much of the improvement owes to a jump in the Expected Business Conditions component (+1.8) though while most other components were relatively unchanged.

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

It is pretty much the case of markets just letting out a sigh of relief. That after all the overblown panic in calling for emergency rate cuts on Monday last week. It’s a meme market these days. When things are going their way, it’s all bullish and life is good. But when a retracement or correction comes, suddenly the view changes dramatically to a crash landing from a soft landing. There’s no in between.

Mind you, both the S&P 500 and Nasdaq are both up roughly 12% this year. So, what exactly is that bad again?

In any case, market players are continuing to take in the calm for now. The rebound in Japanese yen pairs is also a helpful factor, with USD/JPY up another 0.4% to 147.85 currently. That’s helping to soothe carry trades in general, after being beaten up badly after the US jobs report.

Meanwhile, S&P 500 futures are up another 0.4% today with Nasdaq futures up 0.6% currently.

Broader market sentiment is holding up but will be due a litmus test later in US trading. We will be getting US PPI data and while this isn’t quite as crucial as the CPI report tomorrow, it offers a bit of a teaser. At least in terms of how markets might react.

For now, the wait continues. And that’s making for a bit of a snoozer so far in European morning trade.

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