• Yields fall reverberates to broader markets to start the day
• USD/JPY Technical Analysis – Expectations for a 50 bps cut remain alive
• What is the distribution of forecasts for the US CPI?
• BOJ’s Nakagawa: Hard to comment on timing of next rate hike
• Fed to cut rates by 25 bps at each of the remaining three policy meetings this year – poll
• UK July monthly GDP 0.0% vs +0.2% m/m expected
• US MBA mortgage applications w.e. 6 September +1.4% vs +1.6% prior

Markets:

• JPY leads, USD lag on the day
• European equities a touch higher; S&P 500 futures down 0.1%
• US 10-year yields down 2.6 bps to 3.618%
• Gold up 0.3% to $2,522.42
• WTI crude up 2.6% to $67.49
• Bitcoin down 1.4% to $56,770

The most interesting part of the session was during the handover from Asia to Europe. That came as bond yields dipped and cast a bid on the Japanese yen in FX. USD/JPY in particular fell through to test 141.00 before touching a low of 140.70 during the day. The pair then caught a bounce back after, trading back up to 141.70 now but still down by 0.5%.

As yields fell, it put some light pressure on equities as well. S&P 500 futures fell as much as 0.6% before recovering most of that to be down just 0.1% now.

Focusing back on the bond market, 2-year Treasury yields flirted with a break to its lowest level in over two years. Yields were down by as much as 6 bps to 3.55% at one point, before keeping modestly lower now at 3.58%. 10-year yields on the other hand fell further to 3.61% and is keeping thereabouts.

With Treasury yields falling, the dollar is the laggard on the day as such. EUR/USD is up 0.3% to 1.1050 while USD/CHF fell to 0.8422 initially before rebounding back a little to 0.8460 now. Meanwhile, AUD/USD is also seen up 0.3% to 0.6670 on the day.

In other markets, gold is also starting to eye a further breakout as it hovers near the topside of its recent range. The precious metal is up 0.3% to $2,522 now, with buyers on the edge of their seats in wanting to chase a breakout.

That will be another area to watch out for as we turn the focus and attention to the US CPI report later.

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

• Prior +1.6%
• Market index 233.7 vs 230.5 prior
• Purchase index 138.6 vs 136.1 prior
• Refinance index 757.8 vs 751.4 prior
• 30-year mortgage rate 6.29% vs 6.43% prior

The average rate of the most popular US home loan dips further to its lowest since February last year. That comes amid a further drop in rates overall and that is helping mortgage activity catch a bounce. Both purchases and refinancing activities also picked up in the past week as such.

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

The bulls have been huffing and puffing over the last three weeks but they haven’t blown open the door for a stronger technical breakout yet. Gold price action has been consolidating in a bit of a range recently and the next trade is to arguably go with the break that comes.

I’ll continue to point out that there is a certain discomfort in the rise in gold prices this year. That being it is rather one-sided with little to no pullbacks. There have been consolidation phases like the one now and also from April through to June. However, there hasn’t been any meaningful correction to the surging run in 2024.

And that irks me a little even as a gold bull at heart. A healthy correction to the jump higher looks to be overdue but even then, it is going to be but a dip buying opportunity when it comes. At this stage, that’s the only warning signal I can attribute to gold on the charts.

But at the same time, it’s no surprise to see gold staying more bullish considering all the factors in play. China may have said that they have halted gold purchases for now. However, it is China we’re talking about here. So, I do hold my reservations on their actual motives and transparency.

Otherwise, the structural view continues to stay intact for gold as we look towards the Fed kicking off their rate cut cycle next week.

• The very simple case for buying gold

As for the bigger picture, it will be interesting to see how this gold run plays out as we move closer towards the seasonal buying rush in December and January. If the run stretches on, it might complicate the seasonal outlook when the time comes.

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

Last Friday, the Russell
2000 sold off following the weaker than expected NFP
report even though the details were better than the prior month. The
technical break below the key support around the 2120 level eventually increased
the bearish momentum.

The market has become very
sensitive to soft growth and labour market data. There’s also a good argument
that the market wants the Fed to deliver bigger cuts to avoid that the soft
landing turns into a hard landing.

The chances for a 50 bps
cut increased yesterday following the drop in Treasury yields after a weaker US NFIB Small Business Optimism Index and BoC’s Macklem comments on bigger cuts with people
wondering whether the bond market is signalling more economic weakness ahead.

Russell 2000
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that the Russell 2000 dropped back below the major trendline following the US NFP release. The
sellers took back control and they will now target a fall into the 1993 level.
The buyers, on the other hand, will need the price to rally back above the
trendline to start targeting new highs.

Russell 2000 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the price broke through the strong support zone around the 2120 level
where we had the confluence of the trendline and the previous resistance turned support. The sellers piled in on a break
lower to position for a drop into the 1993 level, while the buyers folded waiting
for new opportunities. A rally back above the resistance should give the buyers
some control and increase the bullish momentum into new highs.

Russell 2000 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a downward trendline defining the current bearish momentum.
The sellers will likely keep on leaning on the trendline to position for more
downside, while the buyers will want a break to the upside to start piling in
for a break above the resistance. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we get the US CPI report. Tomorrow, we have the latest US Jobless
Claims figures and the US PPI data. On Friday, we conclude the week with the
University of Michigan Consumer Sentiment report.

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