• Dollar firms amid more defensive risk mood
• Equities stay cautious as bond yields slide back down as well
• Eurozone consumers anticipate lower inflation but weaker spending power – ECB survey
• Germany July final CPI +6.2% vs +6.2% y/y prelim
• France June trade balance -€6.71 billion vs -€8.00 billion expected
• US July NFIB small business optimism index 91.9 vs 91.0 prior

Markets:

• USD leads, AUD lags on the day
• European equities lower; S&P 500 futures down 0.8%
• US 10-year yields down 8 bps to 3.998%
• Gold down 0.4% to $1,929.44
• WTI crude down 1.8% to $80.42
• Bitcoin up 0.5% to $29,292

It was a quiet session bereft of headlines but there were some decent market moves. It would seem European traders are responding to the poor China trade balance from earlier today, as recession fears start to resurface.

That saw more defensive risk flows as equities slumped lower while bond yields also dropped. The latter in particular is rather notable with 10-year Treasury yields sliding back under the 4% mark.

In turn, the dollar kept up its bid from Asia trading and extended gains during the session. EUR/USD fell from 1.0980 to 1.0940 while GBP/USD dropped from 1.2760 to 1.2700 with both pairs more than erasing the advance from yesterday.

USD/JPY is keeping firmer around 143.05 but is down from around 143.40 earlier in the day.

As risk sentiment stays more defensive, the commodity currencies are the ones being hurt the most. USD/CAD is up 0.8% to 1.3475 as oil prices also drop heavily on the day. Meanwhile, AUD/USD is down 1.1% to test the 0.6500 mark.

It’s now over to Wall Street to make do with the more dour risk mood at the moment.

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

Last
week, the NFP missed
expectations for a second time in a row and the previous numbers were all
revised lower. This was seen as a disappointment as the labour market seems to
be a touch weaker than previously expected. Nevertheless, the unemployment rate
fell once again and lessened the disappointment from the miss in the payrolls
number. The worse part for the Fed is that the average hourly earnings beat
expectations, and such high wage growth is not consistent with a sustainable
return to the 2% target. It’s worth reminding though, that the Fed will see
another NFP report before the September meeting, so this NFP doesn’t change much,
but the data leading into the meeting can still weigh on sentiment.

The RBNZ, on the other hand, kept its official cash
rate unchanged 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 though surprised to the upside
which might put some pressure on the central bank at the next rate decision,
although they are more likely to keep rates steady.

NZDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the NZDUSD
selloff from the 0.6389 resistance seems to
be unstoppable as the US data remains quite strong. The sellers will have to
break the 0.6050 support to target the break of the 0.5987 level next. The
buyers, on the other hand, will need the price to break above the trendline to
switch the bias from bearish to bullish and start targeting a rally towards the
0.6389 resistance.

NZDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price is diverging with the
MACD right
when it’s approaching the 0.6050 support. This is generally a sign of weakening
momentum often followed by pullbacks or reversals. In this case, we may see a
pullback all the way back to the downward trendline where the sellers will have
an even better risk to reward setup to target the lows.

NZDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the support level and the divergence with the MACD. Aggressive buyers
may start to pile in here with a defined risk below the level and target the
trendline. The sellers, on the other hand, will want to see the price breaking
lower to pile in even more aggressively and extend the selloff into the 0.5987
low.

Upcoming Events

This week the
main event will be the US CPI report on Thursday. The market is likely to focus
more on the Core readings as this is what the Fed is more interested in. Higher
than expected data should give the US Dollar a boost as the market’s
expectations will be skewed more on the hawkish side. On the other hand, lower
than expected readings should weigh on the USD as it would support the
soft-landing narrative in the short-term. At the same time of the US CPI data,
we will also see the latest US Jobless Claims report, which is less likely to
move the market since it’s released at the same time of the CPI, but big
surprises should have an effect, nonetheless. Finally, we conclude the week
with the University of Michigan Consumer Sentiment report on Friday where the
market is likely to focus more on the inflation expectations figures.

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

The dollar is higher across the board as markets are adopting a more defensive risk posture on the session. There aren’t any major headlines but the retreat in bond yields and equities keeping lower points to risk-off flows. The only thing I can attribute this to would be China’s poor trade balance data, which is perhaps reigniting risks of a global recession.

In that lieu, the dollar is benefitting with EUR/USD now down 0.4% to 1.0964 and GBP/USD falling further by 0.5% to 1.2720 on the day. Both pairs are still sitting within the ranges of last Friday and Monday this week but in the case of the former, it is inviting sellers to keep up the pressure in looking for a test of the 100-day moving average (red line):

Meanwhile, USD/JPY continues to keep higher by 0.5% at 143.18 while USD/CAD is also seen up by 0.6% now to 1.3445. That comes as we see oil prices slide as well amid the poorer risk mood. The aussie is the biggest loser on the day though with AUD/USD down 1.0% to 0.6510 at the lows for the day, coming close to that test of 0.6500 at the moment.

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

Last
week, the NFP missed
expectations for a second time in a row and the previous numbers were all
revised lower. This was seen as a disappointment as the labour market seems to
be a touch weaker than previously expected. Nevertheless, the unemployment rate
fell once again and lessened the disappointment from the miss in the payrolls
number. The worse part for the Fed is that the average hourly earnings beat
expectations, and such high wage growth is not consistent with a sustainable
return to the 2% target. It’s worth reminding though, that the Fed will see
another NFP report before the September meeting, so this NFP doesn’t change
much, but the data leading into the meeting can still weigh on sentiment.

The RBA, on the other hand,
kept its cash rate unchanged with a slight tweak to a line in
the policy statement that suggests that they are leaning more on the dovish
side. The data makes their job harder as the Australian Jobs report surprised again to the upside but
the Inflation report missed expectations. Nonetheless,
they will see more data now before the next meeting and can make a better-informed
decision.

AUDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the AUDUSD
selloff from the 0.69 handle has extended past the 0.6563 support and the
sellers are now targeting the 0.6459 low with a high chance of seeing a break
lower. This is clearly a sellers’ market as the price has been printing lower
lows and lower highs and the moving averages are
crossed to the downside. The buyers will need a strong fundamental catalyst to
switch the bias in the favour.

AUDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that AUDUSD after
the break lower rallied back into the previous swing low area where we had also
the 38.2% Fibonacci retracement level
for confluence. That’s
where the sellers piled in to target the 0.6459 low. The buyers will need the
price to break above the resistance around
the 0.66 handle to switch the bias from bearish to bullish.

AUDUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we
have a minor support at the previous low. A break below should see more sellers
piling in to target the low and eventually a break lower. More aggressive
buyers may try to step in here to target the 0.66 handle and a break higher.

Upcoming Events

This week the
main event will be the US CPI report on Thursday. The market is likely to focus
more on the Core readings as this is what the Fed is more interested in. Higher
than expected data should give the US Dollar a boost as the market’s
expectations will be skewed more on the hawkish side. On the other hand, lower
than expected readings should weigh on the USD as it would support the
soft-landing narrative in the short-term. At the same time of the US CPI data,
we will also see the latest US Jobless Claims report, which is less likely to
move the market since it’s released at the same time of the CPI, but big
surprises should have an effect, nonetheless. Finally, we conclude the week
with the University of Michigan Consumer Sentiment report on Friday where the
market is likely to focus more on the inflation expectations figures.

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

• Prior 91.0

The small business optimism index shows a decent improvement in July but it remains below the long-term average of 98. The last time it was above said reading was all the way back in December 2021. Here’s the breakdown of the components:

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

• Dollar recovers some poise after Friday drop
• Fed’s Williams does not rule out possibility of rates cuts next year
• Eurozone August Sentix investor confidence -18.9 vs -24.3 expected
• Germany June industrial production -1.5% vs -0.5% m/m expected
• UK July Halifax house prices -0.3% vs -0.1% m/m prior
• Switzerland July seasonally adjusted unemployment rate 2.1% vs 2.0% expected

Markets:

• NZD leads, CHF lags on the day
• European equities lower; S&P 500 futures up 0.3%
• US 10-year yields up 3.7 bps to 4.098%
• Gold down 0.3% to $1,935.74
• WTI crude down 0.9% to $82.04
• Bitcoin up 0.4% to $29,035

It was a quiet session as markets are observing a slower but calmer start to the new week.

All eyes are on the US CPI report on Thursday and it really can’t come soon enough. The dollar is recovering some ground after the Friday drop as markets don’t really have much else to reprice in terms of the Fed outlook as seen here. It’s on to the next big data and we will have to wait for the inflation numbers later this week before any further convictions appear.

European stocks were marked lower and kept that way in a bit of a catch up to the losses at the end of last week in Wall Street. But US futures are in a calmer mood, so there is some mixed sentiment in there today.

For major currencies though, the rebound in bond yields is the one that is helping to prop up the dollar. USD/JPY is continuing to keep above 142.00 on the day, seen around 142.20-30 levels mostly in Europe. EUR/USD is also down slightly by 0.3% to 1.0980 with the low earlier touching 1.0965.

The commodity currencies are mostly little changed against the dollar but AUD/USD remains in a precarious spot with sellers still searching for a move towards 0.6500 next.

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

Last
week, the NFP missed
expectations for a second time in a row and the previous numbers were all
revised lower. This was seen as a disappointment as the labour market seems to
be a touch weaker than previously expected and we saw a brief rally in Gold.
The unemployment rate though, fell once again and lessened the disappointment
from the miss in the payrolls number. The worse part for the Fed is that the
average hourly earnings beat expectations, and such high wage growth is not
consistent with a sustainable return to the 2% target. This may have led to the
selloff soon after the rally as it increases the risk of more hikes in the future.
It’s worth reminding though, that the Fed will see another NFP report before
the September meeting, so this NFP doesn’t change much, but the data leading
into the meeting can still weigh on sentiment.

Gold Technical Analysis –
Daily Timeframe

On the daily chart, we can see that Gold has
eventually reached the 1934 support after
the rejection from the 1984 resistance. This is where we should see the buyers
stepping in with a defined risk below the level to target the 1984 resistance
first and eventually the breakout. The sellers, on the other hand, will want to
see the price breaking lower to pile in even more aggressively and extend the
selloff into the 1893 low.

Gold Technical Analysis – 4
hour Timeframe

On the 4 hour chart, we can see more closely the
price action around the 1934 support. The spike lower after the miss in the NFP
led to a brief rally into the 1943 swing low resistance where we have also the
38.2% Fibonacci retracement level.
The sellers stepped in there with a defined risk above the level to target a
break below the 1934 support. The buyers will need to defend the level as a
break lower would open the door for the selloff into the 1893 level.

Gold Technical Analysis – 1
hour Timeframe

On the 1 hour chart, we can see that we
had a mini range around the 1934 support that was broken on both sides
following the NFP release. It’s always better to ignore the spikes after such
high impact news and focus on the levels and the direction that the news is
supporting with a higher probability. The price has returned back within the range,
and it will be another waiting game until we get a breakout.

Upcoming Events

This week the
main event will be the US CPI report on Thursday. The disinflationary trend
seen in the past months has been a tailwind for Gold as the market kept expecting
the Fed to be done with rate hikes soon, but strong US data kept coming in and
pushed the end of the hiking cycle further in the future, ultimately weighing
on the precious metal. In fact, an upside surprise in this report is likely to
weigh on Gold as the market would expect more hikes and push the pause even
further away. On the other hand, another miss in the data should provide some
relief and lead to a rally. After the US CPI we will also see the latest US
Jobless Claims report, which is less likely to move the market since it’s
released at the same time of the CPI, but big surprises should have an effect,
nonetheless. Finally, we conclude the week with the University of Michigan
Consumer Sentiment report on Friday where the market is likely to focus more on
the inflation expectations figures.

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

The dollar is holding higher across the board today as a rebound in bond yields is also helping. 10-year Treasury yields are up 5 bps to 4.116% and that is helping to prop up the greenback as well. Of note, EUR/USD is down 0.4% to 1.0966 at the lows for the day:

The pair threatened a rebound back above 1.1000 only to fall back now as sellers are starting to seize back near-term control. Euro sentiment isn’t the best at the moment amid worsening economic data and a looming ECB policy pivot. Meanwhile, it seems like traders have figured out the Fed outlook and we’ll see if the US CPI data this week will further validate that.

For EUR/USD, the 100-day moving average (red line) is the key technical spot to watch and that sits at 1.0921 currently.

USD/JPY is also seen up 0.4% now to 142.40 as buyers look to hold a rebound back above the 142.00 mark while USD/CHF is hoping to move towards testing the 0.8800 mark once again, up 0.5% to 0.8770 currently.

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

Last
week, the NFP missed
expectations for a second time in a row and the previous numbers were all
revised lower. This was seen as a disappointment as the labour market seems to
be a touch weaker than previously expected. Nonetheless, the unemployment rate
fell once again and lessened the disappointment from the miss in the payrolls
number. The worse part for the Fed is that the average hourly earnings beat
expectations, and such high wage growth is not consistent with a sustainable
return to the 2% target. It’s worth reminding though, that the Fed will see
another NFP report before the September meeting, so this NFP doesn’t change much,
but the data leading into the meeting can still weigh on sentiment.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq
Composite couldn’t extend the rally all the way into the key 14649 resistance.
In fact, we can see that we had a divergence with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. The price is now at a previous resistance turned support where we
should expect the buyers stepping in with a defined risk below the level to
target the 14649 high.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see more closely the
support around the 13865 level where we can also find the 50% Fibonacci retracement level
for confluence. The
buyers are likely to enter here, but the sellers will want to wait for a break
below the level to pile in even more aggressively and extend the fall into the trendline or the
13174 support.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we
have two key levels now:

· The support at
13865 where a break below it should give the sellers control.

· The
resistance at 14115 where a break above it should give the buyers control.

The best strategy would be to wait for a
break on either side and then join the wave.

Upcoming
Events

This week the
main event will be the US CPI report on Thursday. The market has been loving
the disinflationary trend seen in the past months, so an upside surprise is
likely to weigh on risk sentiment and push the market lower. On the other hand,
another miss in the data should provide some relief and lead to a rally. After
the US CPI we will also see the latest US Jobless Claims report, which is less
likely to move the market since it’s released at the same time of the CPI, but
big surprises should have an effect, nonetheless. Finally, we conclude the week
with the University of Michigan Consumer Sentiment report on Friday where the
market is likely to focus more on the inflation expectations figures.

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

• Inflation is coming down as hoped
• Expects unemployment to rise slightly as the economy cools, personally sees unemployment rate rising above 4% next year
• Does not rule out possibility of lowering rates in early 2024
• It all depends on the economic data

Well, that’s one of the first angles by the Fed in agreeing to the current market pricing as seen here. They have been adamant that rates are to hold higher for longer and keep in more restrictive territory, so this is a bit of an early take. But if they keep interest rates unchanged in September again and inflation data continues to point downwards, this may gather more traction.

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