Fundamental
Overview

Yesterday, the US PPI report missed expectations by a big margin
triggering a selloff in the US Dollar as the market started to position into a
potentially soft US CPI release today.

That led to a key breakout
in the NZDUSD pair which didn’t last as the RBNZ
tonight cut rates by 25 bps. While analysts and economist were expecting the
OCR to remain unchanged, the market was pricing more than a 70% probability of
a rate cut nonetheless.

What weighed on the Kiwi were
more dovish than expected central bank’s forecasts for future interest rates
settings.

For the Fed, the market is
split between a 25 and 50 bps cut in September and a total of 107 bps of easing
by year-end. On the RBNZ side, the market is expecting a 25 bps cut in October
and a total of 71 bps of easing by year-end.

NZDUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that NZDUSD probed above the key resistance
zone around the 0.6050 level yesterday after the soft US PPI report but got
smacked back down tonight following the rate cut from the RBNZ.

The sellers piled in with a
defined risk above the resistance to position for a drop back into the lows
around the 0.5850 level. The buyers will want to see the price rising back
above the resistance to increase the bullish bets and position for a rally into
the 0.6217 level next.

NZDUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a minor support zone around the 0.5980 level where the price
got rejected from several times in the past weeks. If we get a pullback all the
way down to the support, the buyers will likely step in with a defined risk
below the support to position for a break above the major 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 0.5850 level.

NZDUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that the price dropped all the way to the lower bound of the average daily range for today. The price generally
doesn’t extend much beyond the range unless there’s a strong catalyst.

That catalyst could be a
hot US CPI report today, which might push the price into the 0.5980 support
zone. For now, the buyers are leaning on the minor upward trendline to position
for a rally into new highs.

Upcoming
Catalysts

Today we have the US CPI report. Tomorrow, we get the US Retail Sales and
Jobless Claims figures. Finally, on Friday, we conclude the week with the New
Zealand Manufacturing PMI and the University of Michigan Consumer Sentiment
survey.

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

Fundamental
Overview

Yesterday, the US PPI report missed expectations by a big margin
triggering a selloff in the US Dollar as the market started to position into a
potentially soft US CPI release today.

The UK
CPI this morning missed estimates across the board as well and raised the
probabilities of a back-to-back cut in September. Most of the initial GBP
weakness though has been erased as the selloff in the greenback has been
stronger and in the bigger picture a positive risk sentiment should favour the
pound anyway.

For the Fed, the market is
split between a 25 and 50 bps cut in September and a total of 107 bps of easing
by year-end. On the BoE side, the market sees a 41% probability of a 25 bps cut
in September and a total of 47 bps of easing by year-end.

GBPUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that GBPUSD is approaching a key resistance
zone around the 1.29 handle. That’s where we can expect the sellers to step in
with a defined risk above the level to position for a drop into the 1.26
handle. The buyers, on the other hand, will want to see the price breaking
higher to increase the bullish bets into new highs.

GBPUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that once the price broke above the downward trendline,
the bullish momentum started to increase as more buyers piled in. We now have a
minor upward trendline defining the current bullish momentum. The buyers will
likely keep on leaning on the trendline to position for new highs, while the
sellers will want to see the price breaking lower to position for a drop into
the 1.26 handle.

GBPUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that the price bounced around the trendline and the 50% Fibonacci
retracement level this morning following the drop from the UK CPI release. The
red lines define the average daily range for today.

Upcoming
Catalysts

Today we have the US CPI report. Tomorrow, 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.

• 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.

Headlines:

• USD/JPY Technical Analysis – Waiting for a breakout of the range
• Dollar trades more mixed as risk sentiment holds up for now
• BOE’s Mann says still concerned about upside risks to inflation
• US data will keep markets in check for now
• OPEC slashes 2024 oil demand growth forecast on softer China outlook
• Germany July wholesale price index +0.3% vs -0.3% m/m prior
• SNB total sight deposits w.e. 9 August CHF 463.1 bn vs CHF 453.9 bn prior

Markets:

• NZD leads, JPY lags on the day
• European equities higher; S&P 500 futures up 0.2%
• US 10-year yields up 1.3 bps to 3.955%
• Gold up 0.4% to $2,440.27
• WTI crude up 1.1% to $77.68
• Bitcoin up 1.6% to $59,675

It was a quieter session with Japanese markets closed, so that already set the tone during Asia trading.

There wasn’t much to work with in the European morning either, as market players are more fixated on the key risk events later in the week. For now, it is but a waiting game as such.

The dollar is trading more mixed as risk sentiment is holding up better. The unwinding of the carry trade is easing further as traders are breathing easier again today. USD/JPY pushed higher from around 147.10 in Asia to 147.60 while USD/CHF is up 0.4% to 0.8690 in a decent move.

Meanwhile, AUD/USD is up 0.4% to 0.6600 and NZD/USD up 0.5% to 0.6025 on the day. Besides that, the dollar remains little changed against the euro, pound, and loonie.

In other markets, stocks were calmer as well. European indices opened with slight gains but are keeping guarded mostly. US futures are also just a touch higher, not really getting too carried away with any optimistic push yet.

It’s all about waiting for the big data this week to cook. And only until we get to that will markets start to pile on any moves with more conviction.

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

• 2024 world oil demand growth forecast seen at 2.11 mil bpd (previously 2.25 mil bpd)
• 2025 world oil demand growth forecast seen at 1.78 mil bpd (previously 1.85 mil bpd)

On the change, OPEC says that softening expectations for China’s oil demand is the main reason for that. But the bloc maintains that despite a slow start to the summer driving season, fuel demand is expected to remain „solid due to healthy road and air mobility“.

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

All the focus and attention this week is on the US CPI report on Wednesday. But just before that, we will be getting the same report from the UK as well. The thing is given base effects, it is estimated that headline annual inflation in the UK is going to increase from 2.0% in June to 2.3% in July. That will mark the first increase in said reading since December last year.

Logically, this plays into the view among major central banks now that the disinflation process is going to encounter some „bumps along the road“. But this is a market that was very much driven by emotions for the past week or so. As such, market players may not be as composed as you would expect in seeking out a logical reaction initially.

The key detail though will be the core annual inflation reading. That is estimated to hold similar to June at 3.5%. If so, that is likely to help calm the nerves among traders. However, if there is an upside surprise there, then we could see risk trades start to get a bit jittery again ahead of the US CPI report later on in that day.

The BOE already made a cut to its bank rate in a knife-edge call at the start of this month here. They followed that up in saying that markets should not expect continuous rate cuts. And that is precisely what is priced right now. Traders are only seeing ~36% odds of a rate cut in September. So, the inflation numbers this week could seal the deal for a no change decision.

To summarise, I wouldn’t underestimate the impact of the UK report for broader market sentiment. It could yet produce keep traders on edge in fear that the US numbers might also be sticky. Although, I doubt that will be the case. The disinflation process in the US is still ongoing, albeit very gradually. And this week’s numbers should stick with that trend and narrative. But we’ll see about that and stay mindful for any surprises that could come along the way.

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