• Equities slump in the opening hour in Europe
• UK July payrolls change 97k vs -9k prior
• ICYMI: China with three rate cuts in one day to try and bolster the economy
• The bond market remains a key driver of broader sentiment at the moment
• Critical juncture for gold as higher yields continue to weigh
• Japan finance minister Suzuki says rapid FX moves are undesirable
• Russia’s central bank raises key interest rate from 8.5% to 12% in extraordinary meeting

Markets:

• EUR leads, AUD lags on the day
• European equities lower; S&P 500 futures down 0.5%
• US 10-year yields up 5.1 bps to 4.232%
• Gold down 0.3% to $1,901.09
• WTI crude down 1.0% to $81.69
• Bitcoin down 0.1% to $29,331

China was in the headlines once again, performing three rate cuts in one day to try and support the economy.

That didn’t do much to help the risk mood though, as the mood soured once again in the opening hour of European morning trade. Regional indices opened with a steadier hand but quickly took a dive as US futures also bled lower from flattish levels earlier in the day.

The retreat in stocks comes alongside a continued push higher in bond yields, this time around being helped the UK jobs report. The wages numbers continue to run hot and that is stoking more hawkish expectations for the BOE to keep acting but the labour market figures itself were not too convincing.

That saw UK gilt yields shoot higher with Treasury yields following. 10-year Treasury yields are now up to 4.23% – its highest levels since November last year.

At the balance, the pound did move a little higher with cable nudging up from 1.2680 to 1.2720 before sticking around 1.2700 now. A slightly mixed dollar isn’t really making things all too clear with EUR/USD itself up 0.3% to 1.0935 while AUD/USD is down 0.2% to 0.6470 from around 0.6500 earlier in the day.

If anything else, I’d continue watching the bond market for clues as we now turn the attention to the US retail sales data later.

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

Last
week, the US CPI came
basically in line with expectations, but the good news is that the Core M/M
reading once again printed at 0.2%. The less good news is that the US Initial Claims spiked
higher, but Continuing Claims remained solid. We have already seen Claims
spiking higher in the past months, so it shouldn’t be worrying yet. The
long-term inflation expectations in the University of Michigan report
ticked lower, so on the data side the soft-landing narrative was supported. The
US Dollar, nonetheless, appreciated across the board as the attention may have
turned already on the next data given the higher energy prices and China starting to stimulate more.

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 surprised to the upside but
the PMIs are in contraction with the Services PMI yesterday plunging into
contraction. Overall, it’s a mixed picture for the RBNZ but should be enough to
keep rates steady.

NZDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that NZDUSD broke
below the last low at 0.5987 and this has opened the door for a fall towards
the 0.5514 level as there’s no strong support until
then. The bias remains clearly bearish as the price keeps printing lower lows
and lower highs and the moving averages remain
crossed to the downside.

NZDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price has
recently pulled back into the trendline and got
rejected as the sellers stepped in with a defined risk just above it. If we see
another pullback, we can expect the sellers to lean on the trendline again. In
fact, the buyers will need a break above the trendline to switch the bias to
the upside and get more conviction to target new higher highs.

NZDUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that at
the moment the price is consolidating just beneath the 0.5987 level as the
market is awaiting the economic data. A break to the upside should see the
buyers piling in and target the trendline, while a break lower should lead to
more bearish pressure.

Upcoming Events

This week is a
bit empty on the data front but we will still have some top tier economic data
and the RBNZ Policy Decision tomorrow. Today, we will see the latest US Retail
Sales report with strong data expected to support the USD while weak figures
likely to weigh on the greenback in the short-term. Tomorrow, the RBNZ is
expected to keep its policy rate unchanged, so the market will focus more on
clues on what’s next. On Thursday, we have the US Jobless Claims. A big miss in
Claims data should trigger some recessionary fears and send the market into
risk-off ultimately weighing on the NZD and supporting the USD. On the other
hand, strong data may even lead the market to expect the Fed to keep with its
hawkish stance and support the US Dollar as well.

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