• Dollar has the recipe for the next leg higher
• Pressure on the Chinese yuan is a tailwind for the dollar
• Stocks see a snap rebound on the session
• German economy ministry: Early indicators don’t yet point to sustainable economic recovery
• Germany July wholesale price index -0.2% vs -0.2% m/m prior
• SNB total sight deposits w.e. 11 August CHF 484.8 bn vs CHF 492.9 bn prior

Markets:

• USD mixed, little changed
• S&P 500 futures up 0.2%
• US 10-year yields down 1.8 bps to 4.150%
• Gold flat at $1,913.42
• WTI crude down 0.4% to $82.87
• Bitcoin down 0.1% to $29,359

The session started off with more of a defensive risk mood, after the equities selling in Asia. The Chinese yuan was also dumped and that put some light pressure on the aussie and kiwi currencies early on as well.

But as we got into European trading, there was a quick snap back higher in stocks and major currencies then settled to being little changed on the day across the board. After that, it has been a relatively quiet one – similar to the kind of lull that we saw last week.

The dollar is little changed in general but remains poised to claim the next upside leg, with USD/JPY teasing a push above 145.00 especially. EUR/USD is sitting just above its 100-day moving average of 1.0929, keeping at around 1.0930-40 levels mostly.

Meanwhile, AUD/USD is seeking a break lower to fresh lows for the year but is now keeping just under 0.6500 with the May low at 0.6458 still in focus. NZD/USD is already at its lowest levels this year, tracking below 0.6000 today but is little changed now after recovering from the earlier dip.

The overall mood in markets remain more tentative I would say and despite the dip buying equities, it needs reminding that this formula did not work in trading last week.

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% or 0.16% unrounded. The not so good news is
that the US Initial Claims spiked
higher coming at 248K vs. 230K expected, but Continuing Claims remained strong.
We have already seen Claims spiking higher in the past months, but the overall
picture remains positive for now. The long-term inflation expectations in the University of Michigan report
ticked lower, so on the data side the week was positive. Nonetheless, the
Nasdaq Composite finished the week negative and it’s hard to find a clear
reason other than a technical pullback or global growth worries.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq
Composite was diverging with the
MACD while
approaching the key 14649 resistance and this
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we are still in the pullback scenario as the price is
now at a key trendline where we
should expect the buyers stepping in and target the 14649 resistance. If the
price breaks lower, we might be in front of a reversal and the sellers are
likely to pile in aggressively to extend the selloff into the 13174 support.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price has
recently broke a key support level and extended the fall into the trendline.
The current momentum is undoubtedly bearish as we can also see from the price
printing lower lows and lower highs and the moving averages being
crossed to the downside. The next big move is likely to be decided here at the
trendline.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we
have another divergence with the MACD but this time it’s supporting the bullish
case. In fact, this might be an extra confirmation for the buyers that we are
about to see a bounce as the bearish momentum is waning. More conservative
buyers may want for the price to break above the top trendline of the channel
and the 13850 support turned
resistance.

Upcoming
Events

This week is a
bit empty on the data front and the lower summer liquidity might trigger false
moves. On Tuesday we will see the latest US Retail Sales report where the
market is likely to react positively in case of a beat and negatively in case
of a miss. The US Jobless Claims on Thursday is likely to be the main event of
the week as another big miss may cause recessionary fears and weaken the market
even more, while strong data should give the Nasdaq Composite some support.

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

After the opening hour in European trading, equities caught a bit of a pop higher. Since then, it has been relatively quiet with stocks just holding slightly higher while major currencies are doing a whole lot of nothing on the session. Dollar pairs are still sitting within 0.1% change of one another, just slugging along since earlier here.

That said, just be mindful that the greenback still has the potential to jump higher in trading this week: Dollar has the recipe for the next leg higher

Elsewhere, bonds are also showing little appetite so far today. 2-year Treasury yields are near unchanged at 4.890% while 10-year Treasury yields are down slightly by 1.5 bps to 4.153% currently. With little on the economic calendar today, the risk mood will be act as a key driver on trading sentiment alongside the dollar technicals above.

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% or 0.16% unrounded. The not so good news is
that the US Initial Claims spiked
higher coming at 248K vs. 230K expected, but Continuing Claims remained strong.
We have already seen Claims spiking higher in the past months, but the overall
picture remains positive for now. The long-term inflation expectations in the University of Michigan report
ticked lower, so on the data side the week was positive. Overall, we should
have seen Gold rally with such data as the market priced out further rate hikes
expectations and some Fed members even started to talk about rate cuts in early
2024.

Gold Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the selloff
from the 1984 resistance extended
past the key 1934 support and the sellers are now eyeing the 1893 low. A break
below the low would open the door for a big fall into the 1805 swing low.

Gold Technical Analysis – 4
hour Timeframe

On the 4 hour chart, we can see that the price is diverging with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. The buyers can either wait for the price to reach the 1893 low to
step in with a tight risk and target the 1984 resistance or wait for a break
above the trendline to
confirm the reversal and ride the bullish wave.

Gold Technical Analysis – 1
hour Timeframe

On the 1 hour chart, we can see that we
have what looks like a falling wedge, which
is generally a reversal pattern. The price will need to break above the
trendline and the 1921 swing high to confirm the reversal though and give the
buyers more conviction for further upside. The sellers, on the other hand, are
likely to pile in at the trendline to target the 1893 low and ultimately a
break lower.

Upcoming Events

This week is a
bit empty on the data front, but we will have two key economic releases,
nonetheless. Tomorrow, we will see the latest US Retail Sales report and we can
expect gold to rally in case we see a miss and fall in case we see a beat. On
Thursday, we will have the US Jobless Claims data release. This is likely to be
the main report of the week as the market remains sensitive to the labour
market data. If we see a miss, Gold is likely to rally as the market will price
out even more the chances of further hikes, but if we see a beat, we should see
the precious metal falling further.

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

We were poised for a bit more of a risk-off mood to start European morning trade but a sudden recovery in stocks is changing that picture now on the session. As seen here, there was a sharp rebound in equities with US futures turning around as tech shares jump up. The gains now are more measured with S&P 500 futures up 0.2% and Nasdaq futures up 0.4% but that is much better than the dour mood from Asia trading at least. That in turn has seen the aussie and kiwi recover with dollar pairs now keeping little changed on the day:

AUD/USD was down around 0.6460 levels in the handover from Asia to Europe but is now trading just under 0.6500 and NZD/USD has even pared losses from 0.5955 to near 0.5990 on the day.

Besides that, dollar pairs remain more tentative but the bulls are still in a position to make use of this recipe for the next leg higher.

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