It’s certainly an interesting view especially with markets not pricing in any more rate hikes for the year. From earlier: Not too much change in the Fed funds futures curve after the US CPI data yesterday
This article was written by Justin Low at www.forexlive.com.
Yesterday, the US CPI report
came basically in line with expectations as the market was already expecting
higher energy prices to push up the August inflation readings. The Core
measure, which is what the Fed is focused on, was in line with forecasts with
the monthly figure just a touch higher than expected. The core 3-month
annualised rate is now 2.4%, which is a good indicator for the Fed that their
policy is working well. Now, the question is whether the labour market softens
enough to bring inflation sustainably back to target without a recession. And
this is something that never happened in history.
Dow Jones Technical
Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones
recently bounced on the key trendline where we
had also the confluence with the
50% Fibonacci retracement level,
and rallied back into the resistance at
35000. The price then fell again and started to chop around as the market
remains uncertain on what’s next.
Dow Jones Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price
action formed a symmetrical triangle and we
are just waiting for a breakout to decide where to go next. In fact, when the
price breaks out on either side of the pattern, we can generally see momentum
picking up and the price moving in the direction of the breakout in a sustained
way. So, this is now a game of patience.
Dow Jones Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more
closely the price action within the triangle with the latest rejection from the
upper bound of the pattern. When the price starts to consolidate within such
patterns, there are no clear support and resistance levels as the price does
not respect them. The best strategy here is to wait for a breakout support by a
fundamental catalyst and then join the move.
Upcoming Events
Today is likely to be a volatile one given that we
are going to see lots of top tier economic indicators released at the same
time. In order of importance, we will get the US Jobless Claims, Retail Sales
and PPI data. The September FOMC meeting is already a done deal as the market
is pricing a 97% probability of a pause, so the data is going to influence the
November and December expectations. Tomorrow, we conclude the week with the
University of Michigan Consumer Sentiment report.
This article was written by FL Contributors at www.forexlive.com.
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This article was written by FL Contributors at www.forexlive.com.
Ethereum
keeps on falling and making new lows as the outlook is turning more and more
bearish given the headwinds from global growth and tight monetary policies. All
the positive news eventually gets faded, which is another sign that the big
picture trend remains bearish. Amid this high uncertainty, the technicals can
help with risk management and short-term directional plays.
Ethereum Technical Analysis
– Daily Timeframe
On the daily chart, we can see that Ethereum sold
off again but bounced on the previous low around the 1545 level. We can see
that the sellers are leaning on the red 21 moving average, and we
will likely find them again around the 1600 level. A break below the 1545 low
would take the price into the next support at 1400.
Ethereum Technical Analysis
– 4 hour Timeframe
On the 4 hour chart, we can see that the bounce
from the low got rejected at the resistance zone around the 1600 level. This is
where the sellers are piling in with a defined risk above the resistance to
target a break below the low and the 1400 support. The buyers, on the other
hand, will want to see the price breaking higher to pile in and extend the
rally into the 1681 resistance.
Ethereum Technical Analysis
– 1 hour Timeframe
On the 1 hour chart, we can see that the
short term market structure is bullish as the price has been printing higher
highs and higher lows. The last higher low is around the 1575 level, so a break
below that level would switch the bullish trend into a bearish one and lead to
more selling pressure.
Upcoming Events
This week we have many important events. Today is the US
CPI Day, which is expected to show an increase in headline inflation due to
higher energy prices but further disinflation in the core measure. Tomorrow, we
will see the latest US Jobless Claims, PPI and Retail Sales data. Finally on
Friday, we get the University of Michigan Consumer Sentiment report. Strong
data is likely to tip the market expectations on the more hawkish side and
support the USD, ultimately weighing on Ethereum. On the other hand, weak
readings should have the opposite effect, unless they are very bad, in which
case the recession fears are likely to send Ethereum lower anyway.
This article was written by FL Contributors at www.forexlive.com.
Markets:
It was a slow session as markets are caught in a bind waiting on the US CPI data to come later.
The dollar was steadier throughout, holding light gains against the major currencies bloc mostly. The ranges for the day are still leaving a lot to be desired though, as traders are awaiting the inflation numbers before firming up any convictions.
GBP/USD did see a slight drop from 1.2485 to a low of 1.2441 during the session, after the UK economy contracted by more-than-expected in July. But price is seen bouncing back to 1.2470 now as we await the main event later today.
Higher bond yields are also something to be wary about, with both European and US bond yields rising. The former is helped by escalating odds of a ECB rate hike for tomorrow while the latter is seeing 10-year yields seeking a potential breakout above 4.30% ahead of the CPI data.
Meanwhile, stocks remain more tepid with European indices posting losses in following the drop in US equities yesterday.
It’s now all about the US CPI data, so let’s see what that has to offer and how it will shape things up before more US data and the ECB decision tomorrow.
This article was written by Justin Low at www.forexlive.com.
Overall mortgage applications fell in the past week amid mixed activity. Purchases were up last week but the drop in refinancing activity more than made up for that, with the index falling to its lowest level since December last year:
This article was written by Justin Low at www.forexlive.com.
This compares with the growth of 0.4% predicted at the end of April, with the government reportedly now expecting the economy to shrink in Q3 and expand only slightly in Q4 this year. Overall, the government is said to anticipate a contraction of 0.3% for the year.
These forecasts are typically slow to react to the underlying trend but it is fair to say that recession signals are beeping all over the place for Germany. So, ECB.. are ya winning, son?
This article was written by Justin Low at www.forexlive.com.
Bitcoin
remains rangebound on a key support level as the outlook is turning more and
more bearish given the headwinds from global growth and tight monetary
policies. All the positive news eventually gets faded, which is another sign
that the big picture trend remains bearish. Amid this high uncertainty, the
technicals can help with risk management and short-term directional plays.
Bitcoin Technical Analysis
– Daily Timeframe
On the daily chart, we can see that Bitcoin
recently sold off into the key 25231 support where it
bounced soon after. The price then rallied into the red 21 moving average where it
found strong sellers. The bias remains bearish as the price keeps on printing
lower lows into the support, which should eventually lead to a breakout. If the
price breaks above the 21 moving average though, we might see a rally back into
the 28400 resistance, where the sellers will be waiting to sell at even better
prices.
Bitcoin Technical Analysis
– 4 hour Timeframe
On the 4 hour chart, we can see that we are
currently trading withing a range between the 25231 support and the 26600
resistance. The best strategy in such instances is to just sit tight and wait
for a breakout, but one can also “play the range” by buying at support and
selling at resistance. A break to the upside should take Bitcoin into the 28400
resistance, while a break to the downside should lead to a selloff into the
21509 support.
Bitcoin Technical Analysis
– 1 hour Timeframe
On the 1 hour chart, we can see that we
have a level of interest at 26024. In the short term, we might see a rally into
the 26600 resistance in the price breaks above it, but the sellers are likely
to pile in here with a defined risk above it to target the 25231 support.
Upcoming Events
This week we have many important events. Today is the US
CPI Day, which is expected to show an increase in headline inflation due to
higher energy prices but further disinflation in the core measure. Tomorrow, we
will see the latest US Jobless Claims, PPI and Retail Sales data. Finally on
Friday, we get the University of Michigan Consumer Sentiment report. Strong
data is likely to tip the market expectations on the more hawkish side and
support the USD, ultimately weighing on Bitcoin. On the other hand, weak
readings should have the opposite effect, unless they are very bad, in which
case the recession fears are likely to send Bitcoin lower anyway.
This article was written by FL Contributors at www.forexlive.com.
US:
New Zealand:
NZDUSD Technical Analysis –
Daily Timeframe
On the daily chart, we can see that the recent
bounce in the NZDUSD pair is struggling at the red 21 moving average where
the sellers are likely to be stepping in to position for further downside. The
bearish momentum seems to be waning and we might see a bigger correction into
the 0.60 handle. If the US data comes out much stronger than expected though,
the pair should keep on depreciating.
NZDUSD Technical Analysis –
4 hour Timeframe
On the 4 hour chart, we can see that we have a divergence with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, the target for the pullback should be the 0.60 resistance, but the
buyers will need to break above the 0.5930 level to start targeting the 0.60
handle. In fact, we can expect the buyers to pile in around the 0.59 handle
where we have also the confluence with the
red 21 moving average. If the price breaks through the support though, the
sellers are likely to extend the drop into the 0.5860 low.
NZDUSD Technical Analysis –
1 hour Timeframe
On the 1 hour chart, we can see clear
support and resistance levels. The buyers should buy the supports, while the
sellers should sell the resistances. The current price action into the 0.5900
support seems to be forming a bullish flag
pattern, so that will also be something to watch.
Upcoming Events
This week we have many important events beginning with
the US CPI tomorrow, which is expected to show an increase in headline
inflation but further disinflation in the core measure. On Thursday, we will
see the US Jobless Claims, PPI and Retail Sales data. Finally on Friday, we get
the University of Michigan Consumer Sentiment report.
This article was written by FL Contributors at www.forexlive.com.
Markets:
It was a relatively slow and quieter session in European trading today, after all the fuss surrounding the surge in the Japanese yen and bond yields yesterday.
The dollar, which saw a drop yesterday, is seen advancing on the day as we see USD/JPY also move back towards the 147.00 mark. EUR/USD is down 0.3% to 1.0710 while GBP/USD is down 0.4% to 1.2460, following a less than ideal UK jobs report for the BOE.
In the equities space, risk tones were calmer earlier but are seen retreating slightly now with US futures moving lower. That is keeping European indices in check after slight gains at the open, with the bond market looking little changed on the day.
All in all, it was a bit more of a placeholder session, as the countdown to the US CPI report tomorrow continues.
This article was written by Justin Low at www.forexlive.com.