He’s not giving much away but the ECB will have a tough time trying to manage market expectations at this point. Inflation is still keeping rather stubborn and the „safe bet“ would be to raise rates one more time. But if they do skip, expect markets to take that as a sign of pausing especially since the economy is starting to run into the ground now in Q3.
This article was written by Justin Low at www.forexlive.com.
Markets:
It was a quiet session for the most part but things are starting to pick up now in the handover to North America trading.
Major currencies saw little appetite despite London coming back today while equities also looked more tentative after a bit of an optimistic start. US futures were up around 0.2% earlier on but are now down slightly as we see Treasury yields turn around as well on the day.
10-year yields were down to around 4.175% earlier on but are now flat at 4.211% and that is helping to underpin the dollar as well.
USD/JPY in particular is jumping up to around 147.00 from around 146.50-60 levels earlier in the day, while GBP/USD is retreating back to 1.2590 from a high of 1.2635 earlier in the session.
Outside of the two pairs, the dollar is little changed and stuck in narrower ranges against the rest of the major currencies. Even AUD/USD which was up to around 0.6455 earlier is now down 0.6420 but that represents a measly 35 pips range on the day.
With month-end and the US jobs report still the bigger focus points this week, there’s still plenty to play for in the meantime.
This article was written by Justin Low at www.forexlive.com.
US:
Japan:
USDJPY Technical Analysis –
Daily Timeframe
On the daily chart, we can see
that USDJPY continues to rise to new highs after breaking out of the 145.00
handle. The natural target for the buyers should be the 150.00 handle but the
momentum seems to be slowing as the market awaits key economic data. The
sellers will need the price to fall below the 145.00 level to switch the bias
from bullish to bearish and start targeting lower lows.
USDJPY Technical Analysis –
4 hour Timeframe
On the 4 hour chart, we can see that the pair has
been diverging with the
MACD for a
long time which is generally a sign of weakening momentum often followed by
pullbacks or reversals. In fact, recently the pair pulled back to the 145.00 resistance turned support and
bounced strongly from the 38.2% Fibonacci retracement level.
The price is now struggling to break above the recent high at 146.56 as the
market awaits the data to gather more momentum.
USDJPY Technical Analysis –
1 hour Timeframe
On the 1 hour chart, we can see that the
price action around the 145.00 handle created a possible bullish flag pattern. The
price broke out last Friday following Fed Chair Powell’s comments and given the
BoJ’s stance, it looks like we might see higher highs coming soon. We can also
notice that we have another divergence with the MACD right at the previous high
which might be a sign that a pullback may be due. In that case, we should see
the buyers coming into the market around the 38.2% Fibonacci retracement level.
Upcoming Events
This week is an important one given that we will see
many key labour market data for the US, including the NFP, before the next FOMC
meeting. Today, we have the US Consumer Confidence and the US Job Openings
reports. Tomorrow, we have the US ADP report. Moving on to Thursday, we will
see the US Jobless Claims and the US PCE data. Finally, we conclude the week
with the US NFP and the ISM Manufacturing PMI on Friday. Although the Fed keeps
all the options on the table, it’s also leaning more towards a pause in September,
so we will need strong data to make the market to expect a hike at the upcoming
meeting.
This article was written by FL Contributors at www.forexlive.com.
Capital
markets come alive in late August and early September, and volatility returns.
New trends often emerge, and opportunities to capitalise on them open up.
Amidst the constantly changing financial landscape, investors must watch
popular instruments like BTC and gold. OctaFX analysts explore the reasons
behind the end of the crypto winter and the increase in demand for gold.
Bitcoin is dominating the crypto market while recovering its
value
From
November 2021 to December 2022, the price of Bitcoin fell more than four times.
This period was called crypto winter. However, since the beginning of 2023,
Bitcoin price has almost doubled—from $16,500 to $29,200, suggesting that the
deep correction phase is over. The difference is also apparent if we compare
the dynamics of Bitcoin and other cryptocurrencies. According to CoinGecko
Crypto Industry Report, Bitcoin added 6.9% in the second quarter of 2023, while
the entire crypto market grew by only 0.14%. Interest in NFT projects and
stablecoins decreased, suggesting that Bitcoin’s crypto winter is likely over.
A constant tailwind for Bitcoin
For
Bitcoin, being an alternative to fiat money fueled its growth in the early days
of the crypto industry. But it wasn’t the only way to contribute to Bitcoin’s
rise—investors also started using it as a store of value. For the past few
years, those looking for safe-haven assets have put Bitcoin on par with gold
and, at the same time, as a counterweight to the US dollar and US treasuries.
OctaFX
analyst Kar Yong Ang says that Bitcoin growth is possible if the US Fed starts
giving dovish signals: in case of a key rate cut, BTC is likely to grow quite
strongly and could reach the $45,000 range by the end of 2023 and up to $30,000
if the rate stays unchanged. His inclination is more towards the second option,
as according to the CME Fed watch tool, the rate hike probability at the FOMC
meetings in September 2023 is only 16%.
The Turkish crisis forced gold prices down in the second quarter
Since
reaching an all-time high of $2075 in August 2020, gold tried to break this
level twice: on 8 March 2022 and 4 May 2023. But each time, the price stopped
and started to decline. The latest decline in gold prices from May 2023 to the
current moment has a fundamental reason. According to the published report of
the World Gold Council, net purchases by central banks fell by 64% in the
second quarter to 103 tons. This slowdown is mainly due to gold sales by the
Central Bank of the Republic of Turkey (CBRT), whose net sales totalled 132
tons in the second quarter of 2023.
According
to Kar Yong Ang from OctaFX, the CBTR’s actions have made gold prices decline
since May 2023. The sales of the Turkish Central Bank were aimed at supporting
the economy in an emergency and were more tactical than strategic. Therefore,
the upward trend in gold demand in 2023 remains in place.
An
additional factor is the anticipated peak of the Fed rate hike cycle and the
falling value of the U.S. dollar. Lower rates increase the attractiveness of
gold amid falling bond yields. The falling dollar rate makes gold cheaper for
holders of other currencies.
Following
the comments of Kar Yong Ang, in 2023, gold may rise to a record $2,500 due to
falling interest rates amid a non-growing global economy and a weak dollar.
Thus, the estimated increase in gold prices can be more than 30%.
Investors
should monitor Fed decisions to understand how much gold and Bitcoin will rise.
The Fed raises the rate in a pessimistic scenario, making the dollar strong and
Bitcoin and gold investments unattractive. In the positive case, the Fed starts
to lower the key rate, encouraging investment interest in Bitcoin and gold as
the best store of value. In such a case, gold will rise to $2,500 and Bitcoin
to $45,000 by the end of 2023. The most likely scenario is neutral—in which the
Fed pauses key interest rate changes until the end of 2023, increasing the
likelihood of gold’s rise above $2,000 and Bitcoin above $30,000. The starting
point of the uptrend will be the FOMC decision of the U.S. Fed, which will be
announced on 20 September 2023.
About OctaFX
OctaFX is an international broker that has been providing online
trading services worldwide since 2011. It offers commission-free access to
financial markets and various services already utilised by clients from 180
countries with more than 42 million trading accounts. Free educational
webinars, articles, and analytical tools they provide help clients reach their
investment goals.
The
company is involved in a comprehensive network of charitable and humanitarian
initiatives, including the improvement of educational infrastructure and
short-notice relief projects supporting local communities.
OctaFX
has also won more than 60 awards since its foundation, including the ‘Best
Online Broker Global 2022’ award from World Business Outlook and the ‘Best
Global Broker Asia 2022’ award from International Business Magazine.
This article was written by FL Contributors at www.forexlive.com.
More stimulus is coming for China as Beijing is reportedly poised to cut interest rates on some of the ¥38.6 trillion of existing mortgages. And that move could come as soon as today, with the reductions set to only affect loans on first homes. Once officially announced, it will be the first time that China has reduced the rates on outstanding home mortgages for the first time since the global financial crisis.
Considering the pressure that the economy is under, these added stimulus measures will help somewhat but again, where is the fiscal help? That for me, is the key to really try and dig China out of its current plight.
This article was written by Justin Low at www.forexlive.com.
10-year yields in the US are back up to 4.210% from a low of 4.175%, turning flat after the decline from earlier today. This is in turn putting a bid in USD/JPY and also weighing on gold as we head back to the drawing board for the day. The former is now up 0.2% to 146.80 levels while the latter is now flat at $1,919 after seeing light gains earlier in the session.
The dollar is also holding steadier as such, paring the marginal losses against the aussie and kiwi to keep marginally higher on the day instead now. EUR/USD is down 0.1% to 1.0805 while GBP/USD is down 0.1% to 1.2590 from a high of 1.2935 earlier.
Equities are not showing much poise though even if European indices are keeping slightly higher. US futures are flat and overall, it represents a more tentative mood across broader markets right now.
It’s all to play for in US trading later.
This article was written by Justin Low at www.forexlive.com.
Markets:
It was a quiet session with London out on holiday today, so there wasn’t much to work with for European traders as the flows were light. Jackson Hole didn’t deliver much in any case, so markets are left to their own devices to start the new week.
There was little appetite among major currencies on the day, with the dollar keeping steadier and mostly little changed in narrow ranges.
In the equities space, Asian stocks rallied initially as China provided some relief measures for investors. Chinese indices opened up 5% higher but saw gains fizzle to end the day just barely 1% higher.
US futures kept a little higher on the day at least, helping to breathe a calmer mood to the general equities space. And with month-end approaching, it will make things a little trickier to navigate in the days ahead. We’ll see if the selling will hit again later in Wall Street today.
This article was written by Justin Low at www.forexlive.com.
Last week
was the Jackson Hole Symposium week and we
have heard from many Fed members about their opinions on the momentary policy
going forward. There seems to be a consensus for a pause in September as they
try to “carefully” assess the lag effects of their tightening to date.
Nonetheless, they are ready to do more if conditions require further tightening
and in fact, they keep reaffirming their data dependency. The economic data
since the last FOMC meeting has been surprising to the upside with the labour
market remaining very strong, but the last two inflation reports showed the Core M/M
inflation rising by just 0.16%. Overall, it looks like a soft landing scenario
but the latest US PMIs showed
that there might be pain ahead.
Nasdaq Composite Technical
Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq
Composite bounced on a key support at 13174
and rallied back towards the broken trendline where we
had also the confluence with the
red 21 moving average. The
price got rejected there as the sellers leant on the moving average to position
for another fall below the key support. The bias for now remains bearish as the
price has been printing lower lows and lower highs and the moving averages are
crossed to the downside.
Nasdaq Composite Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more closely the
resistance zone that we had around the broken trendline with the 50% Fibonacci retracement level
acting as a further barrier. This resistance will be key for the buyers as they
will need the price to break above the level to switch the bias from bearish to
bullish and start targeting a new high.
Nasdaq Composite Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we
have a minor resistance around the 13615 level where we have the confluence of
the 50% Fibonacci retracement level and the red 21 moving average. This is
where we can expect the sellers to pile in with a defined risk above the level
to target the break below the 13174 support. The buyers, on the other hand,
will want to see the price breaking higher to pile in and target a break above
the 13850 resistance.
Upcoming
Events
This week is an important one given that we will see
many key labour market data, including the US NFP, before the next FOMC
meeting. We start tomorrow with the US Consumer Confidence and the US Job
Openings. On Wednesday, we have the US ADP report. Moving on to Thursday, we
will have the US Jobless Claims and the US PCE data. Finally, we conclude the
week with the US NFP and the ISM Manufacturing PMI on Friday. Although the Fed
keeps all the options on the table, it’s also leaning more towards a pause in
September, so we will need strong data to make the market to expect a hike at
the upcoming meeting.
This article was written by FL Contributors at www.forexlive.com.
He looks to be trying to push for it but it is quite evident that not all ECB policymakers are sharing this view. In terms of market pricing, it’s pretty much a coin flip for September at this stage. The odds of a 25 bps rate hike are pinned at around 45% currently, with the remainder 55% pricing in no rate hike for next month.
This article was written by Justin Low at www.forexlive.com.
The quick
rise in the US real yields and the US Dollar in August weighed a lot on Gold
and the yellow metal sold off with very shallow pullbacks along the way.
Recently, the less hawkish comments from Fed members and the
miss in the US PMIs gave
Gold some support as the Treasury yields and the USD retreated. Going forward
it’s going to be all about the data as strong readings should keep weighing on
Gold while a deterioration in the data should support it.
Gold Technical Analysis –
Daily Timeframe
On the daily chart, we can see that Gold has
avoided a complete breakdown as it rallied back above the 1893 low soon after
breaking below it. The price is now testing the red 21 moving average and it’s
struggling to break through as the sellers are probably leaning on the moving average to
position for more downside.
Gold Technical Analysis – 4
hour Timeframe
On the 4 hour chart, we can see that after the long
divergence with the
MACD coming
into the 1893 low, the price broke above the downward trendline
confirming a reversal and rallied towards the 38.2% Fibonacci retracement level.
This is where the sellers are piling in with a defined risk above the 1934 resistance to
position for another selloff below the 1893 support. If the price extends all
the way up to the 1934 resistance, we should see the sellers piling in even
more aggressively as they will have an even better risk to reward setup.
Gold Technical Analysis – 1
hour Timeframe
On the 1 hour chart, we can see that we
recently got a quick selloff from the 38.2% Fibonacci retracement level during
the Fed Chair Powell’s speech and then a quick turnaround as the buyers leant
on the support around 1904 to position for a rally into the 1934 resistance.
The price action now might be messy, but the key levels to watch will be the Fibonacci
retracement levels and the 1904 support.
Upcoming Events
This week is an important one given that we will see
many key labour market data, including the US NFP, before the next FOMC
meeting. We start tomorrow with the US Consumer Confidence and the US Job
Openings. On Wednesday, we have the US ADP report. Moving on to Thursday, we
will have the US Jobless Claims and the US PCE data. Finally, we conclude the
week with the US NFP and the ISM Manufacturing PMI on Friday. Although the Fed
keeps all the options on the table, it’s also leaning more towards a pause in
September, so we will need strong data to make the market to expect a hike at
the upcoming meeting. In case we see weak readings, Gold is likely to rally and
vice versa if we get strong figures.
This article was written by FL Contributors at www.forexlive.com.