<p style=““ class=“text-align-justify“>The kickoff rally for Biden and the Democrats will be in Rockville, Maryland – a safe choice – before moving on to what the White House has billed as a ‚coast-to-coast tour‘ across the country. Biden was facing some really tough odds amid voter discontent on inflation and soaring energy prices but that has cooled down a little.</p><p style=““ class=“text-align-justify“>The whole Roe vs. Wade issue has also somewhat helped but they really will have to go all out on the offensive even if their fortunes have improved in recent weeks. It may be of much focus yet but as we get closer to the date, domestic politics will once again become more of factor for the dollar so just be mindful of that.</p>

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

<ul><li>Prior -2.3%</li><li>Market index 270.1 vs 273.3 prior</li><li>Purchase index 202.8 vs 203.8 prior</li><li>Refinancing index 609.8 vs 627.1 prior</li><li>30-year mortgage rate 5.65% vs 5.45% prior</li></ul><p style=““ class=“text-align-justify“>There was a notable jump in the average rate for home loans in the past week, following the move higher in bond yields as well. But I wouldn’t pin that as the main cause for yet another weekly decline in mortgage activity as the data continues to underscore a deterioration in housing market conditions in general. The trend has been persisting for a while now and eventually, someone on one side of <a target=“_blank“ href=“https://www.forexlive.com/news/the-divergence-of-opinion-on-us-housing-between-markets-and-industry-is-180-degrees-20220816/“ target=“_blank“>this debate</a> has to be right.</p><p>/<a target=“_blank“ href=“https://www.forexlive.com/terms/u/us-dollar/“ target=“_blank“ id=“fddda8f4-d5f8-4ee4-8e34-3760ed062f3c_1″ class=“terms__main-term“>US dollar</a></p>

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

<p style=““ class=“text-align-justify“>The news flow has been light in European morning trade but in the big picture, the focus this week is on Fed chair Powell’s speech at Jackson Hole. There are murmurs of a more hawkish message and we are seeing some positioning flows accompany that now with the greenback nudging higher.</p><p style=““ class=“text-align-justify“>EUR/USD is down 0.5% to 0.9918 and inching towards 0.9900 again while GBP/USD is also down 0.5% to 1.1774 after hovering around 1.1800 earlier in the day. I highlighted the technical considerations for both pairs earlier <a target=“_blank“ href=“https://www.forexlive.com/news/eurusd-downside-bias-remains-intact-awaiting-powell-later-in-the-week-20220824/“ target=“_blank“>here</a> and <a target=“_blank“ href=“https://www.forexlive.com/news/gbpusd-not-down-for-the-count-just-yet-20220824/“ target=“_blank“>here</a> respectively.</p><p style=““ class=“text-align-justify“>Elsewhere, AUD/USD is down 0.5% to 0.6895 while USD/CAD is up 0.3% to near 1.3000 again even as oil prices are seen slightly higher on the day.</p>

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

<p style=““ class=“text-align-justify“>Part of the measures is limits on lighting in public spaces. With some parts of Europe set to face the potential for power rationing or rolling blackouts this coming winter, Germany is actively trying to avoid that but we’ll see if these measures will be enough. In any case, soaring energy prices on its own already won’t be of much comfort. The year-ahead baseload power price in Germany has crossed €600/MWh again today.</p>

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

<ul><li>It is the end of a certain „carefreeness“ in the world</li><li>We are going through a rather „big shift, a big change“</li><li>“Freedom has a cost“ (referring to the Russia-Ukraine conflict)</li></ul><p style=““ class=“text-align-justify“>The warning delivered is to ministers but in general, he is cautioning that France needs effort and sacrifice to get through the current tough times – especially with a rather harsh winter approaching. As much as the foreshadowing has been well telegraphed, it still feels like Europe as a continent is not too prepared for the months ahead. And that will be a major worry for the euro and the ECB.</p>

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

<p>Headlines:</p><ul><li><a target=“_blank“ href=“https://www.forexlive.com/news/europe-pmi-takeaway-it-could-have-been-worse-20220823/“>Europe PMI takeaway: It could have been worse</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/eurusd-continues-to-slug-along-below-parity-20220823/“>EUR/USD continues to slug along below parity</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/eurozone-august-flash-services-pmi-502-vs-505-expected-20220823/“>Eurozone August flash services PMI 50.2 vs 50.5 expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/germany-august-flash-manufacturing-pmi-498-vs-482-expected-20220823/“>Germany August flash manufacturing PMI 49.8 vs 48.2 expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/france-august-flash-services-pmi-510-vs-530-expected-20220823/“>France August flash services PMI 51.0 vs 53.0 expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/uk-august-flash-services-pmi-525-vs-520-expected-20220823/“>UK August flash services PMI 52.5 vs 52.0 expected</a></li></ul><p>Markets:</p><ul><li>CAD leads, CHF lags on the day</li><li>European equities slightly lower; S&P 500 futures up 0.1%</li><li>US 10-year yields down 0.3 bps to 3.015%</li><li>Gold up 0.1% to $1,738.08</li><li>WTI crude up 1.8% to $91.98</li><li>Bitcoin up 1.6% to $21,457</li></ul><p style=““ class=“text-align-justify“>The euro continues to keep softer in the new week, with the latest PMI readings for August helping to see the single currency sustain below parity against the dollar. The were some slightly better readings than estimated but overall, it still points to an added slowdown and contraction in Europe ahead of the winter months.</p><p style=““ class=“text-align-justify“>In the case of the euro area, a contraction in Q3 is a given now while the UK is set to see economic conditions stagnate.</p><p style=““ class=“text-align-justify“>EUR/USD was slightly softer initially as risk tones were also on the defensive. The pair was down to 0.9900 before bouncing back up to 0.9930 and then touching a high of 0.9950 before retreating back slightly lower now to 0.9920-30 levels.</p><p style=““ class=“text-align-justify“>GBP/USD also saw similar price action as the dollar swung around a bit amid the shift in the risk mood, with US futures turning a 0.5% drop to be up 0.1% currently. Cable was down to a low of 1.1718 before holding near flat levels now at 1.1765.</p><p style=““ class=“text-align-justify“>Elsewhere, commodity currencies are seen steadier though the aussie did slip to a one-month low of 0.6857 before keeping near flat now at 0.6875 on the day.</p><p style=““ class=“text-align-justify“>Risk tones and dollar sentiment will continue to dictate proceedings but all else being equal, the path of least resistance is still for the dollar to inch higher (or at least keep in a favourable position) given the technicals for the time being.</p>

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

<ul><li>Probability of recession is increasing</li><li>Recession would mitigate inflation pressures</li><li>We may have to adjust monetary policy stance further</li></ul><p style=““ class=“text-align-justify“>It’s not much and it isn’t coming from too prominent a policymaker within the central bank but this is something fresh at least. The ECB has been adamant that it will keep up the good fight against inflation but as a recession looms just around the corner, the window to keep tightening is surely closing in on the central bank.</p>

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

<p style=““ class=“text-align-justify“>There was a bit of a brief jump earlier from 0.9905 to 0.9930 after the PMI data before the dollar seeing gains pared saw the pair move up to near session highs around 0.9950. The momentum has quickly dissipated though as sellers remain in control below parity. The hold below the 14 July low at 0.9952 also keeps the bias tilted more to the downside on the day.</p><p style=““ class=“text-align-justify“>As much as there were some parts of the PMI data earlier that were not as bad as feared, it was still another set of economic releases that puts the euro area closer towards a recession. There might be some bright spots in the sense that inflation pressures were a little better and supply chain issues were seen less prominent, but we are seeing labour market conditions start to take a hit and economic activity slowing down further in August.</p><p style=““ class=“text-align-justify“>On the balance of things, there is still little to no reason to be optimistic about the euro in my view.</p><p style=““ class=“text-align-justify“>The hold below parity for EUR/USD will put the focus towards 0.9800 and 0.9500 as the next key technical targets. The slight improvement in the risk mood on the day has helped to slow things down as the bullish dollar sentiment hits pause but there hasn’t been a significant shift to suggest a push back above parity for the pair.</p>

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

<ul><li>Prior 8</li></ul><p style=““ class=“text-align-justify“>UK factory output shows a first fall since February 2021 with output expectations also showing a decline of -2 after a +6 reading in July. The softness mirrors the sort of sentiment reflected by the PMI reading for the manufacturing sector earlier in the day <a target=“_blank“ href=“https://www.forexlive.com/news/uk-august-flash-services-pmi-525-vs-520-expected-20220823/“ target=“_blank“>here</a>.</p>

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

<p style=““ class=“text-align-justify“>Similar to yesterday, there isn’t anything significant on the board and tomorrow might feature a similar picture with little else besides a modest-sized one for USD/JPY near 137.00. But we’ll take it day by day.</p><p style=““ class=“text-align-justify“>For now, the risk mood and dollar technicals will continue to do the work in dictating trading sentiment on the day.</p><p style=““ class=“text-align-justify“>For more information on how to use this data, you may refer to this post <a target=“_blank“ href=“https://www.forexlive.com/education/!/forexlive-education-option-contracts-their-impact-and-how-to-trade-off-them-20161116″ target=“_blank“>here</a>.</p>

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