• WTI crude climbs to highest levels for the year as oil continues to impress
• Equities continue to hold steady so far on the day
• US MBA mortgage applications w.e. 4 August -3.1% vs -3.0% prior
• White House reportedly to detail plans restricting some US investments in China
• China considering talks with Japan at ASEAN meeting after Aso visit to Taiwan – report

Markets:

• EUR leads, CHF lags on the day
• European equities higher; S&P 500 futures up 0.2%
• US 10-year yields up 1.4 bps to 4.038%
• Gold flat at $1,924.63
• WTI crude up 1.0% to $83.74
• Bitcoin down 0.6% to $29,813

It was a quiet session as there were no major economic data releases in European trading today. Market flows were relatively light as well, with major currencies not really showing too much appetite.

The dollar was mildly weaker earlier on but is now trading more mixed and little changed in general, as traders start to turn their focus towards the US CPI report tomorrow.

EUR/USD stuck around 1.0960-70 levels while USD/JPY held above 143.00 around 143.10-30 for the most part. There weren’t any exciting moves on the session involving FX as equities and bonds were also less enthused.

European stocks are holding higher, catching up to the late dip buying in Wall Street yesterday. Meanwhile, US futures are holding slightly higher but the gains are relatively mild for now and indicative of just a slight breather after the continued selling since August began.

The standout in terms of performance today is oil, with WTI crude rising to near $84 and up 1% to its highest levels for the year.

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

• Prior -3.0%
• Market index 194.5 vs 200.7 prior
• Purchase index 149.9 vs 154.1 prior
• Refinance index 416.1 vs 433.6 prior
• 30-year mortgage rate 7.09% vs 6.93% prior

A further slump in both purchases and refinancing activities led to another drop in mortgage applications in the past week. Housing market conditions are not faring well as rates continue to hold higher amid tighter financial conditions. Here’s a look at how purchases activity have been tracking:

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

It’s certainly an impressive run as oil has come up strong after rallying since July, now rising to its best levels since November last year.

WTI crude in particular has been sustaining around its 200-week moving average from March to June and even with the lack of initial excitement from the Saudi news, it is now turning things around and quite mightily to say the least.

The jump higher today is also taking out the April highs after a stunning turnaround yesterday amid the more negative risk mood. The rebound saw oil prices come up from a low of $79.97 to end the day higher at just under the $83 mark.

And with oil now breaking higher on the day, the technicals dictate that there is plenty of upside room for oil at the moment. Couple that with a tighter market and this rally could really have legs. Suddenly, those $100 forecasts don’t look too shabby.

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

Bitcoin continues
to surprise as it remains resilient to many headwinds. Yesterday we even saw a
big rally after some banking woes, which
resembled the bullish reaction following the regional banking crisis seen in
March. Looks like Bitcoin is the go-to asset in case we see more troubles in
the banking sector. Anyway, the price action remains choppy amid different
drivers, so the technicals remain the only way to play it.

Bitcoin Technical
Analysis – Daily Timeframe

On the daily chart, we can see that Bitcoin
yesterday has rallied above the support turned resistance and it’s
now eyeing the 31K high. We already saw a fakeout previously, so the buyers
will need to be careful here and manage well risk. Another fakeout should give
the sellers more conviction and take the price back to the 28475 level if not
lower.

Bitcoin Technical Analysis
– 4 hour Timeframe

On the 4 hour chart, we can see that we got a
rejection right from the previous fakeout high, so the level to watch now will
be the 29500 support as a break below it should lead to a selloff into the
28475 level. The buyers will need the price to break above the 30K level to have
more conviction and pile in for a ride towards the 31K high.

Bitcoin Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we
have a minor trendline that
is providing some support for the buyers. This is where the buyers may start to
pile in for another try for a break higher. As previously mentioned, a break
below the 29500 level would be ominous for the buyers and most likely lead to
more selling pressure.

Upcoming Events

This week the
main events will be the US CPI and Jobless Claims reports tomorrow. For the US
CPI, the market is likely to focus more on the Core readings as this is what
the Fed is more interested in. Higher than expected data may lead to a risk off
sentiment as the market should start to price in a more hawkish Fed and it
might weigh on Bitcoin as well. On the other hand, lower than expected readings
may lead to a risk on sentiment due to the soft-landing narrative and no more
rate hikes and support the cryptocurrency. At the same time of the US CPI data,
we will also see the latest US Jobless Claims report, which might have an even
bigger effect if the data shows a big surprise. In fact, a miss may cause
recessionary fears and lead to a selloff in Bitcoin, while a beat may be taken
as bad news because the Fed may keep on hiking.

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

• Dollar firms amid more defensive risk mood
• Equities stay cautious as bond yields slide back down as well
• Eurozone consumers anticipate lower inflation but weaker spending power – ECB survey
• Germany July final CPI +6.2% vs +6.2% y/y prelim
• France June trade balance -€6.71 billion vs -€8.00 billion expected
• US July NFIB small business optimism index 91.9 vs 91.0 prior

Markets:

• USD leads, AUD lags on the day
• European equities lower; S&P 500 futures down 0.8%
• US 10-year yields down 8 bps to 3.998%
• Gold down 0.4% to $1,929.44
• WTI crude down 1.8% to $80.42
• Bitcoin up 0.5% to $29,292

It was a quiet session bereft of headlines but there were some decent market moves. It would seem European traders are responding to the poor China trade balance from earlier today, as recession fears start to resurface.

That saw more defensive risk flows as equities slumped lower while bond yields also dropped. The latter in particular is rather notable with 10-year Treasury yields sliding back under the 4% mark.

In turn, the dollar kept up its bid from Asia trading and extended gains during the session. EUR/USD fell from 1.0980 to 1.0940 while GBP/USD dropped from 1.2760 to 1.2700 with both pairs more than erasing the advance from yesterday.

USD/JPY is keeping firmer around 143.05 but is down from around 143.40 earlier in the day.

As risk sentiment stays more defensive, the commodity currencies are the ones being hurt the most. USD/CAD is up 0.8% to 1.3475 as oil prices also drop heavily on the day. Meanwhile, AUD/USD is down 1.1% to test the 0.6500 mark.

It’s now over to Wall Street to make do with the more dour risk mood at the moment.

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

Last
week, the NFP missed
expectations for a second time in a row and the previous numbers were all
revised lower. This was seen as a disappointment as the labour market seems to
be a touch weaker than previously expected. Nevertheless, the unemployment rate
fell once again and lessened the disappointment from the miss in the payrolls
number. The worse part for the Fed is that the average hourly earnings beat
expectations, and such high wage growth is not consistent with a sustainable
return to the 2% target. It’s worth reminding though, that the Fed will see
another NFP report before the September meeting, so this NFP doesn’t change much,
but the data leading into the meeting can still weigh on sentiment.

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 though surprised to the upside
which might put some pressure on the central bank at the next rate decision,
although they are more likely to keep rates steady.

NZDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the NZDUSD
selloff from the 0.6389 resistance seems to
be unstoppable as the US data remains quite strong. The sellers will have to
break the 0.6050 support to target the break of the 0.5987 level next. The
buyers, on the other hand, will need the price to break above the trendline to
switch the bias from bearish to bullish and start targeting a rally towards the
0.6389 resistance.

NZDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price is diverging with the
MACD right
when it’s approaching the 0.6050 support. This is generally a sign of weakening
momentum often followed by pullbacks or reversals. In this case, we may see a
pullback all the way back to the downward trendline where the sellers will have
an even better risk to reward setup to target the lows.

NZDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the support level and the divergence with the MACD. Aggressive buyers
may start to pile in here with a defined risk below the level and target the
trendline. The sellers, on the other hand, will want to see the price breaking
lower to pile in even more aggressively and extend the selloff into the 0.5987
low.

Upcoming Events

This week the
main event will be the US CPI report on Thursday. The market is likely to focus
more on the Core readings as this is what the Fed is more interested in. Higher
than expected data should give the US Dollar a boost as the market’s
expectations will be skewed more on the hawkish side. On the other hand, lower
than expected readings should weigh on the USD as it would support the
soft-landing narrative in the short-term. At the same time of the US CPI data,
we will also see the latest US Jobless Claims report, which is less likely to
move the market since it’s released at the same time of the CPI, but big
surprises should have an effect, nonetheless. Finally, we conclude the week
with the University of Michigan Consumer Sentiment report on Friday where the
market is likely to focus more on the inflation expectations figures.

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

The dollar is higher across the board as markets are adopting a more defensive risk posture on the session. There aren’t any major headlines but the retreat in bond yields and equities keeping lower points to risk-off flows. The only thing I can attribute this to would be China’s poor trade balance data, which is perhaps reigniting risks of a global recession.

In that lieu, the dollar is benefitting with EUR/USD now down 0.4% to 1.0964 and GBP/USD falling further by 0.5% to 1.2720 on the day. Both pairs are still sitting within the ranges of last Friday and Monday this week but in the case of the former, it is inviting sellers to keep up the pressure in looking for a test of the 100-day moving average (red line):

Meanwhile, USD/JPY continues to keep higher by 0.5% at 143.18 while USD/CAD is also seen up by 0.6% now to 1.3445. That comes as we see oil prices slide as well amid the poorer risk mood. The aussie is the biggest loser on the day though with AUD/USD down 1.0% to 0.6510 at the lows for the day, coming close to that test of 0.6500 at the moment.

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

Last
week, the NFP missed
expectations for a second time in a row and the previous numbers were all
revised lower. This was seen as a disappointment as the labour market seems to
be a touch weaker than previously expected. Nevertheless, the unemployment rate
fell once again and lessened the disappointment from the miss in the payrolls
number. The worse part for the Fed is that the average hourly earnings beat
expectations, and such high wage growth is not consistent with a sustainable
return to the 2% target. It’s worth reminding though, that the Fed will see
another NFP report before the September meeting, so this NFP doesn’t change
much, but the data leading into the meeting can still weigh on sentiment.

The RBA, on the other hand,
kept its cash rate unchanged with a slight tweak to a line in
the policy statement that suggests that they are leaning more on the dovish
side. The data makes their job harder as the Australian Jobs report surprised again to the upside but
the Inflation report missed expectations. Nonetheless,
they will see more data now before the next meeting and can make a better-informed
decision.

AUDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the AUDUSD
selloff from the 0.69 handle has extended past the 0.6563 support and the
sellers are now targeting the 0.6459 low with a high chance of seeing a break
lower. This is clearly a sellers’ market as the price has been printing lower
lows and lower highs and the moving averages are
crossed to the downside. The buyers will need a strong fundamental catalyst to
switch the bias in the favour.

AUDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that AUDUSD after
the break lower rallied back into the previous swing low area where we had also
the 38.2% Fibonacci retracement level
for confluence. That’s
where the sellers piled in to target the 0.6459 low. The buyers will need the
price to break above the resistance around
the 0.66 handle to switch the bias from bearish to bullish.

AUDUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we
have a minor support at the previous low. A break below should see more sellers
piling in to target the low and eventually a break lower. More aggressive
buyers may try to step in here to target the 0.66 handle and a break higher.

Upcoming Events

This week the
main event will be the US CPI report on Thursday. The market is likely to focus
more on the Core readings as this is what the Fed is more interested in. Higher
than expected data should give the US Dollar a boost as the market’s
expectations will be skewed more on the hawkish side. On the other hand, lower
than expected readings should weigh on the USD as it would support the
soft-landing narrative in the short-term. At the same time of the US CPI data,
we will also see the latest US Jobless Claims report, which is less likely to
move the market since it’s released at the same time of the CPI, but big
surprises should have an effect, nonetheless. Finally, we conclude the week
with the University of Michigan Consumer Sentiment report on Friday where the
market is likely to focus more on the inflation expectations figures.

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

• Prior 91.0

The small business optimism index shows a decent improvement in July but it remains below the long-term average of 98. The last time it was above said reading was all the way back in December 2021. Here’s the breakdown of the components:

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

• Dollar recovers some poise after Friday drop
• Fed’s Williams does not rule out possibility of rates cuts next year
• Eurozone August Sentix investor confidence -18.9 vs -24.3 expected
• Germany June industrial production -1.5% vs -0.5% m/m expected
• UK July Halifax house prices -0.3% vs -0.1% m/m prior
• Switzerland July seasonally adjusted unemployment rate 2.1% vs 2.0% expected

Markets:

• NZD leads, CHF lags on the day
• European equities lower; S&P 500 futures up 0.3%
• US 10-year yields up 3.7 bps to 4.098%
• Gold down 0.3% to $1,935.74
• WTI crude down 0.9% to $82.04
• Bitcoin up 0.4% to $29,035

It was a quiet session as markets are observing a slower but calmer start to the new week.

All eyes are on the US CPI report on Thursday and it really can’t come soon enough. The dollar is recovering some ground after the Friday drop as markets don’t really have much else to reprice in terms of the Fed outlook as seen here. It’s on to the next big data and we will have to wait for the inflation numbers later this week before any further convictions appear.

European stocks were marked lower and kept that way in a bit of a catch up to the losses at the end of last week in Wall Street. But US futures are in a calmer mood, so there is some mixed sentiment in there today.

For major currencies though, the rebound in bond yields is the one that is helping to prop up the dollar. USD/JPY is continuing to keep above 142.00 on the day, seen around 142.20-30 levels mostly in Europe. EUR/USD is also down slightly by 0.3% to 1.0980 with the low earlier touching 1.0965.

The commodity currencies are mostly little changed against the dollar but AUD/USD remains in a precarious spot with sellers still searching for a move towards 0.6500 next.

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