Fundamental
Overview

Last Thursday, WSJ’s
Timiraos published an article which seemed suggesting that a 50 bps cut was
still being discussed. The market responded by raising 50 bps cut probabilities
to around 40% from 13% before the news.

Nick Timiraos is considered
a Fed “insider”, so the market is attentive to all of his pieces concerning
potential Fed decisions. Since then, the 50 bps camp got more vocal and the
probability for the Fed to cut by 50 bps at the upcoming meeting stands now
around 70% with a total of 120 bps of easing by year-end.

This repricing weakened the
US Dollar across the board as Treasury yields fell further. Once we are done
with the Fed decision though, the focus will switch back to the economic data.
In case we start to see better figures, the market might start to pare back the
aggressive easing expected in 2025 supporting the greenback in the short-term.

For the RBA, the market
sees a 91% probability of no change at the upcoming meeting and a total of 21
bps of easing by year-end. The central bank keeps its fairly hawkish stance as
inflation has been slow to return inside the target range and the labour market
remains resilient.

AUDUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that AUDUSD bounced around the 0.6650 level and eventually rallied back
above the key 0.67 resistance increasing the bullish momentum.
The target for the buyers should now be the 0.68 handle where we can expect the
sellers to step in with a defined risk above the level to position for a drop
back into the 0.67 handle.

AUDUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the bullish momentum increase as the price broke above the 0.67 resistance
and the trendline
as more buyers piled in while the sellers squared their positions. There’s not
much else to glean from this timeframe, so we need to zoom in to see some more
details.

AUDUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have an upward trendline defining the current bullish momentum. The
buyers will likely keep on leaning on the trendline to position for more
upside, while the sellers will look for a break lower to pile in for a drop
back into the 0.67 level. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we get the US Retail Sales and the US Industrial Production data.
Tomorrow, we have the FOMC Rate Decision. On Thursday, we get the Australian Labour
Market report and the latest US Jobless Claims figures.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

Following
recent success at the Finance Magnates Pacific Summit in Australia earlier this
month, multi-asset Forex and CFD broker, FP Markets,
was presented with three coveted Global Forex Awards at a ceremony held at the
La Caleta in Limassol on Thursday 12 September.
FP Markets was voted ‚Best Value Broker – Global‘ for the sixth time in
a row, ‚Best Broker – Europe‘ for the third time running, and ‚Best Partners
Programme – Asia‘.

According to
London-based organisers Holiston Media, the Global Forex Awards ‘celebrate the
brokers at the forefront of cutting-edge technology, low-cost trading,
comprehensive market research tools, advanced educational programmes and
world-class customer service’. The winners of the ‘world’s biggest Forex Retail
Awards’ were determined through a public voting process, making the trophies
all the more so important for retail Forex brands looking to cement their
market position and reputation.

When asked about the company’s latest achievement, FP Markets
CEO Craig Allison expressed his gratitude and commented: ‘Winning three Global
Forex Awards is another huge achievement for the FP Markets team and one that
sets us apart from our competition. Being recognised as a broker which offers
innovative and cost-effective trading solutions to traders and partners alike,
while maintaining the highest regulatory standards, is testament to our hard
work and ethos as a company. Such awards
exemplify our credibility when it comes to potential new clients and also
demonstrate why our existing traders and partners choose to invest with us’.

About
FP Markets

●
FP Markets is a Multi-Regulated Forex
and CFD Broker with over 19 years of industry experience.

●
The company offers highly competitive
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●
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awarded ‘The Highest Overall Client Satisfaction Award’ over five consecutive
years.

●
FP Markets was awarded ‘Best Global
Forex Value Broker’ for five consecutive years (2019, 2020, 2021, 2022, 2023)
at the Global Forex Awards.

●
FP Markets was awarded the ‘Best Forex
Broker – Europe’ and the ‘Best Forex Partners Programme – Asia’ at the Global
Forex Awards 2022 and 2023.

●
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Execution’, and ‘Most Trusted Broker’ and ‘Best Trade Execution’ at the
Ultimate Fintech Awards in 2022 and 2023, respectively.

●
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●
FP Markets was awarded ‘Best Trade
Execution’ and ‘Most Transparent Broker’ at the Ultimate Fintech Awards APAC
2023.

●
FP Markets was awarded the ‘Best Price
Execution’ at the Brokersview Awards 2024, Singapore.

●
FP Markets was awarded the ‘Best
Trading Experience – Africa’ at the FAME Awards 2024.

●
FP Markets was awarded ‘Most Transparent Broker’
and ‘Best Trading Conditions’ at the
Global Ultimate Fintech Awards 2024.

●
FP Markets was awarded ‘Best Forex Spreads APAC’ and
‘Best Trading Experience APAC’ at the 2024 Finance Magnates Pacific
Summit.

●
FP Markets regulatory presence
includes the Australian Securities and Investments Commission (ASIC), the
Financial Sector Conduct Authority (FSCA) of South Africa, the Financial
Services Commission (FSC) of Mauritius, the Cyprus Securities and Exchange Commission
(CySEC), the Securities Commission of the Bahamas (SCB), and the Capital
Markets Authority (CMA) of Kenya.

For more
information on FP Markets‘ comprehensive range of products and services, visit https://www.fpmarkets.com/

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

The changes among the day remain light, with dollar pairs all holding within 10 pips change currently. It’s just one of those days where even if there are any moves, one shouldn’t look too much into it. At this point, it’s all about the Fed tomorrow.

USD/JPY was a bit more volatile in Asia, trading up to 141.25 but is now flat at 140.60. Meanwhile, EUR/USD saw a light extension of its range earlier to 1.1146 but is now flat again around 1.1135. So, there’s not really a whole lot to talk about in terms of the movement today.

In the equities space though, US futures are pushing higher with tech shares seen rebounding. S&P 500 futures are up 0.4% with Nasdaq futures up 0.6% currently. In the bond market, 2-year yields remain on edge at 3.556% and 10-year yields down marginally on the day at 3.614%.

As for Fed pricing, traders are still seeing ~67% odds of a 50 bps rate cut currently.

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

Headlines:

• Dollar remains pinned down to start the new week
• Major central bank decisions to dominate the agenda in trading this week
• ECB’s de Guindos: Our projections show inflation will hover around 2% by end of 2025
• ECB’s Kažimír: Will almost surely wait until December for next rate cut
• Eurozone July trade balance €21.2 billion vs €22.3 billion prior
• Italy August final CPI +1.1% vs +1.1% y/y prelim
• Switzerland August producer and import prices +0.2% vs 0.0% m/m prior
• SNB total sight deposits w.e. 13 September CHF 466.8 bn vs CHF 455.9 bn prior

Markets:

• USD lags on the day
• European equities mixed; S&P 500 futures down 0.1%
• US 10-year yields down 0.5 bps to 3.643%
• Gold up 0.2% to $2,581.04
• WTI crude up 1.0% to $69.36
• Bitcoin down 0.8% to $58,663

There weren’t any headlines that really stood out on the session but that didn’t stop traders from kick starting the week with a bit of action.

It was all about positioning flows as the dollar lagged across the board, falling against the rest of the major currencies bloc. USD/JPY in particular dipped to a low of 139.57 during the session, its lowest since July last year. That before returning back to hover in and around the 140.00 mark.

The drop in the dollar comes as yields stay pressured, with 2-year Treasury yields in particular continuing to flirt with the 2023 low near 3.55%.

EUR/USD nudged higher to 1.1120 levels while GBP/USD is contesting the 1.3200 mark, up 0.5% on the day. Meanwhile, AUD/USD and NZD/USD are both up 0.6% to 0.6745 and 0.6190 respectively. That despite risk sentiment being more tentative during the session.

European indices are a little mixed after a slightly softer start, with US futures also keeping little changed overall.

In the commodities space, gold is holding up after the break to fresh record highs last week. The precious metal is up another 0.2% to $2,581 and hoping to continue that form into the Fed later this week.

It’s all about the major central bank meetings this week and the Fed is the one most anticipated. That will keep markets on edge with positioning flows set to dominate proceedings in the run up to the meeting.

For now, it looks like traders are looking for a more dovish Fed at least.

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

Fundamental
Overview

Late Thursday, around 1:00
PM ET, WSJ’s Timiraos published an article which seemed suggesting that a 50
bps cut was still being discussed. The market responded by raising 50 bps cut
probabilities to around 40% from 13% before the news.

Nick Timiraos is considered
a Fed “insider”, so the market is attentive to all of his pieces concerning
potential Fed decisions. The probability for the Fed to cut by 50 bps at the
upcoming meeting stand now around 60% with a total of 118 bps of easing by
year-end.

These repricing weakened
the US Dollar across the board as Treasury yields fell further. Once we are
done with the Fed decision, the focus will switch back to the economic data. In
case we start to see better figures, the market might start to pare back the
aggressive easing expected in 2025 supporting the greenback in the short-term.

For the BoC, the market
sees a 25% probability of a 50 bps cut at the upcoming meeting and a total of
68 bps of easing by year-end. Governor Macklem last week raised the prospect of
larger cuts if growth and inflation were to fall more than expected.

USDCAD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDCAD is testing the key resistance around the 1.36 handle. This is where
the sellers are stepping in with a defined risk above the resistance to
position for a drop back into the 1.34 handle. The buyers, on the other hand,
will want to see the price breaking higher to increase the bullish bets into
the 1.38 handle next.

USDCAD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the pair is now trading in a tight range between the 1.3560 support
and the 1.36 resistance. The buyers will want to see the price breaking out to
the upside to increase the bullish bets into new highs, while the sellers will
look for a break lower to pile in for a drop back into the 1.34 handle.

USDCAD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see more clearly the tight range and the choppy price action. There’s not much
else to add here as the market participants will wait for a breakout on either
side. The red lines define the average daily range for today.

Upcoming Catalysts

Tomorrow we get the Canadian CPI, the US Retail Sales and the US Industrial
Production data. On Wednesday, we have the FOMC Rate Decision. On Thursday, we
get the latest US Jobless Claims figures. On Friday, we conclude with the
Canadian Retail Sales.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• It would take a significant shift in the outlook for the ECB to cut in October
• Very little new information in the pipeline before October meeting
• There is no rush to cut rates
• The safest approach is to wait for the outlook to become clearer

All this is very much a given now and they have guided markets relatively well in that regard. But at least economic developments are also playing out accordingly, so that helps with expectations. Traders are pricing in just ~39 bps of rate cuts for the last two meetings this year and not looking for a change in October as well; ~75% odds of no change to rates.

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

The greenback is the laggard in trading today and is being pushed lower in European morning trade. USD/JPY is the standout as it nudges under the 140.00 mark but it’s not the only pair on the move. GBP/USD is up 0.5% to near 1.3200 and AUD/USD also up 0.5% to 0.6740 currently. Meanwhile, EUR/USD is also seen up 0.5% to 1.1128 as it threatens to break a couple of key Fib levels:

The 50.0 and 61.8 Fib retracement levels at 1.1101 and 1.1125 respectively are looking to give way today. And that could set the pair up for stronger gains if the Fed plays ball later this week.

But that’s the caveat though, is that whatever moves we’re seeing with the dollar here is going to need vindication from the Fed.

Traders are pricing in a more dovish Fed as they look for ~59% odds of a 50 bps rate cut. That just means they are either hoping for that to happen or the Fed to turn to rather dovish even if delivering a 25 bps rate cut. It might be an understatement to say that the scope for the Fed disappointing market players this week may be quite large. But it is what it is at the moment.

In the bond market, 2-year Treasury yields are continuing to flirt with the 2023 low near 3.55%. And that’s another key threshold to watch out for before we get to the FOMC meeting on Wednesday. A break lower there will likely help to pin the dollar down further in the meantime.

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

• Prior €22.3 billion

Comparing to last year, the euro area trade balance is showing a surplus of roughly €128 billion from January to July. And that compares to the roughly €4 billion surplus only in the same period last year. Energy price developments are of course a big factor, leading to a drop in imports. And that in turn helping with the overall picture above.

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

UPCOMING
EVENTS:

• Monday: New Zealand Services PMI.
• Tuesday: Eurozone ZEW, Canada CPI, US Retail Sales, US
  Industrial Production and Capacity Utilization, US NAHB Housing Market
  Index.
• Wednesday: UK CPI, US Housing Starts and Building Permits,
  BoC Summary of Deliberations, FOMC Policy Decision.
• Thursday: New Zealand Q2 GDP, Australia Labour Market
  report, BoE Policy Decision, US Jobless Claims.
• Friday: Japan CPI, PBoC LPR, BoJ Policy Decision, UK
  Retail Sales, Canada Retail Sales.

Tuesday

The Canadian CPI
Y/Y is expected at 2.1% vs. 2.5% prior, while the M/M measure is seen at 0.0%
vs. 0.4% prior. As always, focus will be on the underlying inflation measures.
The Trimmed Mean CPI Y/Y is expected at 2.5% vs. 2.7% prior and the Median CPI
Y/Y is seen at 2.3% vs. 2.4% prior.

The BoC is
expected to cut rates by 25 bps at both the last two meetings left for this
year, but there’s also a chance that the central bank delivers bigger rate cuts
if growth and inflation were weaker than projected as Governor Macklem mentioned last week.

The US Retail
Sales M/M is expected at 0.2% vs. 1.0% prior, while the Ex-Autos M/M measure is
seen at 0.3% vs. 0.4% prior. The focus will be on the Control Group figure
which is expected at 0.2% vs. 0.3% prior.

Consumer spending
has been stable which is something you would expect given the positive real
wage growth and resilient labour market. We’ve also been seeing a steady pickup
in the UMich Consumer
Sentiment which suggests
that consumers’ financial situation is stable/improving.

Wednesday

The UK CPI Y/Y is
expected at 2.2% vs. 2.2% prior, while the M/M measure is seen at 0.3% vs.
-0.2% prior. The Core CPI Y/Y is expected at 3.5% vs. 3.3% prior, while the M/M
figure is seen at 0.4% vs. 0.1% prior.

The market expects
the BoE to keep rates unchanged at the upcoming meeting and then cut rates by
25 bps in November and December.

The consensus
among economists sees the Fed cutting rates by 25 bps. The market pricing
though is evenly split between a 25 and 50 bps cut. Some people say that
starting with a standard 25 bps would be better because the economy is still
fine, and 50 bps might be seen as panicky.

Central banking is
also about risk management though. The market pricing is giving the Fed a nice
opportunity to deliver a 50 bps “insurance cut” without surprising. Things
would have been much different if we had something like 30% probabilities for a
50 bps cut and 70% for a 25 bps one.

The Fed didn’t
have the chance to see the labour market report last July as the data was
released two days later. Maybe, if they had the data a week earlier, we might
have seen them cutting by 25 bps back then already and then continuing with 25
bps cuts for the subsequent meetings.

Fed Chair Powell
made it clear at the Jackson Hole Symposium that they will not tolerate more
labour market weakening and they will do everything they can to keep it strong.
Considering everything, starting with a 50 bps cut makes much more sense.

The Fed can then
show that it was just an insurance cut via its Summary of Economic Projections
and Powell can double down on that at the Press Conference. Speaking of the
SEP, the market is expecting the Fed to deliver at least 100 bps of easing by
year-end. The Fed can cut by 50 bps and then project two more 25 bps cuts by
year-end.

Further out, the
market expects the Fed to deliver 150 bps of easing in 2025 which seems too
aggressive at the moment. To sum up, I personally expect the Fed to cut rates
by 50 bps, but in the end what’s important is that the Fed is finally starting
to ease its policy and the magnitude will be shaped by the data in the next
months.

Thursday

The Australian
Labour Market report is expected to show 30.0K jobs added in August vs. 58.2K
in July and the Unemployment Rate to remain unchanged at 4.2%. The market
expects the RBA to deliver the first rate cut in February 2025, but the
probabilities can be brought forward to December 2024 if the data
were to disappoint in the next months.

The BoE is
expected to keep rates unchanged at 5.00%. The expectations for such a move
have been shaped by relatively strong data with PMIs firmly in expansion,
inflation moderating at a slow pace and the unemployment rate ticking lower.
The market then expects the central bank to cut by 25 bps in November and
December.

The US Jobless
Claims continues to be one of the most important releases to follow every week
as it’s a timelier indicator on the state of the labour market.

Initial Claims
remain inside the 200K-260K range created since 2022, while Continuing Claims
have been on a sustained rise (although they’ve improved recently) showing that
layoffs are not accelerating and remain at low levels while hiring is more
subdued.

This week Initial
Claims are expected at 230K vs. 230K prior, while there’s no consensus for Continuing
Claims at the time of writing although the prior release showed an increase to
1850K.

Friday

The Japanese Core
CPI Y/Y is expected at 2.8% vs. 2.7% prior. Inflation has been picking up
alongside wage growth which are two of the most important factors for the BoJ. Nonetheless,
the BoJ is expected to keep rates unchanged this time around and potentially
deliver another rate hike by the end of the year.

The BoJ is
expected to keep interest rates unchanged at 0.25%. The focus will be on the
Press Conference as the markets will be attentive to signals or hints on the
timing of the next rate hike.

Several BoJ
officials kept the rate hikes on the table as they want to normalise policy to
a more neutral stance. Markets instability has been a major concern for the central
bank, so they will likely wait for the Fed to be a bit more down the road in
its easing cycle before tightening policy further.

The PBoC is
expected to keep the 1 year and 5 year LPR rates unchanged at 3.35% and 3.85%
respectively. The Chinese economic data hasn’t been exactly good and
deflationary risks remain high. Chinese officials should really go harder on
monetary policy easing and bring real rates down from the current high levels.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

China retail sales, industrial output, investment data for August 2024 – another round of disappointing results.

Retail Sales +2.1% (YoY) (Aug)

• expected 2.5%, prior 2.7%

Industrial Production +4.5% (YoY) (Aug)

• expected 4.8%, prior 5.1%

Fixed Asset Investment +3.4$(YTD) (YoY) (Aug)

• expected 3.5%, prior 3.6%

Unemployment 5.3%

• expected 5.2%, prior 5.2%

Also published were home prices data, which fell at their sharpest rate in 9 years, at -5.3% y/y in August, compared with the previous month’s -4.9%.

• For the m/m, down 0.7% (July was also -0.7% m/m)

China’s property sector continues to be a black hole for the economy.

Piecemeal stimulus looks set to continue:

• Reports that China set to cut interest rates on more than $5 trln of outstanding mortgages

China has a growth target of ‚around 5%‘ this year. China invariably hits its growth target, officially anyway.

—

China’s National Bureau of Statistics (NBS) painted an upbeat picture.

• In August, under the strong leadership of the Central Committee of the Communist Party of China (CPC) with Comrade Xi Jinping at its core, all regions and departments strictly implemented the decisions and arrangements made by the CPC Central Committee and the State Council. All regions and departments adhered to the general principle of pursuing progress while ensuring stability, fully and faithfully applied the new development philosophy on all fronts, strengthened macro-regulation and strove to promote high-quality development. As a result, the production and demands sustained a recovery, employment and prices were basically stable, and high-quality development continued to move ahead. The national economy maintained stability in general while making steady progress.

These are the main headings from the statement:

1. Industrial Production Increased Steadily with Fast Growth in Equipment Manufacturing and High-Tech Manufacturing.

2. Service Sector Continued to Recover and Modern Services Developed Well.

3. Market Sales Kept Increasing and Online Retail Sales Grew Rapidly.

4. Investment in Fixed Assets Scaled up and Investment in High-Tech Industries Grew Fast.

5. Imports and Exports of Goods Grew Fast and Trade Structure Continued to Optimize.

6. Employment Was Generally Stable and Urban Surveyed Unemployment Rate Increased Slightly.

7. Increase of Consumer Price Expanded and Producer Prices for Industrial Products Declined.

This article was written by Eamonn Sheridan at www.forexlive.com.