<p style=““ class=“text-align-justify“>The dollar is firmer on the day as it works to claw back losses suffered from the aftermath of the US CPI data on Wednesday. If the trade then was to punish those betting against a Fed pivot, <a target=“_blank“ href=“https://www.forexlive.com/news/a-bit-of-a-rethink-before-the-weekend-20220812/“ target=“_blank“>the bond market clearly had other ideas</a> and we are now seeing things run back in FX as well.</p><p style=““ class=“text-align-justify“>GBP/USD is the worst performer, down 0.7% to 1.2130 after having scaled as high as 1.2215 earlier in the day right upon the UK Q2 GDP data release. The figures were better than expected but it still pointed to a contraction in the UK economy, well before the long recession forecast by the BOE later in the year through to next year.</p><p style=““ class=“text-align-justify“>From a technical perspective, the drop also comes amid a rejection against the trendline resistance (white line) above 1.2200.</p><p style=““ class=“text-align-justify“>Elsewhere, EUR/USD is down 0.3% to 1.0290 and keeping just below a large set of expiries (around €2.8 billion) at 1.0300-10 today. USD/JPY is also keeping higher by 0.4% to 133.50 but the range play remains between its 100-day moving average (red line) at 131.32 and the 135.00 mark for the time being.</p><p style=““ class=“text-align-justify“>Looking at commodity currencies, the aussie was higher earlier but has seen gains dissipate in a drop from 0.7125 to 0.7098 currently but continues to dance around its 100 and 200-day moving averages as outlined earlier <a target=“_blank“ href=“https://www.forexlive.com/news/audusd-higher-but-another-key-resistance-level-lurks-nearby-20220812/“ target=“_blank“>here</a>.</p>

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

<ul><li>Prior +0.8%; revised to +2.1%</li><li>Industrial production +2.4% vs +0.8% y/y expected</li><li>Prior +1.6%</li></ul><p style=““ class=“text-align-justify“>The material revision higher in May is something to note but the June reading is also solid, reflecting another monthly increase in industrial output. Looking at the details, production of capital goods rose by 2.6% and energy by 0.6%, while production of intermediate goods fell by 0.1%, durable consumer goods by 0.6% and non-durable consumer goods by 3.2%.</p><p style=““ class=“text-align-justify“>That said, this pertains to Q2 data and from the PMI readings, we already saw indications of a significant decline in factory activity in July so that is the latest look at the euro area economy.</p><p>/<a target=“_blank“ href=“https://www.forexlive.com/terms/e/eur/“ target=“_blank“ id=“b0427fd7-674c-4ad1-b689-22d1f8b087b0_1″ class=“terms__main-term“>EUR</a></p>

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

<p class=“MsoNormal“>Brent Donnelly’s am/FX is a clear and concise daily look at one or two important topics related to global markets. Brent talks macro, narrative economics, trading strategy, tactics, positioning, technicals, and market psychology as he covers whatever markets are in play. Topics covered include FX, crypto, stocks, fixed income, <a target=“_blank“ href=“https://www.forexlive.com/terms/c/commodities/“ target=“_blank“ id=“da4553bf-21d1-405c-bc80-d431ff06ffd0_1″ class=“terms__main-term“>commodities</a>, and macroeconomics.</p><p class=“MsoNormal“>Brent’s huge network of hedge fund, real money, central bank, and trading contacts give him unique insight into what is driving markets today and what will move markets tomorrow.</p><p class=“MsoNormal“>Each day, am/FX helps you surf the current narrative and puts new themes on your radar before they hit the mainstream. 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He has been trading currencies since 1995 and writing about macro since 2004. Brent is the author of “Alpha Trader” (2021) and “The Art of Currency Trading” (Wiley, 2019). He writes a widely-read and highly-respected global macro and FX daily called am/FX. Over the course of his career, he has been a market maker, trader, and senior manager at some of the top banks in foreign exchange.</p><p class=“MsoNormal“>Brent has extensive experience trading currencies, FX options, stock index futures, NASDAQ stocks, and commodities. He is a respected macro thinker with the unique perspective of a senior risk taker. He has been quoted by or featured in the Economist, Real Vision, Epsilon Theory, the Wall Street Journal, Financial Times, Bloomberg, and CNBC.</p><p class=“MsoNormal“>Before joining Spectra, Brent was a senior FX trader at HSBC, head of G10 Spot Trading at Citi New York and a Managing Director at Nomura New York. He was also a portfolio manager at a major hedge fund in Connecticut for three years. He created and wrote a cartoon called ‘‘Daft Planet,’’ which aired on TV in Canada, and he dreams of one day winning the Man Booker Prize.</p><p class=“MsoNormal“>Here’s what other industry veterans have to say:</p><p class=“MsoNormal“>“Brent is a smart, balanced, and hyper-pragmatic trader. I have known and worked with him for years, and his constant search for new paradigms is what sets him apart.” – Jens Nordvig, World-Renowned Currency Strategist and Found of Exante Data</p><p class=“MsoNormal“>“A must-read for anyone who wants to truly understand global macro trading and currency markets.” – John Mauldin, New York Times Bestselling Author and Chairman of Mauldin Economics</p><p class=“MsoNormal“>“For years, professional investors have profited from Brent Donnelly’s daily insights on currency markets. 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This article was written by ForexLive at www.forexlive.com.

<p style=““ class=“text-align-justify“>The pair is staying in the hunt for a third straight day of gains after the surge to fresh two-month highs upon the US CPI data release on Wednesday. The better risk mood is certainly helping and <a target=“_blank“ href=“https://www.forexlive.com/news/equities-nudge-higher-as-risk-appetite-picks-up-20220812/“ target=“_blank“>the early ground covered so far today</a> is also bolstering sentiment with the pair holding near session highs around 0.7120-25.</p><p style=““ class=“text-align-justify“>Of note, buyers managed to breach the 100-day moving average (red line) yesterday and that opens up some room to roam to the topside but there is another key resistance level that is lurking nearby. The 200-day moving average (blue line) stands at 0.7149 and that may help to limit a further advance in the sessions ahead.</p><p style=““ class=“text-align-justify“>The dollar is trading more mixed right now with gains seen against the likes of the <a target=“_blank“ href=“https://www.forexlive.com/news/eurusd-lacks-poise-on-break-higher-this-week-20220812/“ target=“_blank“>euro</a> and <a target=“_blank“ href=“https://www.forexlive.com/news/gbpusd-fails-to-clinch-upside-break-on-the-week-20220812/“ target=“_blank“>pound</a> and if risk appetite gets sapped as it did again late yesterday, I doubt the aussie can hang on to gains before we get to the weekend.</p><p style=““ class=“text-align-justify“>In any case, we are now trading in between the two key levels highlighted and the next trading bias for the pair is rather straightforward. Break above the 200-day moving average and buyers will open up the path towards retesting the May and June highs around 0.7266-82 while a break back below the 100-day moving average will put sellers back in control with the potential to fall back towards 0.7000 as the key target.</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/a-crest-of-hope-and-comfort-20220811/“>A crest of hope and comfort?</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/markets-settle-down-in-european-morning-trade-20220811/“>Markets settle down in European morning trade</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/feds-daly-were-not-near-done-yet-in-battle-against-inflation-20220811/“>Fed’s Daly: We’re not near done yet in battle against inflation</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/us-gasoline-prices-drop-below-4-for-the-first-time-since-march-aaa-20220811/“>US gasoline prices drop below $4 for the first time since March – AAA</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/german-chancellor-scholz-says-does-not-think-will-see-unrest-in-the-country-20220811/“>German chancellor Scholz says does not think will see unrest in the country</a></li></ul><p>Markets:</p><ul><li>NZD leads, GBP lags on the day</li><li>European equities mixed; S&P 500 futures up 0.4%</li><li>US 10-year yields down 2 bps to 2.76%</li><li>Gold up 0.1% to $1,794.63</li><li>WTI crude up 0.7% to $92.55</li><li>Bitcoin up 3.0% to $24,623</li></ul><p style=““ class=“text-align-justify“>It was another quiet session in terms of headlines but there were some decent moves in markets as the dollar slipped further after yesterday’s fall. The greenback is contesting or looking to contest some key technical levels on the charts (<a target=“_blank“ href=“https://www.forexlive.com/news/eurusd-nudges-higher-as-dollar-stays-sluggish-20220811/“ target=“_blank“>euro</a>, <a target=“_blank“ href=“https://www.forexlive.com/news/usdjpy-taken-on-a-see-saw-ride-by-us-economic-releases-20220811/“ target=“_blank“>yen</a>, <a target=“_blank“ href=“https://www.forexlive.com/news/gbpusd-looks-to-build-on-yesterdays-gains-amid-heavy-dollar-20220811/“ target=“_blank“>pound</a>, <a target=“_blank“ href=“https://www.forexlive.com/news/usdcad-looks-to-establish-further-downside-leg-after-fall-to-two-month-lows-20220811/“ target=“_blank“>loonie</a>, <a target=“_blank“ href=“https://www.forexlive.com/news/audusd-takes-a-peek-above-key-resistance-level-on-dollar-struggles-20220811/“ target=“_blank“>aussie</a>) and that will be ones to watch in the sessions ahead.</p><p style=““ class=“text-align-justify“>The dollar is generally lower across the board with EUR/USD moving up from 1.0300 to 1.0340 and USD/JPY down from 132.70 to 132.30 during the session. Meanwhile, AUD/USD moved up from 0.7080 to 0.7115 while NZD/USD tracked higher from 0.6400 to 0.6445 as equities also held steadier for the most part.</p><p style=““ class=“text-align-justify“>European indices are trading more mixed after a positive start while US futures are holding slight gains, building on the positive momentum from yesterday.</p><p style=““ class=“text-align-justify“>The bond market remains more tepid though and that might be something for market players to be wary about as Fed funds futures also dialed back some of the pricing for a 75 bps rate hike after the drop yesterday. Odds are now seen at ~43% after a drop to ~30% following the US CPI data.</p>

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

<p style=““ class=“text-align-justify“>The hype this week was all about the US CPI data and the reaction yesterday did not disappoint. However, it seems like market players are running out of steam today or it may just be another summer’s day in Europe as things settle down and we are seeing light changes overall for the most part.</p><p style=““ class=“text-align-justify“>European indices are now little changed after a positive open, trading more mixed while US futures are still keeping slightly higher but the gains are rather measured. S&P 500 futures are up 11 points, or 0.3%, while Nasdaq futures are up by only 0.1% on the day.</p><p style=““ class=“text-align-justify“>Meanwhile, Treasury yields cratered initially to the release yesterday but picked itself up as rates showed little change in general but are slightly lower today. Perhaps 10-year yields are looking for a bigger play with a wedge/flag pattern forming at the moment:</p><p style=““ class=“text-align-justify“>While greed is the name of the game in the equities space, the bond market seems to be voting that not much has changed in terms of the Fed outlook after just one data point that may be hinting at inflation pressures easing slightly. I think the fact that Fed funds futures also dialed back a little higher to ~43% for a 75 bps rate hike next month (it was down to ~30% at one point) is a testament to that.</p><p style=““ class=“text-align-justify“>In FX, the dollar remains a little softer today but there are some key technical levels in play at the moment before any further downside leg for the greenback as outlined earlier:</p><ul><li><a target=“_blank“ href=“https://www.forexlive.com/news/eurusd-nudges-higher-as-dollar-stays-sluggish-20220811/“ target=“_blank“>EUR/USD nudges higher as dollar stays sluggish</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/gbpusd-looks-to-build-on-yesterdays-gains-amid-heavy-dollar-20220811/“ target=“_blank“>GBP/USD looks to build on yesterday’s gains amid heavy dollar</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/usdjpy-taken-on-a-see-saw-ride-by-us-economic-releases-20220811/“ target=“_blank“>USD/JPY taken on a see-saw ride by US economic releases</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/usdcad-looks-to-establish-further-downside-leg-after-fall-to-two-month-lows-20220811/“ target=“_blank“>USD/CAD looks to establish further downside leg after fall to two-month lows</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/audusd-takes-a-peek-above-key-resistance-level-on-dollar-struggles-20220811/“ target=“_blank“>AUD/USD takes a peek above key resistance level on dollar struggles</a></li></ul>

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

<ul><li>Tax relief is part of overall package to help citizens</li></ul><p style=““ class=“text-align-justify“>There are sparse details on this with German finance minister Lindner only stating that the tax relief plan would be in the realms of €10 billion. This is on top of the €30 billion package unleashed by the government earlier which included a fuel tax cut and a public transport ticket valid across Germany priced at just €9 a month for June, July and August.</p>

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

<p style=““ class=“text-align-justify“>The pair traded to fresh highs in two months after the US CPI data yesterday but the daily close fell short of breaching the 100-day moving average (red line). That key resistance level is once again the focus today and we are seeing buyers look to test waters above that at 0.7085 at the moment.</p><p style=““ class=“text-align-justify“>Hold above and the bearish bias in the pair will be put off as there is the scope for price action to trade towards the 200-day moving average (blue line), seen at 0.7150 currently. These key technical levels have been vital in definining and limiting price moves in AUD/USD, as evident from the chart above since May trading.</p><p style=““ class=“text-align-justify“>As such, they will be key levels to pay attention to in gauging the potential for the next leg lower in the dollar against the aussie. Across other dollar charts, the greenback also has key levels that are being contested, or close to, at the moment as seen with the <a target=“_blank“ href=“https://www.forexlive.com/news/eurusd-nudges-higher-as-dollar-stays-sluggish-20220811/“ target=“_blank“>euro</a>, <a target=“_blank“ href=“https://www.forexlive.com/news/gbpusd-looks-to-build-on-yesterdays-gains-amid-heavy-dollar-20220811/“ target=“_blank“>pound</a>, <a target=“_blank“ href=“https://www.forexlive.com/news/usdjpy-taken-on-a-see-saw-ride-by-us-economic-releases-20220811/“ target=“_blank“>yen</a>, and <a target=“_blank“ href=“https://www.forexlive.com/news/usdcad-looks-to-establish-further-downside-leg-after-fall-to-two-month-lows-20220811/“ target=“_blank“>loonie</a>.</p><p style=““ class=“text-align-justify“>The coherent technical picture across multiple pairs exemplifies the notion that dollar sentiment is the key driver in FX at the moment, as markets continue to look for clues on the Fed pivot. For now, we’re still caught up in the reaction to the US jobs report from Friday last week and the US CPI data yesterday. The dollar is softer and while there is scope for a further drop, there needs to be confirmation from the technicals and we are approaching that crossroads towards the end of the week.</p>

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

<p style=““ class=“text-align-justify“>There were big moves across dollar pairs in trading yesterday and USD/CAD was no exception as it cast aside the memory of the jump to 1.2980 last Friday in a drop back below 1.2800 in the aftermath of the US CPI data release. There hasn’t been much relief since the drop with the slight retracement earlier stalling at the 100-day moving average (red line) at 1.2793 – a level that was broken yesterday and which helped to stall the downside trend initially on 1 August.</p><p style=““ class=“text-align-justify“>The break below the key technical level is a boost to sellers and opens up the path towards testing the 200-day moving average (blue line) next at 1.2741. That is the key support level to watch now as a break below that will pave the way for a further downside leg in the pair.</p><p style=““ class=“text-align-justify“>It isn’t much of a coincidence that we are seeing dollar pairs in general move close towards testing another round of key technical levels in which a break might set off the next downside leg for the dollar.</p><p style=““ class=“text-align-justify“>I want to say that the late surge in oil prices yesterday helped to keep the loonie steadier but considering its recent volatility, it’s hard to really pin down such a move to fluctuations in oil. For now, dollar sentiment is still the key driver in FX and the technicals are what is defining the action at the moment as seen with the <a target=“_blank“ href=“https://www.forexlive.com/news/eurusd-nudges-higher-as-dollar-stays-sluggish-20220811/“ target=“_blank“>euro</a>, <a target=“_blank“ href=“https://www.forexlive.com/news/gbpusd-looks-to-build-on-yesterdays-gains-amid-heavy-dollar-20220811/“ target=“_blank“>pound</a>, and <a target=“_blank“ href=“https://www.forexlive.com/news/usdjpy-taken-on-a-see-saw-ride-by-us-economic-releases-20220811/“ target=“_blank“>yen</a> as well.</p>

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

<ul><li>Prior +1.2%</li><li>Market index 279.8 vs 279.2 prior</li><li>Purchase index 205.4 vs 208.4 prior</li><li>Refinancing index 662.9 vs 640.6 prior</li><li>30-year mortgage rate 5.47% vs 5.43% prior</li></ul><p style=““ class=“text-align-justify“>The increase in mortgage activity owes to refinancing in the past week as home purchases were seen falling once again. As the Fed’s battle against inflation continues to rage on, it is hitting the US housing market and that is something to be wary of as economic conditions does show signs of worsening in the months ahead.</p>

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