There was a bit of a push and pull after the US CPI report yesterday but Wall Street ended up with a positive close. The Nasdaq was flat though and we’re seeing some light struggles in tech now again. On the other hand, Walmart just reported its Q2 earnings and that was a beat on both EPS ($0.67 vs $0.64 exp.) and revenue ($169.3 billion vs $168.5 billion exp.). Dow futures are up 0.2% currently but S&P 500 futures and Nasdaq futures have turned flat.

European trading featured a more muted tone across broader markets. That puts all the focus on the US retail sales data coming up later to set the tone for the final two days this week.

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

Fundamental
Overview

The Nasdaq has been on a steady rise ever since the last week’s US Jobless
Claims as the data quelled the fears around the labour market following the
weak NFP report. The “growth scare” triggered by the ugly ISM Manufacturing PMI
and the weak NFP report looks to be behind us for now.

This week we got some more positive news on the inflation front as the US PPI surprised to the
downside and the US CPI yesterday showed some
more easing. That should be good news as the Fed will likely be even more
dovish from now on and the chances of three rate cuts by year-end solidify.

Nasdaq
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that the Nasdaq broke above the key trendline around the 19000 level this week. This
should give the buyers a bit more confidence to increase the bullish bets into
new highs. The sellers, on the other hand, will want to see the price falling
back below the trendline to regain some control and position for a drop into the
17500 level.

Nasdaq Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a notable support zone around the 18800 level which saw the
bearish momentum increasing on the way down and the bullish momentum increasing
on the way up.

If the price were to fall
back into the support zone, we can expect the buyers to step in with a defined
risk below the zone to position for a rally into the 19727 level. The sellers,
on the other hand, will want to see the price breaking lower to position for a
drop into the 17500 level.

Nasdaq Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor upward trendline defining the current bullish
momentum. The buyers will likely keep on leaning on the trendline to position
for new highs, while the sellers will want to see the price breaking lower to
target a drop into the 18800 support. The red lines define the average daily range for today.

Upcoming Catalysts

Today we get the US Retail Sales and Jobless Claims figures. Tomorrow, we
conclude the week with the University of Michigan Consumer Sentiment survey.

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

It’s been a bit of a back and forth week for the pair but price action is ultimately looking to settle higher. The pair nudged higher on Tuesday but was dragged back down yesterday despite some dollar softness in play. But after the more solid employment figures earlier here, we are seeing the aussie pull itself back up again.

Coming into this week, the challenge for AUD/USD was to try and break above its key daily moving averages. The 100 (red line) and 200-day (blue line) moving averages are holding close to one another and limited the rises last Friday and earlier this Monday.

Buyers were dealt a bit of a blow yesterday after what looked to be a decent shove higher on Tuesday, closing above 0.6600 as well. But they are getting back on their feet again in trading today at least.

It will be crucial for buyers to secure a close above the key technical region above, now seen at 0.6598-04, to secure a more bullish sentiment once more.

That being said, there is still one more hurdle to get through today. And that is the US retail sales data coming up later.

One can also argue that the 61.8 Fib retracement level at 0.6626 is one to watch. However, I’d be eyeing more closely the key daily moving averages to affirm any bullish bias in the pair for now.

That said, further gains in the pair may be left wanting. It will highly depend on how long can the RBA resist rate cuts for the most part.

On the dollar side of the equation, I would argue that we could see traders slowly conform to a 25 bps rate cut by the Fed next month. If so, there is a pull back in pricing to be seen. And that could limit any outsized dollar weakness at least in the short-term.

That unless markets are convinced that they can bully the Fed into moving by 50 bps in September. But I am holding my reservations as the broader market mood has calmed down since the panic earlier this month.

For some context, traders are still pricing in a ~38% probability of the Fed moving by 50 bps next month. For the remainder of the year, there is ~103 bps of rate cuts priced in with just three meetings to go.

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

Fundamental
Overview

The S&P 500 has been on a steady rise ever since the last week’s US Jobless
Claims as the data quelled the fears around the labour market following the
weak NFP report. The “growth scare” triggered by the ugly ISM Manufacturing PMI
and the weak NFP report looks to be behind us for now.

This week we got some more positive news on the inflation front as the US PPI surprised to the
downside and the US CPI yesterday showed some
more easing. That should be good news as the Fed will likely be even more
dovish from now on and the chances of three rate cuts by year-end solidify.

S&P 500
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that the S&P 500 reached a key trendline
around the 5500 level. This is where we can expect the sellers to step in with
a defined risk above the trendline to position for a drop into new lows. The
buyers, on the other hand, will want to see the price breaking higher to
increase the bullish bets into a new all-time high.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a key support
around the 5432 level. If we get a pullback from the trendline, that’s where we
can expect the buyers to step in with a defined risk below the level to
position for a break above the trendline with a better risk to reward setup.
The sellers, on the other hand, will want to see the price breaking lower to
increase the bearish bets into new lows.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor upward trendline defining the current bullish momentum.
This is where the buyers keep on leaning onto to position for new highs. A
break below the trendline should see the sellers piling in and target the 5432
level where we will likely find the dip-buyers. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we get the US Retail Sales and Jobless Claims figures. Tomorrow, we
conclude the week with the University of Michigan Consumer Sentiment survey.

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

Headlines:

• UK July CPI +2.2% vs +2.3% y/y expected
• Traders now see BOE decision in September to be a coin flip
• The kiwi is the main mover today amid dovish RBNZ
• What are the distribution of forecasts for the US CPI?
• US CPI data due Wednesday, the ranges of estimates (& why they’re crucial to know)
• What is the market pricing for the Fed ahead of the US CPI report later?
• France July final CPI +2.3% vs +2.3% y/y prelim
• Eurozone Q2 GDP second estimate +0.3% vs +0.3% q/q prelim
• Eurozone June industrial production -0.1% vs +0.5% m/m expected
• US MBA mortgage applications w.e. 9 August +16.8% vs +6.9% prior

Markets:

• EUR leads, NZD lags on the day
• European equities higher; S&P 500 futures flat
• US 10-year yields down 2.3 bps to 3.831%
• Gold up 0.3% to $2,471.93
• WTI crude down 0.3% to $78.10
• Bitcoin up 0.7% to $60,982

It was more of a placeholder session in European morning trade today, as all eyes are on the US CPI report coming up later.

We got inflation numbers from the UK and they were softer than estimated, bolstering expectations for a BOE rate cut next month. The market pricing briefly jumped to near 50-50 before settling down a little bit. Now, traders are seeing ~42% odds of a rate cut as compared to ~36% before the report.

GBP/USD dipped lower initially down to 1.2820 but is now trading back to 1.2840, lower by just 0.1% on the day.

There wasn’t much action in the major currencies space with most dollar pairs relatively muted as traders await the main event later in US trading.

EUR/USD did nudge up a little to 1.1020 from around 1.0990 earlier in the session, with buyers eyeing a firmer break above 1.1000. There are large option expiries at 1.1035 to be mindful of as well.

The kiwi is the weakest performer, owing to a more dovish RBNZ which cut interest rates earlier in the day. NZD/USD remains down 1% at 0.6015, not much changed since Asia.

In the equities space, European stocks are slightly higher while US futures are more muted as the risk mood keeps more tentative for the time being.

It’s over to the US CPI report to see how that will shape things for the remainder of the week now.

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

• Prior +6.9%
• Market index 251.3 vs 215.1 prior
• Purchase index 137.7 vs 133.9 prior
• Refinance index 889.3 vs 661.4 prior
• 30-year mortgage rate 6.54% vs 6.55% prior

The big jump in the past week comes as we see a spike in refinancing activity in particular. That comes as the average rate of the most popular US home loan came falling in the last two weeks, amid the plunge in yields. Here’s a look at how the jump in refinancing activity looks from the graph:

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

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This article was written by Jeff Patterson at www.forexlive.com.

Fundamental
Overview

Yesterday, the US PPI report missed expectations by a big margin
triggering a selloff in the US Dollar as the market started to position into a
potentially soft US CPI release today.

That led to a key breakout
in the NZDUSD pair which didn’t last as the RBNZ
tonight cut rates by 25 bps. While analysts and economist were expecting the
OCR to remain unchanged, the market was pricing more than a 70% probability of
a rate cut nonetheless.

What weighed on the Kiwi were
more dovish than expected central bank’s forecasts for future interest rates
settings.

For the Fed, the market is
split between a 25 and 50 bps cut in September and a total of 107 bps of easing
by year-end. On the RBNZ side, the market is expecting a 25 bps cut in October
and a total of 71 bps of easing by year-end.

NZDUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that NZDUSD probed above the key resistance
zone around the 0.6050 level yesterday after the soft US PPI report but got
smacked back down tonight following the rate cut from the RBNZ.

The sellers piled in with a
defined risk above the resistance to position for a drop back into the lows
around the 0.5850 level. The buyers will want to see the price rising back
above the resistance to increase the bullish bets and position for a rally into
the 0.6217 level next.

NZDUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a minor support zone around the 0.5980 level where the price
got rejected from several times in the past weeks. If we get a pullback all the
way down to the support, the buyers will likely step in with a defined risk
below the support to position for a break above the major resistance with a
better risk to reward setup. The sellers, on the other hand, will want to see
the price breaking lower to increase the bearish bets into the 0.5850 level.

NZDUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that the price dropped all the way to the lower bound of the average daily range for today. The price generally
doesn’t extend much beyond the range unless there’s a strong catalyst.

That catalyst could be a
hot US CPI report today, which might push the price into the 0.5980 support
zone. For now, the buyers are leaning on the minor upward trendline to position
for a rally into new highs.

Upcoming
Catalysts

Today we have the US CPI report. Tomorrow, we get the US Retail Sales and
Jobless Claims figures. Finally, on Friday, we conclude the week with the New
Zealand Manufacturing PMI and the University of Michigan Consumer Sentiment
survey.

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

Fundamental
Overview

Yesterday, the US PPI report missed expectations by a big margin
triggering a selloff in the US Dollar as the market started to position into a
potentially soft US CPI release today.

The UK
CPI this morning missed estimates across the board as well and raised the
probabilities of a back-to-back cut in September. Most of the initial GBP
weakness though has been erased as the selloff in the greenback has been
stronger and in the bigger picture a positive risk sentiment should favour the
pound anyway.

For the Fed, the market is
split between a 25 and 50 bps cut in September and a total of 107 bps of easing
by year-end. On the BoE side, the market sees a 41% probability of a 25 bps cut
in September and a total of 47 bps of easing by year-end.

GBPUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that GBPUSD is approaching a key resistance
zone around the 1.29 handle. That’s where we can expect the sellers to step in
with a defined risk above the level to position for a drop into the 1.26
handle. The buyers, on the other hand, will want to see the price breaking
higher to increase the bullish bets into new highs.

GBPUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that once the price broke above the downward trendline,
the bullish momentum started to increase as more buyers piled in. We now have a
minor upward trendline defining the current bullish momentum. The buyers will
likely keep on leaning on the trendline to position for new highs, while the
sellers will want to see the price breaking lower to position for a drop into
the 1.26 handle.

GBPUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that the price bounced around the trendline and the 50% Fibonacci
retracement level this morning following the drop from the UK CPI release. The
red lines define the average daily range for today.

Upcoming
Catalysts

Today we have the US CPI report. Tomorrow, we get the US Retail Sales and
Jobless Claims figures. Finally, on Friday, we conclude the week with the
University of Michigan Consumer Sentiment survey.

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

• US July NFIB small business optimism index 93.7 vs 91.5 prior
• The risk mood continues to hold up, eyes on US PPI data later
• Germany August ZEW survey current conditions -77.3 vs -75.0 expected
• IEA makes no change to 2024 world oil demand growth forecast in latest report
• European equities open on a more positive note as risk mood breathes easier for now
• Spain July final CPI +2.8% vs +2.8% y/y prelim
• What are the main events for today?
• Eurostoxx futures +0.2% in early European trading
• Japan’s Nikkei extends recovery bounce, closes above 36,000
• UK June ILO unemployment rate 4.2% vs 4.5% expected
• FX option expiries for 13 August 10am New York cut
• UK labour market report in focus in the session ahead
• USD/JPY stays in recovery mode for now, eyes on US data later

Markets:

• NZD leads, JPY lags on the day
• European equities lower;
  S&P 500 futures +0.16%
• US 10-year yields down 13 bps to 3.902%
• Gold
  down 0.35% to $2,463
• WTI
  crude up 0.24% to $79.84
• Bitcoin
  down 0.97% to $58786

The main
highlight in the European session was the release of the UK jobs report where
we saw a notable improvement in the unemployment rate although the data
continues to suffer from reliability issues.

We’ve also
got the German ZEW survey which surprised to the downside posting the biggest
decline in the past two years. In contrast, the situation indicator for the
eurozone improved marginally.

The focus
will now switch to the US PPI figures and Fed’s Bostic, but the main event
comes tomorrow when we will get the US CPI report.

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