• We will return to 2% inflation target
• To set rates at restrictive level as long as needed for that
• Eurozone will not grow as much as expected earlier, but should pick up in 2024
• Weaker growth does not mean recession

She’s not really offering too much pushback or explicitly keeping the door open for another rate hike, similar to yesterday. As for the likelihood of a recession, let’s just say it never is a good sign when policymakers have to mention the R-word itself in trying to defend their stance.

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

Yesterday, the US CPI report
came basically in line with expectations as the market was already expecting
higher energy prices to push up the August inflation readings. The Core
measure, which is what the Fed is focused on, was in line with forecasts with
the monthly figure just a touch higher than expected. The core 3-month
annualised rate is now 2.4%, which is a good indicator for the Fed that their
policy is working well. Now, the question is whether the labour market softens
enough to bring inflation sustainably back to target without a recession. And
this is something that never happened in history.

Nasdaq Composite Technical Analysis
– Daily Timeframe

On the daily chart, we can see that the Nasdaq
Composite is still consolidating around the support zone at
13810 with the red 21 moving average acting
as dynamic support. The bias is more skewed to the upside given that the price
has made a new higher high recently around the 14148 level and the moving
averages are crossed to the upside but watch out for a break lower as that
could open the door for a much bigger fall.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we got a break
below the upward minor trendline recently
and the moving averages on this timeframe crossed to the downside. This might
turn into a bearish flag pattern
and the likely target would be the 12274 support. The buyers will need a strong
bounce on this support zone to invalidate the bearish setup, while the sellers
will want to see the price continuing lower to confirm the breakout of the
pattern and pile in to position for the selloff.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see the tight
range the Nasdaq Composite has been trading in for the past week. The levels to
watch are the last higher high at 13934 and the last higher low at 13732. In
fact, a break to the upside should see more buyers piling in and extend the rally
into a new high. The sellers, on the other hand, will want to see the price
breaking below the 13732 low to make a new lower low and pile in to target the
13174 support.

Upcoming
Events

Today is likely to be a volatile one given that we
are going to see lots of top tier economic indicators released at the same
time. In order of importance, we will get the US Jobless Claims, Retail Sales
and PPI data. The September FOMC meeting is already a done deal as the market
is pricing a 97% probability of a pause, so the data is going to influence the
November and December expectations. Tomorrow, we conclude the week with the
University of Michigan Consumer Sentiment report.

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

• PBOC calls on banks to hold off on immediate dollar purchases – report
• PBOC cuts RRR by 25 bps, with effect from 15 September
• China says it has the conditions to keep the yuan currency stable
• It’s a tall order for the euro to sustain any climb after the ECB today
• Don’t sleep on the major US data releases today
• Switzerland August producer and import prices -0.2% vs -0.1% m/m prior

Markets:

• AUD leads, GBP lags on the day
• European equities slightly higher; S&P 500 futures up 0.4%
• US 10-year yields up 1.4 bps to 4.262%
• Gold up 0.1% to $1,907.80
• WTI crude up 1.3% to $89.67
• Bitcoin up 0.5% to $26,362

Major currencies didn’t do a whole lot today, as traders are waiting on the ECB decision and some major US data to come later.

There wasn’t much conviction overall, with the dollar keeping more mixed and light changes being observed for the most part – continuing from the dull action after the US CPI report yesterday.

Some China headlines kept things interesting as the PBOC cut RRR again for the second time this year and called on banks to put off dollar purchases when they can, in order to alleviate pressure on the yuan currency.

In other markets, equities were solid throughout as stocks gained ground in European morning trade. US futures pushed higher with both S&P 500 futures and Nasdaq futures now up 0.4%. That is seeing European indices gather some confidence but there is still the ECB to come later in the day.

The bond market is little changed in general as it is still all to play for in the session to come. The ECB will be the main highlight but US retail sales, producer prices, and weekly jobless claims could also end up being key drivers of trading sentiment before the weekend comes along.

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

It’s certainly an interesting view especially with markets not pricing in any more rate hikes for the year. From earlier: Not too much change in the Fed funds futures curve after the US CPI data yesterday

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

Yesterday, the US CPI report
came basically in line with expectations as the market was already expecting
higher energy prices to push up the August inflation readings. The Core
measure, which is what the Fed is focused on, was in line with forecasts with
the monthly figure just a touch higher than expected. The core 3-month
annualised rate is now 2.4%, which is a good indicator for the Fed that their
policy is working well. Now, the question is whether the labour market softens
enough to bring inflation sustainably back to target without a recession. And
this is something that never happened in history.

Dow Jones Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Dow Jones
recently bounced on the key trendline where we
had also the confluence with the
50% Fibonacci retracement level,
and rallied back into the resistance at
35000. The price then fell again and started to chop around as the market
remains uncertain on what’s next.

Dow Jones Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price
action formed a symmetrical triangle and we
are just waiting for a breakout to decide where to go next. In fact, when the
price breaks out on either side of the pattern, we can generally see momentum
picking up and the price moving in the direction of the breakout in a sustained
way. So, this is now a game of patience.

Dow Jones Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see more
closely the price action within the triangle with the latest rejection from the
upper bound of the pattern. When the price starts to consolidate within such
patterns, there are no clear support and resistance levels as the price does
not respect them. The best strategy here is to wait for a breakout support by a
fundamental catalyst and then join the move.

Upcoming Events

Today is likely to be a volatile one given that we
are going to see lots of top tier economic indicators released at the same
time. In order of importance, we will get the US Jobless Claims, Retail Sales
and PPI data. The September FOMC meeting is already a done deal as the market
is pricing a 97% probability of a pause, so the data is going to influence the
November and December expectations. Tomorrow, we conclude the week with the
University of Michigan Consumer Sentiment report.

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

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

Ethereum
keeps on falling and making new lows as the outlook is turning more and more
bearish given the headwinds from global growth and tight monetary policies. All
the positive news eventually gets faded, which is another sign that the big
picture trend remains bearish. Amid this high uncertainty, the technicals can
help with risk management and short-term directional plays.

Ethereum Technical Analysis
– Daily Timeframe

On the daily chart, we can see that Ethereum sold
off again but bounced on the previous low around the 1545 level. We can see
that the sellers are leaning on the red 21 moving average, and we
will likely find them again around the 1600 level. A break below the 1545 low
would take the price into the next support at 1400.

Ethereum Technical Analysis
– 4 hour Timeframe

On the 4 hour chart, we can see that the bounce
from the low got rejected at the resistance zone around the 1600 level. This is
where the sellers are piling in with a defined risk above the resistance to
target a break below the low and the 1400 support. The buyers, on the other
hand, will want to see the price breaking higher to pile in and extend the
rally into the 1681 resistance.

Ethereum Technical Analysis
– 1 hour Timeframe

On the 1 hour chart, we can see that the
short term market structure is bullish as the price has been printing higher
highs and higher lows. The last higher low is around the 1575 level, so a break
below that level would switch the bullish trend into a bearish one and lead to
more selling pressure.

Upcoming Events

This week we have many important events. Today is the US
CPI Day, which is expected to show an increase in headline inflation due to
higher energy prices but further disinflation in the core measure. Tomorrow, we
will see the latest US Jobless Claims, PPI and Retail Sales data. Finally on
Friday, we get the University of Michigan Consumer Sentiment report. Strong
data is likely to tip the market expectations on the more hawkish side and
support the USD, ultimately weighing on Ethereum. On the other hand, weak
readings should have the opposite effect, unless they are very bad, in which
case the recession fears are likely to send Ethereum lower anyway.

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

• What’s priced in for the Fed outlook ahead of the CPI data today?
• UK July monthly GDP -0.5% vs -0.2% m/m expected
• Eurozone July industrial production -1.1% vs -0.7% m/m expected
• German government to downgrade GDP forecast for the year, sees contraction of 0.3%
• German economy ministry says current indicators point to weak Q3
• PBOC says will support prices to rise moderately
• China says it has not issued a ban on purchase and/or use of iPhones
• Japan’s Matsuno confirms he will remain as chief Cabinet secretary after the reshuffle
• Putin does not rule out military cooperation with North Korea amid Kim Jong Un’s visit

Markets:

• NZD leads, AUD lags on the day
• European equities lower; S&P 500 futures down 0.1%
• US 10-year yields up 4.4 bps to 4.308%
• Gold down 0.1% to $1,911.24
• WTI crude up 0.6% to $89.41
• Bitcoin up 0.5% to $26,191

It was a slow session as markets are caught in a bind waiting on the US CPI data to come later.

The dollar was steadier throughout, holding light gains against the major currencies bloc mostly. The ranges for the day are still leaving a lot to be desired though, as traders are awaiting the inflation numbers before firming up any convictions.

GBP/USD did see a slight drop from 1.2485 to a low of 1.2441 during the session, after the UK economy contracted by more-than-expected in July. But price is seen bouncing back to 1.2470 now as we await the main event later today.

Higher bond yields are also something to be wary about, with both European and US bond yields rising. The former is helped by escalating odds of a ECB rate hike for tomorrow while the latter is seeing 10-year yields seeking a potential breakout above 4.30% ahead of the CPI data.

Meanwhile, stocks remain more tepid with European indices posting losses in following the drop in US equities yesterday.

It’s now all about the US CPI data, so let’s see what that has to offer and how it will shape things up before more US data and the ECB decision tomorrow.

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

• Prior -2.9%
• Market index 182.2 vs 183.6 prior
• Purchase index 143.7 vs 141.9 prior
• Refinance index 367.0 vs 388.1 prior
• 30-year mortgage rate 7.27% vs 7.21% prior

Overall mortgage applications fell in the past week amid mixed activity. Purchases were up last week but the drop in refinancing activity more than made up for that, with the index falling to its lowest level since December last year:

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

This compares with the growth of 0.4% predicted at the end of April, with the government reportedly now expecting the economy to shrink in Q3 and expand only slightly in Q4 this year. Overall, the government is said to anticipate a contraction of 0.3% for the year.

These forecasts are typically slow to react to the underlying trend but it is fair to say that recession signals are beeping all over the place for Germany. So, ECB.. are ya winning, son?

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