• A slower day for major currencies as the bond selling pauses for now
• ECB’s Kazimir: The preferable option would be to hike rates by 25 bps next week
• ECB’s Knot: Markets may be underestimating September rate hike chances
• ECB’s Villeroy: We are near or very near the peak on interest rates
• ECB’s Villeroy: There is a slowdown but no recession
• BOJ’s Takata: We won’t evaluate currencies by focusing on certain levels
• BOJ’s Takata: Stronger than expected US economy having an impact on currencies
• Japan’s Matsuno says watching FX moves with high sense of urgency
• Eurozone July retail sales -0.2% vs -0.1% m/m expected
• Germany July factory orders -11.7% vs -4.0% m/m expected
• Germany August construction PMI 41.5 vs 41.0 prior
• UK August construction PMI 50.8 vs 50.5 expected

Markets:

• JPY leads, GBP lags on the day
• European equities lower; S&P 500 futures down 0.2%
• US 10-year yields down 2 bps to 4.248%
• Gold down 0.1% to $1,924.39
• WTI crude down 0.5% to $86.29
• Bitcoin up 0.2% to $25,745

The selling in Treasuries is taking a bit of a breather, at least for now, and that is helping to keep dollar gains in check in European trading today.

The greenback is slightly on the lower side but nothing too significant. USD/JPY did hit a low of 147.03 but is keeping around 147.30-40 levels now, still down 0.2% on the day.

Meanwhile, EUR/USD is up 0.2% to 1.0740 and AUD/USD up 0.2% to 0.6390 levels currently. But those are the only real movers with there being light changes among other dollar pairs, so that speaks to the lack of enthusiasm so far.

In the equities space, there is a more cautious mood though with European indices trailing and US futures also slightly softer. There is still some angst it would seem, after the jump higher in bond yields on Friday and yesterday.

In terms of headlines, we did get some added verbal intervention from Japan and also ECB policymakers trying to keep a rate hike next week as being a ‚possibility‘. But both of those developments aren’t anything new at this stage.

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

• One more, likely last rate hike, still needed
• The alternative option would be to hike in October or December
• Inflation remains stubbornly high, price growth expectations too far above 2%

As we move closer to the decision next week, it looks like maybe ECB policymakers are starting to break rank. This is one of the more direct and hawkish takes as compared to the others, which are just alluding to a rate hike being a mere „possibility“.

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

• Prior +2.3%
• Market index 183.6 vs 189.0 prior
• Purchase index 141.9 vs 144.9 prior
• Refinance index 388.1 vs 407.1 prior
• 30-year mortgage rate 7.21% vs 7.31% prior

Mortgage applications declined once again in the past week with both purchase and refinancing activities falling. It adds to the strain in the housing market amid higher interest rates.

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

Last
week, Bitcoin jumped following the news that Greyscale won the lawsuit against
the SEC as the D.C. court ruled that the SEC improperly rejected the Bitcoin
spot ETF. This was seen as a positive news as Greyscale will have to reapply
for a spot ETF but that an ETF is actually coming. The market started to
“selling the fact” and eventually returned to the key support level. Looking at
the bigger picture, we have some bearish news all around as CryptoQuant reported
that Bitcoin trading volume is at its lowest in more than four years and on the
macro side we have more and more deteriorating economic data that point to a
possible recession in Q4 2023 or Q1 2024. On top of that, the central banks are
expected to keep monetary conditions tight even if we start to see more
weakness creeping in, which should ultimately make the economic conditions and
the risk sentiment worse.

Bitcoin Technical Analysis
– Daily Timeframe

On the daily chart, we can see that Bitcoin rallied
into the resistance zone
around the 28200 area where we had also the 61.8% Fibonacci retracement level
but got rejected soon after as the market “sold the fact” on the positive
Bitcoin news. The price is now trading again at the key 25231 support. If we
see a break to the downside, Bitcoin is likely to fall all way to the 21509
level.

Bitcoin Technical Analysis
– 4 hour Timeframe

On the 4 hour chart, we can see that the buyers had
a good support zone around the 26800 level where there was also the 61.8%
Fibonacci retracement level but the price fell through it like nothing
confirming the bearish bias. We are now in a consolidation after two weeks of high
volatility, but these are generally just rests before the big moves.

Bitcoin Technical Analysis
– 1 hour Timeframe

On the 1 hour chart, we can see that we
have a range inside the orange box. A break to the upside should see the buyers
piling in to target the 26750 level and eventually the 28200 one. On the other
hand, a break to the downside should see more sellers piling in and extend the
selloff into the 21509 level.

Upcoming Events

This week is a bit empty on the data front with just the
US ISM Services PMI today and the US Jobless Claims tomorrow being the main
highlights. If we see strong data, the market is unlikely to price an imminent
recession and thus it shouldn’t affect Bitcoin too much. On the other hand,
weak data should bring back recessionary fears and likely trigger some risk
aversion in the markets eventually weighing on Bitcoin.

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

• Dollar in charge as higher yields come back into focus
• RBA leaves the cash rate unchanged at 4.10%
• The full statement of the September RBA monetary policy meeting decision
• ECB’s Lane: August inflation data is welcome but we need to see that continue
• ECB consumer survey shows rising inflation expectations
• UK August final services PMI 49.5 vs 48.7 prelim
• Eurozone August final services PMI 47.9 vs 48.3 prelim
• Eurozone July PPI -0.5% vs -0.6% m/m expected
• China reportedly set to launch new state-backed fund to boost chip industry

Markets:

• USD leads, AUD lags on the day
• European equities lower; S&P 500 futures down 0.2%
• US 10-year yields up 5.5 bps to 4.228%
• Gold down 0.4% to $1,930.52
• WTI crude down 0.3% to $85.26
• Bitcoin down 0.4% to $25,738

The return of the bond market, or more specifically Treasuries, from the long weekend was the key driver across broader markets today. Higher yields are once again the talk of the day, carrying over the sudden turn in the mood on Friday after the US jobs report.

That is helping to bid up the dollar while weighing on the general risk mood. The greenback was bid across the board and all through European trading, continuing the momentum from Friday.

EUR/USD moved down from 1.0780 to 1.0730, its lowest levels since June, while GBP/USD also declined from 1.2620 to 1.2530 before holding around 1.2540-50 levels now. Amid higher bond yields, USD/JPY is trading up near the highs for the year in a push back above the 147.00 mark.

Meanwhile, the antipodeans are the ones beaten down the most due to a couple of factors at play today. At first, China worries weighed on the aussie with AUD/USD down to around 0.6425. Then, the RBA left the cash rate unchanged for a third straight meeting and the extended pause alongside a bid in the dollar carried AUD/USD all the way down to 0.6360 and is trading thereabouts now.

NZD/USD is also down over 1% to 0.5865 currently, as a more cautious risk mood is also not helping with sentiment for commodity currencies.

Things were shaping up much rougher for stocks early in Europe but they have pared losses a fair bit. That said, with the bond market at the wheel, higher yields could yet bite at equities again later in US trading.

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

The good news for stocks is that the rough start to the session has abated somewhat. Here’s the snapshot of the equities space currently:

• Eurostoxx -0.1%
• Germany DAX -0.1%
• France CAC 40 -0.3%
• UK FTSE +0.1%
• S&P 500 futures -0.1%
• Nasdaq futures -0.2%
• Dow futures flat

The bad news is that bond yields are continuing to hold higher, carrying over the momentum from Friday last week. It was a US holiday yesterday but with the return of Treasuries trading today, it could yet trigger some cautious tones in equities as yields hold on the higher side later.

For now, the FX market has already responded with the dollar finding bids all across the board. We’ll see if stocks will also turn later or if dip buyers can somehow find the appetite to keep their cool.

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

After the US jobs report on Friday, it looked like USD/JPY was set for a break lower in a drop below the 145.00 mark. However, a major turnaround in the bond market helped to drive yields higher and was a saviour for USD/JPY buyers. The pair closed higher at the end of last week above 146.00 and is now in the hunt for a third straight day of gains.

This comes as Treasury yields are once again pushing higher, with the bond market returning to play after the long weekend. 10-year yields are up 5.1 bps to 4.224% currently and that is underpinning USD/JPY especially as the dollar itself is strongly bid across the board.

The pair is now closing in on the highs for the year with plenty of breathing room still from 145.00 to 150.00 at least from a technical perspective.

What is perhaps also helping buyers feel more confident is the lack of pushback from Japanese officials as of late. They’re not really attempting to jawbone the yen, so that does free up some room to maneuver as bond yields continue to track higher.

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

US:

• The Fed hiked by 25 bps as
  expected and kept everything unchanged at the last meeting.
• Fed Chair Powell reaffirmed their data dependency
  and kept all the options on the table.
• Inflation measures
  since then showed further disinflation.
• The labour market
  displayed signs of softening although it remains fairly tight.
• Overall, the economic data started to surprise to
  the downside lately.
• The Fed members are leaning more towards a pause
  rather than another rate hike.
• The market doesn’t expect the Fed to hike anymore.

Australia:

• The
  RBA kept its cash rate unchanged as widely expected as they are
  seeing signs that the economy is indeed slowing and that will help to return
  inflation back to target.
• The
  data is supporting the RBA’s stance as the Australian jobs, wages and inflation data all missed expectations
  lately.
• The
  Australian PMIs also missed expectations remaining
  in contraction.
• The
  market expects the RBA to hold rates steady at the next meeting as well.

AUDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that today the
AUDUSD pair sold off as the Chinese Services PMI missed expectations by a big
margin. The RBA also seems to be done with their tightening cycle, so there’s
not much support for the AUD on the fundamentals side, while there’s support
for the USD as a safe haven currency. The pair is now at the previous lows, and
we might see a bounce as we await the US data next. The bearish trend
nonetheless remains intact and the target for the sellers is the 0.6168 level.

AUDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we’ve been
ranging between the 0.6370 support and the
0.6500 resistance. The last week it seemed like the pair could at least correct
into the 0.6616 level as China stepped up support for the economy and the US
data missed expectations, but fears of a bigger global slowdown are likely
prevailing. A break below the support should see more sellers piling in and
extend the drop into the 0.6168 level.

AUDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price is now overextended as depicted by the distance from the blue 8 moving average. In
such instances, we can see the price pulling back into the moving average or
consolidate before the next move. The buyers are likely to step in here with a
defined risk below the support to target the 0.66 handle. The sellers, on the
other hand, will want to see the price breaking lower to pile in even more and
target new lows.

Upcoming Events

This week is a bit empty on the data front with just the
US ISM Services PMI tomorrow and the US Jobless Claims on Thursday being the
main highlights. The market pricing is unlikely to change unless the data comes
in really hot in which case, we should see the US Dollar strengthening. On the
other hand, weaker readings might just bring forward rate cuts expectations and
weigh on the greenback in the short term.

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

US:

• The Fed hiked by 25 bps as
  expected and kept everything unchanged at the last meeting.
• Fed Chair Powell reaffirmed their data dependency
  and kept all the options on the table.
• Inflation measures
  since then showed further disinflation.
• The labour market
  displayed signs of softening although it remains fairly tight.
• Overall, the economic data started to surprise to
  the downside lately.
• The Fed members are leaning more towards a pause
  rather than another rate hike.
• The market doesn’t expect the Fed to hike anymore.

UK:

• The BoE hiked by 25 bps as expected at the last meeting.
• The central bank seems to be leaning
  more on the less hawkish side as a key line in the statement was tweaked to
  indicate the propensity for a “higher for longer” stance rather than keeping
  with additional rate hikes.
• Recent key economic data like the
  latest employment report showed even more wage growth
  despite the unemployment rate ticking higher again, and the UK CPI beat expectations pointing to stagflation.
• The UK PMIs missed expectations across the board with the
  Services sector plunging into contraction.
• The market expects the BoE to hike
  by 25 bps at the upcoming meeting.

GBPUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPUSD seems to
be bottoming out around the key support at
1.2593 level. The bias is still bearish though as the price has been printing
lower lows and lower highs and the moving averages are
crossed to the downside. Nevertheless, the buyers should be leaning on this
support with a defined risk below it to target the 1.3141 high. The sellers, on
other hand, are likely to lean again on the red 21 moving average to position
for a break below the support zone.

GBPUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price
recently got rejected from the downward trendline and a
previous swing level, but the buyers keep on defending the support zone. A
break above the trendline should open the door for more upside with the buyers
targeting the 1.28 resistance first and eventually a breakout.

GBPUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that GBPUSD
broke below the support again and set a new low. The sellers are firmly in
control, but the price is now overextended as depicted by the distance from the
blue 8 moving average. In such instances, we can generally see a pullback into
the moving average or some consolidation before the next move. If the price
pulls back into the previous swing low around the 1.2580 level, we can expect
the sellers to pile in with a defined risk above the level to target a new
lower low. The buyers, on the other hand, will need the price to break above
the last swing high around the 1.2640 to start positioning for more upside.

Upcoming Events

This week is a bit empty on the data front with just the
US ISM Services PMI tomorrow and the US Jobless Claims on Thursday being the
main highlights. The market pricing is unlikely to change unless the data comes
in really hot in which case, we should see the US Dollar strengthening. On the
other hand, weaker readings might just bring forward rate cuts expectations and
weigh on the greenback in the short term.

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

• Dollar loses a bit of ground in European morning trade
• US holiday won’t do markets much good today
• Central bank policy decisions in focus this week
• ICYMI: China president Xi is expected to skip upcoming G20 summit
• Eurozone September Sentix investor confidence -21.5 vs -20.0 expected
• Germany July trade balance €15.9 billion vs €18.0 billion expected
• Switzerland Q2 GDP 0.0% vs +0.1% q/q expected

Markets:

• GBP leads, JPY lags on the day
• European equities higher; S&P 500 futures up 0.1%
• Gold flat at $1,939.05
• WTI crude flat at $85.58
• Bitcoin up 0.5% to $25,875

It was a quiet one in Europe today as markets are also taking a bit of a light breather with it being a US and Canadian holiday.

The main story on Friday was a sudden rebound in Treasury yields and with the key market closed today, we’ll have to wait until tomorrow for further clues.

As such, major currencies could only rely on equities and the general risk mood for direction. A slight nudge higher in stocks in Europe is helping to see the dollar pinned a little lower but nothing too significant.

EUR/USD moved up from 1.0780 to 1.0800 while GBP/USD nudged up from 1.2610 to 1.2640 but both pairs are still holding below key technical levels that broke on Friday. The former is still below its 200-day moving average at 1.0817 while the latter is still below its 100-day moving average at 1.2650 currently.

There wasn’t much appetite elsewhere with USD/JPY keeping flattish after the turnaround on Friday, still above 146.00 today. With the Treasuries market out, there’s really not much to work with today.

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