Last
week, the US CPI came
basically in line with expectations, but the good news is that the Core M/M
reading once again printed at 0.2%. The less good news is that the US Initial Claims spiked
higher, but Continuing Claims remained solid. We have already seen Claims
spiking higher in the past months, so it shouldn’t be worrying yet. The
long-term inflation expectations in the University of Michigan report
ticked lower, so on the data side the soft-landing narrative was supported. The
US Dollar, nonetheless, appreciated across the board as the attention may have
turned already on the next data given the higher energy prices and China starting to stimulate more.

The RBNZ, on the other hand, kept its official cash
rate unchanged while stating that it will remain at the restrictive level for
the foreseeable future to ensure that inflation comes down back to target. The
recent New Zealand inflation and employment data surprised to the upside but
the PMIs are in contraction with the Services PMI yesterday plunging into
contraction. Overall, it’s a mixed picture for the RBNZ but should be enough to
keep rates steady.

NZDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that NZDUSD broke
below the last low at 0.5987 and this has opened the door for a fall towards
the 0.5514 level as there’s no strong support until
then. The bias remains clearly bearish as the price keeps printing lower lows
and lower highs and the moving averages remain
crossed to the downside.

NZDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price has
recently pulled back into the trendline and got
rejected as the sellers stepped in with a defined risk just above it. If we see
another pullback, we can expect the sellers to lean on the trendline again. In
fact, the buyers will need a break above the trendline to switch the bias to
the upside and get more conviction to target new higher highs.

NZDUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that at
the moment the price is consolidating just beneath the 0.5987 level as the
market is awaiting the economic data. A break to the upside should see the
buyers piling in and target the trendline, while a break lower should lead to
more bearish pressure.

Upcoming Events

This week is a
bit empty on the data front but we will still have some top tier economic data
and the RBNZ Policy Decision tomorrow. Today, we will see the latest US Retail
Sales report with strong data expected to support the USD while weak figures
likely to weigh on the greenback in the short-term. Tomorrow, the RBNZ is
expected to keep its policy rate unchanged, so the market will focus more on
clues on what’s next. On Thursday, we have the US Jobless Claims. A big miss in
Claims data should trigger some recessionary fears and send the market into
risk-off ultimately weighing on the NZD and supporting the USD. On the other
hand, strong data may even lead the market to expect the Fed to keep with its
hawkish stance and support the US Dollar as well.

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

The precious metal saw its worst weekly performance in seven last week and is keeping at that downside move so far this week. The slide comes amid higher bond yields which also is inadvertently propping up the dollar.

Given prevailing market sentiment, it is tough for gold to turn things around unless we also see bonds stop puking all over. If yields are going to keep stretching higher, gold prices are likely to be dragged further to the downside. And that comes despite the backdrop of major central banks starting to pivot away from tighter monetary policy.

From a technical perspective, the test of the 200-day moving average (blue line) now for gold is a crucial one. The level is seen at around $1,902.90 and a break below that as well as the $1,900 handle will set off alarm bells with a steeper drop impending.

The next key support will sit closer to the February to March lows just above $1,800. These were levels I previously highlighted in the linked post above and they are still holding true for now.

At some point, when recession signals light up and central banks are forced to move towards cutting rates, you would expect gold to flourish. That remains the key underlying factor for a more bullish structural proposition in gold but as always is the case, the bond market needs to attest to that first and foremost. And right now, that is certainly not the case yet.

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

Bonds are continuing to suffer a beating and it’s not looking pretty. This is not a market that is too sensitive on inflation at the moment and it seems to be more of a supply-demand reaction. This is something Bill Ackman pointed to when he made his short bet earlier this month here.

There was a mild pullback at the start of this month in 10-year yields back to the 4% mark but we are now seeing yields push up to 4.22% and that is the highest since November last year.

The Fitch credit ratings cut may also be a factor although I wouldn’t pin that as being a crucial one in this instance.

If you’re only going to have one chart to watch in trying to read broader market sentiment, I would say this is probably the best one.

In response to higher yields, we have seen the dollar find a stronger footing, equities start to come under a little more pressure, and in particular gold stumble all the way back to near $1,900 again.

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

Last
week, the US CPI came
basically in line with expectations, but the good news is that the Core M/M
reading once again printed at 0.2%. The less good news is that the US Initial Claims spiked
higher, but Continuing Claims remained solid. We have already seen Claims
spiking higher in the past months, so it shouldn’t be worrying yet. The
long-term inflation expectations in the University of Michigan report
ticked lower, so on the data side the soft-landing narrative was supported. The
US Dollar, nonetheless, appreciated across the board as the attention may have
turned already on the next data given the higher energy prices and China starting to stimulate more.

The RBA, on the other hand,
kept its cash rate unchanged with a slight tweak to a line in
the policy statement that suggests that they are leaning more on the dovish
side. The data has been mixed as the Australian Jobs report surprised again to the upside but
the Inflation report and the Wages data missed expectations. Nonetheless,
they will see more data before the next meeting and can make a better-informed decision.

AUDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that AUDUSD has
eventually reached the 0.6459 low and a break lower would open the door for a
fall towards the 0.6168 level. The buyers should step in here with a defined
risk below to target the 0.66 handle first and the 0.69 resistance upon a
break higher. The overall bias remains bearish though, so the sellers will look
at the pullbacks as opportunities to re-enter at better prices.

AUDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we have a divergence with the
MACD right at
the low. This is generally a sign of weakening momentum often followed by
pullbacks or reversals. In this case, we may see a pullback into the trendline where
the sellers are likely to step in to target a break below the low. The buyers,
on the other hand, will need the price to break above the trendline to gain
more conviction and target new higher highs.

AUDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
have also the Fibonacci levels for confluence near the trendline, so the
sellers will have more defined levels where to short from.

Upcoming Events

This week is a
bit empty on the data front but we will still have some top tier economic data.
Today, we will see the latest US Retail Sales report with strong data expected
to support the USD while weak figures likely to weigh on the greenback in the
short-term. On Thursday, we have the Australian Jobs report where we will see
if the data supports the RBA’s stance and then later in the day, we will see
the US Jobless Claims. A big miss in Claims data should trigger some
recessionary fears and send the market into risk-off ultimately weighing on the
AUD and supporting the USD. On the other hand, strong data may even lead the
market to expect the Fed to keep with its hawkish stance and support the US
Dollar as well.

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

• Dollar has the recipe for the next leg higher
• Pressure on the Chinese yuan is a tailwind for the dollar
• Stocks see a snap rebound on the session
• German economy ministry: Early indicators don’t yet point to sustainable economic recovery
• Germany July wholesale price index -0.2% vs -0.2% m/m prior
• SNB total sight deposits w.e. 11 August CHF 484.8 bn vs CHF 492.9 bn prior

Markets:

• USD mixed, little changed
• S&P 500 futures up 0.2%
• US 10-year yields down 1.8 bps to 4.150%
• Gold flat at $1,913.42
• WTI crude down 0.4% to $82.87
• Bitcoin down 0.1% to $29,359

The session started off with more of a defensive risk mood, after the equities selling in Asia. The Chinese yuan was also dumped and that put some light pressure on the aussie and kiwi currencies early on as well.

But as we got into European trading, there was a quick snap back higher in stocks and major currencies then settled to being little changed on the day across the board. After that, it has been a relatively quiet one – similar to the kind of lull that we saw last week.

The dollar is little changed in general but remains poised to claim the next upside leg, with USD/JPY teasing a push above 145.00 especially. EUR/USD is sitting just above its 100-day moving average of 1.0929, keeping at around 1.0930-40 levels mostly.

Meanwhile, AUD/USD is seeking a break lower to fresh lows for the year but is now keeping just under 0.6500 with the May low at 0.6458 still in focus. NZD/USD is already at its lowest levels this year, tracking below 0.6000 today but is little changed now after recovering from the earlier dip.

The overall mood in markets remain more tentative I would say and despite the dip buying equities, it needs reminding that this formula did not work in trading last week.

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

Last
week, the US CPI came
basically in line with expectations, but the good news is that the Core M/M
reading once again printed at 0.2% or 0.16% unrounded. The not so good news is
that the US Initial Claims spiked
higher coming at 248K vs. 230K expected, but Continuing Claims remained strong.
We have already seen Claims spiking higher in the past months, but the overall
picture remains positive for now. The long-term inflation expectations in the University of Michigan report
ticked lower, so on the data side the week was positive. Nonetheless, the
Nasdaq Composite finished the week negative and it’s hard to find a clear
reason other than a technical pullback or global growth worries.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq
Composite was diverging with the
MACD while
approaching the key 14649 resistance and this
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we are still in the pullback scenario as the price is
now at a key trendline where we
should expect the buyers stepping in and target the 14649 resistance. If the
price breaks lower, we might be in front of a reversal and the sellers are
likely to pile in aggressively to extend the selloff into the 13174 support.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price has
recently broke a key support level and extended the fall into the trendline.
The current momentum is undoubtedly bearish as we can also see from the price
printing lower lows and lower highs and the moving averages being
crossed to the downside. The next big move is likely to be decided here at the
trendline.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we
have another divergence with the MACD but this time it’s supporting the bullish
case. In fact, this might be an extra confirmation for the buyers that we are
about to see a bounce as the bearish momentum is waning. More conservative
buyers may want for the price to break above the top trendline of the channel
and the 13850 support turned
resistance.

Upcoming
Events

This week is a
bit empty on the data front and the lower summer liquidity might trigger false
moves. On Tuesday we will see the latest US Retail Sales report where the
market is likely to react positively in case of a beat and negatively in case
of a miss. The US Jobless Claims on Thursday is likely to be the main event of
the week as another big miss may cause recessionary fears and weaken the market
even more, while strong data should give the Nasdaq Composite some support.

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

After the opening hour in European trading, equities caught a bit of a pop higher. Since then, it has been relatively quiet with stocks just holding slightly higher while major currencies are doing a whole lot of nothing on the session. Dollar pairs are still sitting within 0.1% change of one another, just slugging along since earlier here.

That said, just be mindful that the greenback still has the potential to jump higher in trading this week: Dollar has the recipe for the next leg higher

Elsewhere, bonds are also showing little appetite so far today. 2-year Treasury yields are near unchanged at 4.890% while 10-year Treasury yields are down slightly by 1.5 bps to 4.153% currently. With little on the economic calendar today, the risk mood will be act as a key driver on trading sentiment alongside the dollar technicals above.

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

Last
week, the US CPI came
basically in line with expectations, but the good news is that the Core M/M
reading once again printed at 0.2% or 0.16% unrounded. The not so good news is
that the US Initial Claims spiked
higher coming at 248K vs. 230K expected, but Continuing Claims remained strong.
We have already seen Claims spiking higher in the past months, but the overall
picture remains positive for now. The long-term inflation expectations in the University of Michigan report
ticked lower, so on the data side the week was positive. Overall, we should
have seen Gold rally with such data as the market priced out further rate hikes
expectations and some Fed members even started to talk about rate cuts in early
2024.

Gold Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the selloff
from the 1984 resistance extended
past the key 1934 support and the sellers are now eyeing the 1893 low. A break
below the low would open the door for a big fall into the 1805 swing low.

Gold Technical Analysis – 4
hour Timeframe

On the 4 hour chart, we can see that the price is diverging with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. The buyers can either wait for the price to reach the 1893 low to
step in with a tight risk and target the 1984 resistance or wait for a break
above the trendline to
confirm the reversal and ride the bullish wave.

Gold Technical Analysis – 1
hour Timeframe

On the 1 hour chart, we can see that we
have what looks like a falling wedge, which
is generally a reversal pattern. The price will need to break above the
trendline and the 1921 swing high to confirm the reversal though and give the
buyers more conviction for further upside. The sellers, on the other hand, are
likely to pile in at the trendline to target the 1893 low and ultimately a
break lower.

Upcoming Events

This week is a
bit empty on the data front, but we will have two key economic releases,
nonetheless. Tomorrow, we will see the latest US Retail Sales report and we can
expect gold to rally in case we see a miss and fall in case we see a beat. On
Thursday, we will have the US Jobless Claims data release. This is likely to be
the main report of the week as the market remains sensitive to the labour
market data. If we see a miss, Gold is likely to rally as the market will price
out even more the chances of further hikes, but if we see a beat, we should see
the precious metal falling further.

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

We were poised for a bit more of a risk-off mood to start European morning trade but a sudden recovery in stocks is changing that picture now on the session. As seen here, there was a sharp rebound in equities with US futures turning around as tech shares jump up. The gains now are more measured with S&P 500 futures up 0.2% and Nasdaq futures up 0.4% but that is much better than the dour mood from Asia trading at least. That in turn has seen the aussie and kiwi recover with dollar pairs now keeping little changed on the day:

AUD/USD was down around 0.6460 levels in the handover from Asia to Europe but is now trading just under 0.6500 and NZD/USD has even pared losses from 0.5955 to near 0.5990 on the day.

Besides that, dollar pairs remain more tentative but the bulls are still in a position to make use of this recipe for the next leg higher.

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

UPCOMING EVENTS:

• Tuesday:
  PBoC MLF, Australia Wage Price Index, China Industrial Production, UK Jobs
  Report, German ZEW, US Retail Sales, Canada CPI, NAHB Housing Market Index.
• Wednesday:
  RBNZ Policy Decision, UK CPI, FOMC Meeting Minutes.
• Thursday:
  Australia Jobs Report, US Jobless Claims.
• Friday:
  Japan CPI, UK Retail Sales.

Tuesday

The PBoC is expected to keep the MLF rate
unchanged. Chinese authorities recently promised more policy support though
and that included RRR cuts, OMO, and rate cuts from the PBoC. The Chinese
economic data has been ugly, and the country recently slipped into deflation,
so it’s common sense to expect more support. The other side of the coin is that
more stimuli would pressure the yuan further and we’ve seen how they
dislike this as they’ve been constantly intervening to stem the depreciation.

Wages data is something the central
banks are watching closely lately as they look for
signs of wage-price spiral. The Australian Wage Price Index for Q2 Y/Y is
expected at 3.8% vs. 3.7% prior, while the Q/Q reading is seen at 1.0% vs. 0.8%
prior.

The UK Unemployment Rate is expected to
remain steady at 4.0%. The focus should be on the wages data (barring
a big jump in the unemployment rate) with the Average Earnings ex-Bonus
expected at 7.4% vs. 7.3% prior and Average Earnings + Bonus seen at 7.3% vs.
6.9% prior.

The US Retail Sales M/M are expected to
rise 0.4% vs. 0.2% prior, while the Y/Y reading is seen at 1.5% vs. 1.49%
prior. The Control Group is seen as a better gauge of consumer spending so
this is the number that will likely matter the most. There’s no consensus
at the moment but the prior release saw a 0.6% increase.

The Canadian CPI Y/Y is expected to ease
to 2.7% vs. 2.8% prior. The BoC is more focused on the underlying inflation
data but given the recent weakness in retail sales and the uptrend in the
unemployment rate (although wage
growth jumped), the central bank is likely to respond with a hike only
if the data beats. The Common CPI Y/Y is expected at 4.7% vs. 5.1% prior; the
Trimmed Mean CPI Y/Y is seen at 3.4% vs. 3.7% prior and the Median CPI Y/Y is
expected at 3.7% vs. 3.9% prior. As a reminder, the BoC target range is 1-3%.

Wednesday

The RBNZ is expected to keep the OCR
unchanged as the central bank paused its tightening cycle to see how things
evolve. The data has been mixed so far but inflation and wage growth eased
further with the unemployment rate also ticking higher. Overall, it should
be enough for them to keep rates steady at this meeting as well.

The UK CPI Y/Y is expected at 6.8% vs.
7.9% prior, while the M/M reading is seen at -0.5% vs. 0.1% prior. The Core CPI
Y/Y is expected at 6.8% vs. 6.9% prior, while the M/M figure is seen at 0.3%
vs. 0.2% prior. As a reminder, the BoE is expected to hike again by 25 bps at
the September meeting.

Thursday

The Australian Jobs Report is expected to
show 21.5K jobs added vs. 32.6K prior with the Unemployment and Participation
Rates remaining steady at 3.5% and 66.8% respectively.

The US Jobless Claims remain a key
labour market data and a big market mover.
Initial Claims are expected at 240K vs. 248K prior, while Continuing Claims are
seen at 1700K vs. 1684K prior.

Friday

The Japanese CPI Y/Y is expected to ease
to 2.5% vs. 3.3% prior with the Core CPI Y/Y also seen cooling to 3.1% vs. 3.3%
prior. There’s no forecast for the Core-core reading at the moment, but the
prior figure showed a 4.2% increase. As a reminder, the Tokyo
CPI, which is seen as a leading indicator for nationwide inflation, beat
expectations across the board with the Core-core reading rising to 4.0% vs.
3.7% expected and 3.8% prior.

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