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European Monetary Union CFTC EUR NC Net Positions climbed from previous ?26.3K to ?27.8K
United States CFTC S&P 500 NC Net Positions dipped from previous $-28.4Kto $-35.8K
United Kingdom CFTC GBP NC Net Positions: 4.8K vs -24.5K
United States CFTC Oil NC Net Positions increased to 355.1K from previous 349.2K
Japan CFTC JPY NC Net Positions up to -60.3K from previous -62.3K
Australia CFTC AUD NC Net Positions dipped from previous $-70.5Kto $-83.4K
United States CFTC Gold NC Net Positions climbed from previous $206K to $207.8K
During the European session, the AUD/USD reached a peak of 0.7321. However, as market sentiment deteriorated and American traders got to their desks,
  • AUD/USD prints a fresh three-week low at 0.7262.
  • Downbeat market sentiment boosts the demand for US dollars.
  • AUD/USD awaits the FOMC meeting to resume its direction.

During the European session, the AUD/USD reached a peak of 0.7321. However, as market sentiment deteriorated and American traders got to their desks, the AUD/USD dipped below 0.7300, pushing the pair to a three-week low at 0.7262. The AUD/USD is trading at 0.7284 at the time of writing, down 0.05% on the day.

US stocks fall while the greenback rises, underpinned by higher bond yields

In the New York session, US stock indexes are posting losses between 0.32% and 1.21%. The US Dollar Index is on the right foot, rising 0.41% on the day, currently at 93.24, underpinned by higher yields. The 10-year benchmark rate is at 1.368%, up to three basis points.

In the US economic docket, the Consumer Sentiment of the University of Michigan was released. The sentiment improved to 71.0 in September but remained below the 72.2 expected. The Delta strain has dampened the consumer sentiment, lowering the economic forecasts for the third quarter as economic activity slowed down.

The week ahead: FOMC Meeting and RBA Minutes

The Federal Open Market Committee will hold its September meeting. A lousy employment report and moderate inflationary pressures could delay bond taper announcement until November’s meeting. Contrarily, rising PPI and a stellar Retail Sales report could potentially prompt the Fed to take action at the following week’s meeting.  

Meanwhile, the Reserve Bank of Australia will reveal the minutes of their last meeting on September 21.

AUD/USD Price Forecast: Technical outlook

The AUD/USD pair is trading well below its main daily moving averages in the daily chart, suggesting that sellers are in charge. The first support level would be 0.7200. In case of a break below the latter, the next demand area would be the 2021 low at 0.7100. A breach of that level could motivate sellers to push the price towards the psychological 0.7000.

On the other hand, buyers would need to push the price  towards the 50-day moving average at 0.7342 to reclaim control.

The Relative Strength Index is at 41.18, heading lower, supporting the bearish bias.

KEY TECHNICAL LEVELS TO WATCH

 

EUR/USD keeps sliding for the second day in a row, exchanging hands at 1.1728 down 0.30% on the day at the time of writing. After a stellar US Retail
  • EUR/USD reaches a three-week low at 1.2724.
  • Market sentiment weighs on the EUR/USD as flows flew to the safe-haven USD.
  • The US Dollar Index rises above 93.00 despite weak US consumer sentiment data.

EUR/USD keeps sliding for the second day in a row, exchanging hands at 1.1728 down 0.30% on the day at the time of writing. After a stellar US Retail Sales report on Thursday, the EUR/USD pair is trading at three-week lows, on broad US dollar strength. 

The US Dollar Index (DXY) is at three-week highs

The market mood is in risk-off mode, with US stock indices sliding between 0.26% and 1.19% and bond yields rising. The US 10-year benchmark rate is at 1.368%, up almost four basis points on Friday, underpinning the greenback. The US Dollar Index is up 0.33%, sitting at 93.17.

During the European session, the Eurozone Core Consumer Price Index (YoY) rose by 1.6%, in line with expectations. Meanwhile, the Core CPI for August (MoM) edged higher 0.3% as foreseen.

Across the pond, the US University of Michigan Consumer Sentiment increased slightly to 71 in September versus 70.3 in the previous month, although it was worse than the 72.2 expected. The report attributed the declines to higher prices, as consumers expect the inflation rate to rise 4.7%, matching the highest since 2008.

Investors’ focus turns to next week events. The Federal Open Market Committee will discuss monetary policy issues, being the QE reduction the spotlight of the statement.

Key technical levels to watch

 

USD/CAD is gaining ground in the session, up 0.45%, trading at 1.2739 at the time of writing. The market sentiment remains downbeat, as US stock index
  • USD/CAD prints a new weekly high at 1.2763.
  • The market sentiment remains downbeat, with the S&P 500 trading below the 50-DMA.
  • WTI is falling in the session by 1.27%, dragging the loonie with it.
  • Federal Election in Canada to take place on September 20.

USD/CAD is gaining ground in the session, up 0.45%, trading at 1.2739 at the time of writing. The market sentiment remains downbeat, as US stock indexes post losses caused by expiring options on Friday. The S&P 500 has broken below the 50-day moving average, risking the “buying the dip” narrative.

Additionally, oil prices that strongly correlate with the Canadian dollar are falling for the second straight day, with the WTI trading at $72.12, down 0.55%.

US Consumer Sentiment worse than expected

In the US economic docket, the University of Michigan Consumer Sentiment edged up to 71.0, still worse than the 72.2 expected by economists. The USD/CAD reaction to that headline was muted, while investors’ focus turned to next week’s Federal Open Market Committee meeting on September 21-22.

Meanwhile, in Canada, the Federal Election to take place on September 20 could spur some choppiness in the USD/CAD while the market awaits its results.

USD/CAD Price Forecast: Technical outlook

In the daily chart, the USD/CAD is trading at 1.2728. Even though the pair reached a weekly high, it unsuccessfully tested the September 8 high at 1.2762, retracing almost 40 pips afterwards. The first resistance on the upside would be the mentioned high at 1.2762. In case of a sustained break of that level, the following supply area, would be 1.2800.

On the flip side, failure at 1.2762 could pave the way for further losses. The first support would be 1.2700. In case of a break of that level, the USD/CAD could tumble to 1.2600.

The Relative Strength Index is at 58.34, aiming higher, supporting the uptrend, but macroeconomic developments should keep bulls cautious.

Technical levels to watch

 

United States Baker Hughes US Oil Rig Count climbed from previous 401 to 411
Previewing next week's FOMC policy meeting, TD Securities analysts said that they expect policymakers to note that they are "almost ready to taper." K

Previewing next week's FOMC policy meeting, TD Securities analysts said that they expect policymakers to note that they are "almost ready to taper."

Key quotes

"We expect a formal announcement in December, not November, but will reassess after the meeting. While median 2022-23 dot-plot projections will likely be unchanged, the math makes any changes more likely to be up than down. Median inflation/growth projections for 2021 will have to be raised/cut."

"While we think the FX reaction should be contained, the balance of risks leans towards a more hawkish outcome especially given the low bar to shift the median dot-plot higher. From a risk/reward perspective, that favors some modest USD upside and a challenge for the traditional funders."

"Due to its widespread use outside the borders of the US, the fundamentals of the USD are far more complex than that of any other currency," note Rabo

"Due to its widespread use outside the borders of the US, the fundamentals of the USD are far more complex than that of any other currency," note Rabobank analysts. 

Key quotes

"Heavy use of the USD as an invoicing currency worldwide means that it continues to dominate the global payments system.  According to the BIS, at least half of cross-border transactions are invoiced in the USD.  This accounts for the fact that while the US’ share of global trade has dropped in recent decades, the USD has retained its dominant position as a reserve currency, making up around 66% of the total."

"In emerging markets, the appeal of the USD has translated into a steady increase in the amount of USD denominated debt, with issuance levels maintained through 2020.   Additionally, many households in emerging markets hoard dollars as protection against volatile local currencies."

"Estimates from the Fed suggest that around 60% of all US banknotes in circulation are held outside the US.  In this instance, the greenback acts more like an asset than a currency with its value a function of the sheer depth and liquidity of USD markets.  These examples underpin our view that, unlike other currencies, the outlook for the USD is driven more by its own fundamentals than those of its issuing country.  This perception remains central to our forecasts for the USD and contributes to our view that the greenback is set to remain on the front foot in the coming months." 

After plunging to its lowest level since 2011 in August, consumer sentiment improved only modestly in early September to 71.0 from 70.3 previously, ex

After plunging to its lowest level since 2011 in August, consumer sentiment improved only modestly in early September to 71.0 from 70.3 previously, explained analysts at Wells Fargo. According to them, consumers remain downbeat about current conditions. 

Key Quotes: 

“Consumer sentiment measured by the University of Michigan suggests consumers are more downbeat today than when the pandemic first struck last year. The preliminary read on consumer sentiment for September showed only a modest improvement to 71.0 in early September, which is still lower than at any point during the pandemic and a worrying indication for the outlook for the consumer.”

“Despite worries over higher prices, consumers overall views of household finances improved in September, which is particularly encouraging given the expiration of enhanced unemployment benefits at the start of the month and dwindling fiscal support more broadly.”

“Today's report is clear: consumers remain more downbeat that just a few months ago, which is consistent with weaker spending. Retail sales came in higher than expected in August, but that data largely covers the goods sector and is in nominal dollars, or not adjusted for changes in prices. We believe households remain in solid financial shape given the accumulated savings over the past year and increase in net worth across income cohorts, but the rapid rise in consumer prices and the surge in case counts associated with the virus are likely weighing on near-term spending.”

The critical event for markets next week will be the Federal Reserve meeting. According to National Bank of Canada analysts, the meeting may prove une

The critical event for markets next week will be the Federal Reserve meeting. According to National Bank of Canada analysts, the meeting may prove unextraordinary. They do not expect the Fed to announce formally a reduction of the purchase program, but they see tapering later this year. 

Key Quotes:

“In the U.S., the key focus of next week will be the Federal Reserve’s meeting, though it may prove unextraordinary. After what was a disappointing August jobs report, it’s unlikely we’ll see the Fed formally announce the tapering of its outsized asset purchases. We do, however, still see that occurring this year, so we’ll be closely following Powell’s press conference for clues on the exact timing.”

“While an official announcement isn’t expected to be in the cards, look for the Fed chair to continue to pre-emptively break down any perceived links between the timing of the taper and rate hikes. On inflation, we expect the transitory narrative to be prevalent once again, both in the statement and press conference. Finally, the statement will also be released alongside a fresh Summary of Economic Projections. While June’s SEP saw growth projections upgraded and rate hikes moved into 2022, we don’t expect the same momentum this month.”
 

The key event next week will be the FOMC meeting. Analysts at MUFG Bank, consider Fed Chair Jerome Powell is set to reiterate the gradual approach of

The key event next week will be the FOMC meeting. Analysts at MUFG Bank, consider Fed Chair Jerome Powell is set to reiterate the gradual approach of QE tapering and on interest rate hikes.

Key Quotes:

“The US dollar strengthened notably yesterday with risk appetite weak fuelled by the ongoing concerns over the impact on growth from supply-constraints and the continued regulatory crackdown in China and renewed default concerns following the trading suspension of Evergrande bonds yesterday. The fragile risk conditions look to certainly be a validation of the caution communicated by Fed Chair Powell at Jackson Hole over the commencement of QE tapering. We expect Chair Powell to repeat that if the “economy evolved broadly as anticipated, it could be appropriate to start reducing the pace of asset purchases this year”.”

“Our FX correlation analysis confirms that the US dollar is becoming more sensitive to rate moves at the short-end of the curve. Short-term rates jumped in June after the FOMC meeting then saw the DOTs surprise to the upside. We don’t expect a repeat of that next week. A repeat of the June profile with a similar pace for 2024 as 2023 would be a relief to the market and likely see some modest USD depreciation. The DOTs confirming a median hike in 2022 would illicit the biggest FX reaction with DXY likely to trade back above the 93.000 level. A 2022 median DOT would clearly undermine Powell’s attempts to break any link between tapering and rate hikes.”

“Assuming a 2022 median rate hike is not revealed, we would expect FX reaction to be relatively contained next week.”
 

Gold struggled to preserve its intraday gains and dropped to the lower end of the daily trading range during the early North American session. The US
  • A combination of factors failed to assist gold to capitalize on its modest intraday gains.
  • Hawkish Fed expectations, rising US bond yields acted as a headwind for the commodity.
  • COVID-19 woes, softer USD did little to impress bulls or provide any impetus to the metal.
  • Gold Price Forecast: XAU/USD bears seize control as focus shifts to FOMC meeting

Update: Following Thursday's sharp decline, the XAU/USD pair managed to stage a rebound in the first half of the day on Friday. After climbing to a daily high of $1,767, however, gold lost its traction in the early American trading hours and dropped below $1,750 amid renewed USD strength. Nevertheless, the risk-averse market environment, as reflected by a 0.9% decline in the S&P 500 Index, seems to be helping the precious metal find demand as safe haven and limit its losses. As of writing, XAU/USD was virtually unchanged on the day at $1,754 but was down 1.9% for the week. 

Gold struggled to preserve its intraday gains and dropped to the lower end of the daily trading range during the early North American session. The US dollar witnessed a modest pullback from three-week tops touched on Thursday, which was seen as a key factor that extended some support to the dollar-denominated commodity. However, renewed speculations about an earlier policy tightening by the Fed acted as a tailwind for the greenback. This, in turn, kept a lid on any further gains for the non-yielding yellow metal, rather prompted some fresh selling near the $1,767-68 region.

Thursday's upbeat US Retail Sales data underscored consumer confidence and pointed to the continuation of economic recovery. Investors now seem convinced that the Fed would eventually begin rolling back its massive pandemic-era stimulus later this year. This was reinforced by a fresh leg up in the US Treasury bond yields, which further underpinned the greenback. In fact, the yield on the benchmark 10-year US government bond climbed back to the 1.35% threshold. Hence, the next most important event for gold prices will be the FOMC monetary policy meeting on September 20-21.

Meanwhile, firming expectations for an imminent Fed taper announcement, along with persistent worried about the Delta variant and a global economic slowdown weighed on investors' sentiment. This was evident from the prevalent cautious mood around the equity markets. This might turn out to be the only factor that could help limit any deeper losses for the safe-haven gold, at least for the time being. Market participants now look forward to the release of the Michigan Consumer Sentiment Index for some short-term trading opportunities on the last day of the week.

Technical outlook

The overnight slump below strong horizontal support near the $1,780 shifted the near-term bias back in favour of bearish traders. The emergence of fresh selling on Friday adds credence to the negative outlook and supports prospects for further losses. Moreover, technical indicators on the daily chart have been drifting lower and are still far from being in the oversold territory. Hence, a subsequent decline towards the next relevant support, around the $1,729-27 region, remains a distinct possibility. The downward trajectory could further get extended and drag gold back towards challenging the $1,700 round-figure mark.

On the flip side, the daily swing highs, around the $1,767-68 region now seems to act as an immediate resistance ahead of the $1,772-74 region. Any further recovery would be seen as a selling opportunity near the $1,780 support breakpoint. That said, some follow-through buying might trigger a short-covering move and allow gold to aim back to reclaim the $1,800 mark. This is closely followed by the very important 200-day SMA, around the $1,808-10 region, which should cap the upside for the XAU/USD.

fxsoriginal

GBP/USD is sliding in the American session to new weekly lows, trading at 1.3754, down 0.26% at the time of writing. As we approach the London Fix and
  • GBP/USD prints a new weekly low at 1.3745.
  • Awful UK’s Retail Sales report fails to boost the British pound.
  • The greenback strengthened despite a fall in Consumer Sentiment.

GBP/USD is sliding in the American session to new weekly lows, trading at 1.3754, down 0.26% at the time of writing. As we approach the London Fix and head into the weekend, we could expect some downward pressure on the back of the dampened market sentiment. 

The market sentiment is downbeat. US stocks are losing ground, following the European trend, and bond yields rise as investors turn cautious on the global economic recovery amid worries about the Delta strain and risks from China.

UK Retail Sales disappoint the market

During the European session, the Office for National Statistics reported that Retail Sales shrank 0.9% in August, worse than the 2.5% gain (YoY) foreseen by economists. This negative data adds to concerns about economic recovery, albeit sales volumes remain above pre-pandemic levels.

Across the pond, the University of Michigan Consumer Sentiment rose to 71 in September, a tick lower than the 72.2 expected by analysts. Digging a little deeper on the report, buying conditions for homes, household durables, and vehicles fell. The report said that the declines were attributable to high prices. Consumers expect inflation to rise 4.7% in 2022.

Commenting on the data, Richard Curtin, Surveys of Consumers chief economist noted, "the steep August falloff in consumer sentiment ended in early September, but the small gain still meant that consumers expected the least favorable economic prospects in more than a decade."

Heading into the next week, the Federal Open Market Committee will meet to discuss monetary policy on September 21-22, followed by the Bank of England on September 23. 

Technical levels to watch

 

Fear has gripped markets ? the Federal Reserve may still go ahead with tapering of its bond-buying scheme and China's Evergrande is in deep financial
  • XAU/USD has tumbled down as dollar demand triggers selling.
  • The Confluence Detector is showing gold has critical support at $1,744.
  • Gold Price Forecast: XAU/USD bears seize control as focus shifts to FOMC meeting

Fear has gripped markets – the Federal Reserve may still go ahead with tapering of its bond-buying scheme and China's Evergrande is in deep financial trouble, The second-largest real-estate firm in the second-largest economy seems to be on the brink of missing a debt payment or even bankruptcy.

In turn, stock markets are under pressure and the safe-haven dollar is in demand. Moreover, US returns on 10-year Treasuries are on the rise, making yieldless gold less attractive. How is the precious metal positioned? 

The Technical Confluences Detector is showing that XAU/USD has weak support at $1,746, which is the convergence of the Bollinger Band 4h-Lower and the previous day's low. 

The critical line in the sand for the yellow metal is $1,743, which is where the all-important Fibonacci 38.2% one-month hits the price. 

Looking up, two resistance lines are eyed. First, $1,758 is the confluence of the Fibonacci 23.6% one-day, the Simple Moving Average 100-15m and the BB 1h-Middle. 

The second line is $1,765, which is the meeting point of the Fibonacci 38.2% one day and the BB 1h-Upper. 

XAU/USD resistance and support levels

Confluence Detector

The Confluence Detector finds exciting opportunities using Technical Confluences. The TC is a tool to locate and point out those price levels where there is a congestion of indicators, moving averages, Fibonacci levels, Pivot Points, etc. Knowing where these congestion points are located is very useful for the trader, and can be used as a basis for different strategies.

Learn more about Technical Confluence

 

Colombia Trade Balance: $-1.209M (July) vs $-1.559M
The USD/JPY pair continued to push higher in the early American session and reached a daily top of 110.07. However, the pair struggled to preserve its
  • USD/JPY rose to a daily high of 110.07 in early American session.
  • 10-year US T-bond yield is up more than 2%.
  • Wall Street's main indexes are suffering heavy losses.

The USD/JPY pair continued to push higher in the early American session and reached a daily top of 110.07. However, the pair struggled to preserve its bullish momentum and was last seen trading at 109.95, where it was still up 0.25% on the day. On a weekly basis, the pair remains on track to close virtually unchanged for the fifth straight time.

Safe haven flows help JPY find demand

The broad-based USD strength and rising US T-bond yields fueled USD/JPY upside on Friday. The US Dollar Index is currently trading at its strongest level since late August at 93.13 and the benchmark 10-year US T-bond yield is up 3% at 1.379%.

Nevertheless, the risk-averse market environment, as reflected by the sharp decline witnessed in Wall Street's main indexes, is helping the JPY show some resilience against the USD. Currently, the Nasdaq Composite and the S&P 500 indexes are down 1% and 0.75%, respectively.

Earlier in the day, the data from the US revealed that the University of Michigan's Consumer Sentiment Index improved modestly to 71 in September from 70.3 in August. This reading missed the market expectation of 72.2 but failed to trigger a noticeable market reaction.

Technical levels to watch for

 

The AUD/USD dropped further and is trading at 0.7265, the lowest level in three weeks. The aussie is about to post the second weekly loss in a row ami
  • Greenback gains momentum amid higher yields and risk aversion. 
  • AUD/USD heads for second weekly decline in a row. 

The AUD/USD dropped further and is trading at 0.7265, the lowest level in three weeks. The aussie is about to post the second weekly loss in a row amid a stronger US dollar. 

The breakout of the US 10-year yield above 1.35% boosted the greenback across the board. The DXY is at 93.15, up 0.31%, at the highest level since August 27. The modestly lower than expected reading of UoM Consumer Confidence did not weakened the dollar. At the same time, equity prices in Wall Street are falling. The risk aversion weighs on the aussie. The Dow Jones falls 0.52% and the Nasdaq 0.80%. 

Week ahead: FOCM and RBA minutes 

Market volatility will likely continue next week with the FOMC meeting. The Federal Reserve is expected to keep monetary policy unchanged; analysts will look for clues about the future of the QE program. 

According to analysts at TD Securities, Fed’s officials will likely signal that they are almost ready to taper the purchase program. “We expect a formal announcement in December, not November, but we will review our forecast after the meeting. While median 2022-23 dot-plot projections will likely be unchanged, the math makes any changes much more likely to be up than down. The 2024 dot plot will likely show further, gradual tightening. Median inflation/growth projections for 2021 will have to be raised/cut.”

In Australia, the key report will be the Reserve Bank of Australia minutes. “Governor Lowe laid out the case for the RBA's Sep taper decision in his recent speech, but we think the minutes could showcase a debate among the Board on other G10 CBs' future monetary policy settings and its implications for RBA's QE path. Discussion over housing could be more prominent and if bank lending is indeed being "maintained" even as the property market runs red-hot”, argue analysts at TDS. 

Technical levels

 

The Canadian dollar has likely discounted some degree of political uncertainty. Economists at ING think a workable majority should ultimately be the k

The Canadian dollar has likely discounted some degree of political uncertainty. Economists at ING think a workable majority should ultimately be the key to allow the loonie to benefit from good fundamentals

A workable majority is what matters the most for CAD

“The best-case scenario for CAD is undoubtedly a majority win by either one of the two parties, but that seems to be a low-probability outcome if the latest polls are to be trusted. The most likely scenario of either the Liberals or the Conservatives winning most seats but having to rely on other parties (either on a case-by-case basis like the latest government, or through coalition deals) to govern may ultimately have a quite contained impact on CAD.”

“A minority win would pave the way for a potential hung parliament. We should know more on Tuesday, as post-election comments start to outline the different possible political scenarios, but from an FX point of view, we think that any political-noise risk premium embedded in CAD may remain in place until a clear working majority materialises.”

“The latest data (labour market and inflation) have all but confirmed the view that the Bank of Canada will have to step in with another round of tapering in October, which should leave it on track to fully unwind QE by year-end, or by early-2022. The set of good fundamentals should provide some sustained support to CAD into year-end, and we expect USD/CAD to trade consistently below 1.25 in 4Q21.”

 

Consumer confidence in the US improved modestly in September with the University of Michigan's Consumer Sentiment Index rising to 71 (September) from
  • UoM Consumer Sentiment Index edged slightly higher in early September.
  • US Dollar Index stays in the positive territory near 93.00.

Consumer confidence in the US improved modestly in September with the University of Michigan's Consumer Sentiment Index rising to 71 (September) from 70.3 in August. This reading came in slightly weaker than the market expectation of 72.2.

Further details of the publication revealed that the Current Conditions Index declined to 771. from 78.5 and the Consumer Expectations Index edged higher to 67.1 from 65.1.

Commenting on the data, "the steep August falloff in consumer sentiment ended in early September, but the small gain still meant that consumers expected the least favorable economic prospects in more than a decade," noted Richard Curtin, Surveys of Consumers chief economist. 

Market reaction

This report doesn't seem to be having a significant impact on the greenback's performance against its rivals. As of writing, the US Dollar Index was up 0.14% on the day at 92.99.

United States Michigan Consumer Sentiment Index came in at 71 below forecasts (72.2) in September
After hitting fresh daily tops in the 1.1780 region, sellers return to the market and now drag EUR/USD back to the negative territory. EUR/USD looks t
  • EUR/USD fades initials gains to the 1.1780 area.
  • The dollar regains upside traction along with yields.
  • Flash US Consumer Sentiment comes up next in the docket.

After hitting fresh daily tops in the 1.1780 region, sellers return to the market and now drag EUR/USD back to the negative territory.

EUR/USD looks to USD, bonds

EUR/USD now adds to Thursday’s deep pullback to fresh monthly lows in the mid-1.1700s and reverses the initial optimism in response to the bounce in the dollar and US yields.

Actually, yields of the US 10-year reference note come back to life and flirt with the key 200-day SMA around 1.37%, while the buck follows suit and pushes the US Dollar Index (DXY) closer to the key barrier at 93.00 the figure.

Earlier in the euro calendar, the EMU’s Current Account surplus improved to €30.2B in July and final inflation figures in the broader euro zone matched the preliminary readings in August: up 0.4% MoM and 3.0% YoY. In addition, the Core CPI rose 1.6% over the last twelve months.

Later in the US docket, the preliminary results from the Consumer Sentiment is expected to grab all the attention.

EUR/USD levels to watch

So far, spot is losing 0.06% at 1.1757 and faces the next up barrier at 1.1798 (55-day SMA) followed by 1.1845 (weekly high Sep.14) and finally 1.1909 (monthly high Sep.3). On the other hand, a break below 1.1750 (monthly low Sep.16) would target 1.1704 (monthly low Mar.31) en route to 1.1663 (2021 low Aug.20).

The USD/CAD pair managed to rebound around 35-40 pips from daily lows and was last seen trading in the neutral territory, around the 1.2675 region dur
  • A combination of factors assisted USD/CAD to attract some dip-buying on Friday.
  • Hawkish Fed expectations, rallying US bond yields acted as a tailwind for the USD.
  • Weaker oil prices undermined the loonie and remained supportive of the move up.

The USD/CAD pair managed to rebound around 35-40 pips from daily lows and was last seen trading in the neutral territory, around the 1.2675 region during the early North American session.

Expectations for an imminent Fed taper announcement, along with a softer risk tone helped revive demand for the safe-haven US dollar. Apart from this, sliding oil prices undermined the commodity-linked loonie and assisted the USD/CAD pair to attract some dip-buying on Friday.

Looking at the broader picture, the pair has been oscillating in a familiar trading range over the past one week or so. This constituted the formation of a rectangle on short-term charts and points to indecision among traders, warranting caution before placing aggressive directional bets.

Meanwhile, technical indicators on the daily chart maintained their bullish bias and have been gaining some positive traction on hourly charts. This, in turn, supports prospects for an eventual breakout to the upside amid the prevalent bullish sentiment surrounding the greenback.

That said, it will still be prudent to wait for a sustained move beyond the 1.2700 round figure before positioning for any further appreciating move. The USD/CAD pair might then aim to surpass monthly swing highs, around the 1.2760-65 region, and aim to reclaim the 1.2800 mark.

On the flip side, the lower boundary of the mentioned trading range, around the 1.2615-10 area, coincides with the 200-period SMA on the 4-hour chart. This should act as a strong base for the USD/CAD pair, which if broken decisively might prompt some technical selling.

The next relevant support is pegged near the 1.2600-1.2590 region. A convincing break below has the potential to drag the USD/CAD pair further towards the very important 200-day SMA, currently around the 1.2520 region, en-route the key 1.2500 psychological mark.

USD/CAD 4-hour chart

fxsoriginal

Technical levels to watch

 

Major equity indexes in the US started the last day of the week in the negative territory. As of writing, the S&P 500 was down 0.1% at 4,470, the Dow
  • Wall Street's main indexes opened modestly lower on Friday.
  • Technology shares remain on the back foot after the opening bell.
  • Investors await UoM's September Consumer Sentiment Index data.

Major equity indexes in the US started the last day of the week in the negative territory. As of writing, the S&P 500 was down 0.1% at 4,470, the Dow Jones Industrial Average was posting small losses at 34,748 and the Nasdaq Composite was falling 0.2% at 15,150.

Later in the session, the University of Michigan (UoM) will release the preliminary Consumer Sentiment Index data for September. Meanwhile, the market volatility is expected to increase toward the end of the session due to the so-called "quadruple witching."

 Among the 11 major S&P 500 sectors, the Technology Index is down 0.72% as the biggest decliner after the opening bell. On the other hand, the Energy Index is rising 0.65% despite the modest losses witnessed in crude oil prices.

S&P 500 chart (daily)

India FX Reserves, USD fell from previous $642.45B to $641.113B in September 10
Prices of the WTI gives away further ground and retest the area below the $72.00 mark per barrel on Friday. WTI now looks to the $74.00 mark Crude oil
  • WTI corrects lower and breaches the $72.00 yardstick on Friday.
  • The dollar looks unchanged near recent tops.
  • Crude oil keeps targeting the $74.00 mark and above.

Prices of the WTI gives away further ground and retest the area below the $72.00 mark per barrel on Friday.

WTI now looks to the $74.00 mark

Crude oil prices trade on the defensive as traders cash up part of the recent strong gains and the dollar returns to the area of recent peaks when gauged by the US Dollar Index.

The sharp rally in the West Texas Intermediate, in the meantime, has been fueled by prospects of higher demand in the next year by both the EIA and the IEA in past sessions in combination with supply concerns stemming from the pass of Hurricane Ida.

Collaborating with the upbeat note around the commodity came another strong drop in weekly US crude oil supplies, as per reports by the API and the EIA on Tuesday and Wednesday, respectively.

Later on Friday, driller Baker Hughes will release its weekly report on US oil rig count, closing the weekly calendar.

WTI significant levels

At the moment the barrel of WTI is losing 1.72% at $71.72 and a breach of $69.86 (55-day SMA) would aim for $67.17 (monthly low Sep.1) and then $65.27 (low Aug.9). On the upside, the next hurdle is located at $73.11 (monthly high Sep.15) followed by $ $74.21 (high Jul.30) and $75.47 (high Jul.13).

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