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Gold price is moving back and forth in a familiar range while trading close to the $1,800 mark, as the rebound in the US dollar and the Treasury yield
  • Gold price is looking to defend the key support yet again amid listless trading.
  • Treasury yields, US dollar heal post-soft US CPI-led wounds ahead of Fed minutes.
  • XAU/USD battle lines are well-defined near the $1,800 mark, where next?

Gold price is moving back and forth in a familiar range while trading close to the $1,800 mark, as the rebound in the US dollar and the Treasury yields keep bears in control. Markets don’t seem to be convinced that the Fed will alter its tightening cycle, in the face of the first signs of peak inflation, exerting downward pressure on the non-interest-bearing bullion. However, bulls continue to find comfort from growing recession fears amid renewed Chinese lockdown concerns and the deepening European gas crisis. Despite the listless trading over the past few days, XAU/USD remains on track to book the fourth weekly gain. Attention now turns towards the Fed July meeting’s minutes due for release next week for a fresh direction in the bright metal. In the meantime, the Fed rate hike expectations, growth fears and Fedspeak will continue to influence the metal price.

Also read: Gold Price Forecast: Losing bullish potential below $1,800

Gold Price: Key levels to watch

The Technical Confluence Detector shows that the gold price is defending the crucial support at $1,784, which is the convergence of the SMA50 one-day and the Fibonacci 23.6% one-week. 

Should sellers find acceptance below the latter, the next downside cap at $1,780 will come into play. At that level, the Fibonacci 38.2% one-week and SMA10 one-day intersect.

The last line of defense for gold bulls is seen at the pivot point one-day S2 at $1,775.

Alternatively, sellers are aligned near $1,792 to guard the upside, the meeting point of the SMA10 four-hour and the Fibonacci 38.2% one-day.

Further up, the confluence of the previous week’s high and the pivot point one-week R1 at $1,796 will challenge the bearish commitments.

The $1,800 round figure and the monthly high of $1,808 will be next on buyers’ radars.  

Here is how it looks on the tool

fxsoriginal

About Technical Confluences Detector

The TCD (Technical Confluences Detector) 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.  If you are a short-term trader, you will find entry points for counter-trend strategies and hunt a few points at a time. If you are a medium-to-long-term trader, this tool will allow you to know in advance the price levels where a medium-to-long-term trend may stop and rest, where to unwind positions, or where to increase your position size.

 

USD/CAD dribbles inside a choppy range between 1.2760 and 1.2770 during Friday?s sluggish Asian session. In doing so, the Loonie pair traces the marke
  • USD/CAD treads water around the lowest levels in two months.
  • Global markets jitter as Fed policymakers resist cheering easy inflation figures.
  • OPEC, IEA oil demand forecasts join cautious mood to weigh on energy prices.
  • Flash forecasts for August month Michigan Consumer Sentiment Index will be crucial for fresh impulse.

USD/CAD dribbles inside a choppy range between 1.2760 and 1.2770 during Friday’s sluggish Asian session. In doing so, the Loonie pair traces the market’s inaction even as the sour sentiment underpins the US dollar's rebound from the lowest levels in six weeks.

That said, the US Dollar Index (DXY) picks up bids to consolidate the weekly losses around 105.25 by the press time.

The greenback’s latest gains could be linked to the comments from San Francisco Fed President Mary Day who backed opportunities of witnessing another 75 basis points (bps) of a rate hike in September, while also suggesting an upfront 0.50% rate hike to be sure. Previously, Minneapolis Fed President Neel Kashkari and Chicago Fed President Charles Evans sounded grim. That said, Fed’s Kashkari mentioned that he hasn't "seen anything that changes" the need to raise the Fed's policy rate to 3.9% by year-end and to 4.4% by the end of 2023. Further, Fed policymaker Evens stated, “The economy is almost surely a little more fragile, but would take something adverse to trigger a recession.” Fed’s Evans also called inflation "unacceptably" high.

It should be noted that the Fed policymakers’ latest comments contrast with the recent easing in the US inflation data and firmer employment numbers.

On Thursday, the US Producer Price Index (PPI) for July tracked the headline Consumer Price Index (CPI) while easing to 9.8% YoY versus 11.3% prior and 10.4% market forecasts, the data published by the US Bureau of Labor Statistics revealed on Thursday. Details suggest that the monthly PPI dropped to the lowest levels since May 2020, to -0.5% compared to 1.0% expected and 0.2% prior, which in turn signaled more easing of inflation fears. Elsewhere, US Initial Jobless Claims eased to 262K for the week ending August 6 versus 263K expected and downwardly revised 248K prior.

On a different page, softer prices of Canada’s main export item WTI crude oil also put a floor under the USD/CAD pair. That said, WTI crude oil prints a 0.30% intraday loss at around $93.00, snapping a three-day uptrend, amid downbeat demand forecasts for 2022 by the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA), published on Thursday, appear to weigh on the quote.

Also read: WTI eases towards $93.00 on OPEC/EIA demand forecasts, USD rebound

Against this backdrop, Wall Street began Thursday on a positive side before closing mixed while the US 10-year Treasury yields rallied 10 basis points (bps) to 2.88% at the latest. It’s worth noting that the S&P 500 Futures remains indecisive at around 4,215 and the US Treasury yields remain firmer by the press time.

Looking forward, the first impressions of the US Michigan Consumer Sentiment Index (CSI) for August, expected at 52.5 versus 51.5 prior, will be important to watch for clear directions.

Also read: Michigan Consumer Sentiment Index Preview: Good news for the dollar but not for households

Technical analysis

Although the 200-DMA level surrounding 1.2745 challenges the USD/CAD bears, recovery moves need validation from the 1.2800 resistance, comprising the 100-DMA, to convince the buyers.

 

USD/CHF snaps four-day downtrend, grinds higher around the intraday top of 0.9426 as sellers retreat from the lowest levels since April, marked the pr

USD/CHF snaps four-day downtrend, grinds higher around the intraday top of 0.9426 as sellers retreat from the lowest levels since April, marked the previous day. In doing so, the Swiss currency (CHF) pair ignores recently positive options market signals ahead of the preliminary readings of the US Michigan Consumer Sentiment Index (CSI) for August.

That said, one-month USD/CHF risk reversal (RR), a difference between the call options and the put options, prints the strongest negative figures since July 29.

With this, the daily options market gauge turned out to be -0.015 while the weekly RR prints the -0.010 mark. It should be noted that the USD/CHF RR for the week jumped the most in five weeks by the end of last Friday.

Also read: USD/CHF Price Analysis: Surrenders the 200-DMA as sellers eye 0.9200

The US dollar, DXY, was set for its third weekly loss in four against its rivals, but the bulls are moving in on the final day of the week in a turnar
  • US dollar bulls are moving in following a significant sell-off in the greenback. 
  • US yields perked up towards the end of the week as hawkish Fed sentiment overrides softer US inflation data.

The US dollar, DXY, was set for its third weekly loss in four against its rivals, but the bulls are moving in on the final day of the week in a turnaround in US yields and mix sentiment surroufing the outlook for the Federal Reserve. At the time of writing, DXY is trading at 105.2810, up 0.18% on the day so far. 

Benchmark US 10-year Treasury yields were oscillating near a three-week peak, recovering on Thursday as San Francisco Federal Reserve Bank President Mary Daly said a 50-basis-point interest rate hike in September "makes sense" given the recent economic data including inflation. Crucially, she also said that she is still open to a bigger rate hike if data warrants.

Earlier this week, US Fed policymakers noted that they would continue to tighten monetary policy until price pressures were fully broken. Following yesterday's CPI, Neel Kashkari unleashed his inner hawk and said the July CPI data did not change his expected rate path, though he was happy to see inflation surprise to the downside. Kashkari stressed that the Fed is far from declaring victory over inflation and stressed that recession “will not deter me” from getting to the 2% target. 

Fed funds futures traders are now pricing in a 61.5% chance of a 50-basis-point hike in September and a 38.5% chance of a 75-basis-point increase. Analysts at Brown Brothers Harriman explained that WIRP is now showing only 45% odds of a 75 bp hike at the September 20-21 FOMC meeting vs. 80% before the CPI data.

''Looking ahead, the swaps market is now pricing in a 3.5% terminal rate vs. 3.75% at the start of this week.  We think the markets are once again overreacting to one data point. The battle to lower inflation is likely to be long and protracted, with most Fed policymakers looking at an extended tightening cycle. Yes, we may have seen the worst in terms of inflation, but we are a long way from the Fed’s 2% target.  Markets should also reprice the more dovish expectations in the coming days and weeks.''

Meanwhile, analysts at TD Securities argued that ''a potential inflation peak (and associated end to Fed terminal rate price discovery) is an important ingredient to call the top in the USD.''

''The other key (and arguably) more important ingredient is the outlook for global growth. On that factor, we don't think it is time to completely fade the USD, though the recent backdrop reductions convictions on USD long exposure,'' the analysts explained. 

 

 

Australia HIA New Home Sales (MoM): -13.1% (July) vs previous 1.9%
After an upbeat mid-week, global markets remain sluggish as they await the final dossier of the key data during Friday?s Asian session. Also keeping t
  • Market sentiment remains divided amid a light calendar, mixed clues.
  • S&P 500 Futures extend pullback from three-month high, yields snap three-day uptrend at 12-day peak.
  • Softer PPI, CPI fail to reject Fed hawks, China headlines, recession also test optimism.

After an upbeat mid-week, global markets remain sluggish as they await the final dossier of the key data during Friday’s Asian session. Also keeping the traders on their toes are the mixed feelings surrounding inflation and growth, not to forget fears of geopolitical and trade tussles.

While portraying the mood, Wall Street began Thursday on a positive side before closing mixed while the US 10-year Treasury yields rallied 10 basis points (bps) to 2.88% at the latest. It’s worth noting that the S&P 500 Futures remains indecisive around 4,215 and the US Treasury yields remain firmer by the press time.

Starting with the inflation, US Producer Price Index (PPI) for July tracked the headline Consumer Price Index (CPI) while easing to 9.8% YoY versus 11.3% prior and 10.4% market forecasts, the data published by the US Bureau of Labor Statistics revealed on Thursday. That said, the monthly PPI dropped to the lowest levels since May 2020, to -0.5% compared to 1.0% expected and 0.2% prior, which in turn signaled more easing of inflation fears.

In addition to the receding inflation woes, the softer prints of the US Weekly Jobless Claims also portrayed improvement in the employment scenario, tracking the recent job numbers from the world’s largest economy, which in turn helped to build the risk-on mood. That said, US Initial Jobless Claims eased to 262K for the week ending August 6 versus 263K expected and downwardly revised 248K prior.

Even so, President and Chief Executive Officer of the Federal Reserve Bank of San Francisco Mary Daly mentioned that she is open to a 75bps rate hike in September. Previously, Minneapolis Fed President Neel Kashkari and Chicago Fed President Charles Evans sounded grim. That said, Fed’s Kashkari mentioned that he hasn't "seen anything that changes" the need to raise the Fed's policy rate to 3.9% by year-end and to 4.4% by the end of 2023. Further, Fed policymaker Evens stated, “The economy is almost surely a little more fragile, but would take something adverse to trigger a recession.” Fed’s Evans also called inflation "unacceptably" high.

On a different page, US President Joe Biden’s pause in announcing tariff relaxations to China, actually the removal of the Trump-era tariffs, gain major attention and renew the Sino-US tussles to weigh on the market sentiment. Additionally, Additionally, a jump in the coronavirus cases from China, to 700 new confirmed cases in the mainland on August 10 versus 444 a day earlier, also roil the sentiment. Furthermore, Taiwan’s criticism of the “One China” policy and US House Speaker Nancy Pelosi’s support for Taipei also challenged the market optimism.

It should be noted that the cautious mood ahead of the preliminary readings of the UK’s second quarter (Q2) Gross Domestic Product (GDP) and the US Michigan Consumer Sentiment Index (CSI) for August also challenge the market’s optimism.

To sum up, recently softer US inflation data fail to keep the markets happy for long, which in turn highlights today’s scheduled statistics for fresh impulse.

USD/JPY has been picked up by the bulls at a discount and is on the verge of a significant bullish correction according to the following multi-timefra
  • USD/JPY are taking over in a bid for the greenback.
  • USD/JPY breakout could see the price move in on the neckline before the day is out for a test above 134 the figure. 

USD/JPY has been picked up by the bulls at a discount and is on the verge of a significant bullish correction according to the following multi-timeframe analysis:

USD/JPY daily chart

The M-formation is a reversion pattern that has a high probability of playing out in that the price is more than often attracted back into to test the neckline as illustrated above. 

This gives rise to a prospect of a bullish correction that can be monitored from a lower time frame, such as the 15 min chart, as follows:

USD/JPY 15-min charts

The price has been accumulating and is breaking the upside resistance structure near 133.30. 

It is pulling back in a correction to mitigate the price imbalance below the recent highs but bulls could well be attracted from support which would likely see the price extend beyond the resistance for the day ahead. A continuation of the breakout could see the price move in on the neckline before the day is out for a test above 134 the figure. 

In recent trade today, the People?s Bank of China (PBOC) set the yuan (CNY) at 6.7413 vs. the last close of 6.7450. About the fix China maintains stri

In recent trade today, the People’s Bank of China (PBOC) set the yuan (CNY) at 6.7413 vs. the last close of 6.7450. 

About the fix

China maintains strict control of the yuan’s rate on the mainland.

The onshore yuan (CNY) differs from the offshore one (CNH) in trading restrictions, this last one is not as tightly controlled.

Each morning, the People’s Bank of China (PBOC) sets a so-called daily midpoint fix, based on the yuan’s previous day's closing level and quotations taken from the inter-bank dealer.

NZD/USD holds onto the previous day?s pullback from a two-month high as the adjacent key resistance line and 100-DMA challenge buyers during Friday?s
  • NZD/USD snaps four-day uptrend around the two-month high.
  • Nearly overbought RSI, pullback from monthly resistance line add strength to bearish bias.
  • Tops marked during mid-June, early-August lure near-term sellers ahead of monthly support line.

NZD/USD holds onto the previous day’s pullback from a two-month high as the adjacent key resistance line and 100-DMA challenge buyers during Friday’s Asian session. That said, the NZD/USD pair prints mild losses around 0.6430 by the press time.

The Kiwi pair’s latest drop from the upward sloping resistance line from July 08, as well as a retreat from the 100-DMA, also justifies the RSI’s recent struggles around the overbought territory. With this, the NZD/USD sellers are likely to re-enter the game.

However, the June 16 high will precede the August-start peak, respectively around 0.6395 and 0.6350, to restrict the short-term NZD/USD downside.

Following that, a one-month-old ascending support line near 0.6255 will be crucial to watch.

On the flip side, the 100-DMA and the aforementioned resistance line, around 0.6435 and 0.6455 in that order, will challenge the short-term advances of the Kiwi pair.

Even if the NZD/USD prices rise past 0.6455, the latest high close to 0.6465 can act as an extra filter to the north before directing bulls towards June’s monthly peak of 0.6575.

NZD/USD: Daily chart

Trend: Further weakness expected

 

The AUD/USD pair has declined gradually below 0.7100 after printing a high of 0.7135 on Thursday. The asset has tumbled after sensing exhaustion in th
  • A break of the consolidation formed in a 0.6869-0.7047 range strengthened the aussie bulls.
  • An establishment above 61.8% Fibo retracement adds to the upside filters.
  • Advancing 20-and 200-EMAs signal more gains ahead.

The AUD/USD pair has declined gradually below 0.7100 after printing a high of 0.7135 on Thursday. The asset has tumbled after sensing exhaustion in the upside momentum. However, that doesn’t warrant a bearish reversal for now but a corrective move, which is healthy for a decent uptrend.

On a four-hour scale, the asset has given an upside break of the consolidation formed in a broader range of 0.6869-0.7047, which has strengthened the aussie bulls. Also, the asset is auctioning above the 61.8% Fibonacci retracement (which is placed from June 3 high at 0.7283 to July 14 low at 0.6681) at 0.7054. For resuming an upside journey, a test of 61.8% Fibo is critical for the aussie bulls.

The 20-and 200-period Exponential Moving Averages (EMAs) at 0.7052 and 0.6950 respectively are advancing sharply, which adds to the upside filters.

Meanwhile, the Relative Strength Index (RSI) (14) is established in the bullish range of 60.00-80.00, which signals a continuation of upside momentum.

A pullback near 61.8% Fibo retracement at 0.7054 will drive the asset towards Thursday’s high at 0.7137.  A latter breach will expose the asset for more upside towards 78.6% Fibo at 0.7156.

Alternatively, a drop below Wednesday’s low at 0.6951 will drag the asset towards the previous week’s low at 0.6869, followed by 23.6% Fibo retracement at 0.6824.

AUD/USD Price Analysis

 

  

 

GBP/USD takes offers to refresh intraday low around 1.2180, down for the second consecutive day, as the US dollar pares weekly losses during Friday?s
  • GBP/USD extends the previous day’s losses towards refreshing daily low, mildly offered of late.
  • Hawkish Fedspeak contradicts recently softer US inflation data and helps US dollar to lick its wounds after five-day downtrend.
  • Jitters surrounding UK politics, Brexit join BOE’s gloomy outlook to keep buyers at bay.
  • The preliminary reading of the UK’s Q2 GDP is likely to propel recession woes and weigh on the cable prices.

GBP/USD takes offers to refresh intraday low around 1.2180, down for the second consecutive day, as the US dollar pares weekly losses during Friday’s Asian session. In addition to the greenback’s consolidation of recent downside around the monthly low, the Cable pair trader’s cautious mood ahead of the initial estimations of the UK’s second quarter (Q2) Gross Domestic Product (GDP) also weigh on the quote.

Also read: UK GDP Preview: Early confirmation of BOE’s recession forecast

The pre-data anxiety appears strong enough to recall the GBP/USD bears even as the US Dollar Index (DXY) dropped for the fifth consecutive day on Thursday. The reason could be linked to the political and Brexit-linked pessimism surrounding Britain.

On Thursday, the UK government held talks with the energy bosses about high bills but Prime Minister Boris Johnson said, per Sky News, that it is for his successor in Number 10 to "make significant fiscal decisions". Elsewhere, a Conservative commentator has claimed per the UK Express that the US has taken favor with Brexit Britain due to its lack of ties to the European Union (EU).

On the other hand, US Producer Price Index (PPI) for July tracked the headline Consumer Price Index (CPI) while easing to 9.8% YoY versus 11.3% prior and 10.4% market forecasts. That said, the monthly PPI dropped to the lowest levels since May 2020, to -0.5% compared to 1.0% expected and 0.2% prior, which in turn signaled more easing of inflation fears.

Furthermore, the softer prints of the US Weekly Jobless Claims also portrayed improvement in the US employment scenario, tracking the recent job numbers from the world’s largest economy, which in turn helped to build the risk-on mood but could not favor GBP/USD. That said, US Initial Jobless Claims eased to 262K for the week ending August 6 versus 263K expected and downwardly revised 248K prior.

Recently, President and Chief Executive Officer of the Federal Reserve Bank of San Francisco Mary Daly mentioned that she is open to a 75bps rate hike in September. Previously, Minneapolis Fed President Neel Kashkari and Chicago Fed President Charles Evans sounded grim. That said, Fed’s Kashkari mentioned that he hasn't "seen anything that changes" the need to raise the Fed's policy rate to 3.9% by year-end and to 4.4% by the end of 2023. Further, Fed policymaker Evens stated, “The economy is almost surely a little more fragile, but would take something adverse to trigger a recession.” Fed’s Evans also called inflation "unacceptably" high.

Amid these plays, Wall Street began the day on a positive side before closing mixed while the US 10-year Treasury yields rallied 10 basis points (bps) to 2.88% at the latest. It’s worth noting that the S&P 500 Futures print mild gains around 4,215 and the US Treasury yields remain firmer by the press time.

To sum up, GBP/USD bears are set for further dominance ahead of the key UK GDP release, expected -0.2% QoQ versus 0.8% prior, mainly due to the Bank of England’s (BOE) fears of economic transition. However, as the markets are all negative, any positive surprise won’t be taken lightly considering the US dollar’s recent weakness and easing inflation fears.

Following the UK data, the first impressions of the US Michigan Consumer Sentiment Index (CSI) for August, expected at 52.5 versus 51.5 prior, will be important to watch for clear directions.

Also read: Michigan Consumer Sentiment Index Preview: Good news for the dollar but not for households

Technical analysis

GBP/USD extends pullback from a1 11-week-old downward sloping resistance line, at 1.2245 by the press time, towards revisiting the 21-DMA support near 1.2090. However, the cable pair’s further weakness hinges on the clear downside break of the previous resistance line from mid-June, around 1.1940 at the latest.

 

The EUR/GBP pair is facing barricades around the immediate hurdle of 0.8465 continuously since Thursday. The asset is expected to display topsy-turvy
  • EUR/GBP is sensing selling interest around 0.8470 despite the lower consensus for UK economic data.
  • UK households are making higher payouts as subdued earnings are unable to offset soaring inflation.
  • The second-tier Eurozone data is expected to display a vulnerable performance.

The EUR/GBP pair is facing barricades around the immediate hurdle of 0.8465 continuously since Thursday. The asset is expected to display topsy-turvy moves as investors await the UK Gross Domestic Product (GDP) data. On a broader note, the cross is advancing sharply higher in entire August after printing a three-month low of 0.8340.

According to the preliminary estimates, the UK economy has shrunk by 0.2% in the second quarter of CY2022 vs. the expansion of 0.8% recorded in Q1CY22. Also, the annual data is expected to shift lower to 2.8% from the prior release of 8.7%. A downside print in the growth rate indicates that the overall demand has dived significantly and eventually, the economic activities are facing a slowdown.

Soaring price pressures along with subdued Labor Cost Index are responsible for downward estimates of UK GDP data. The households are facing the headwinds of higher payouts due to surging cost pressures. Over that, subdued Average Hourly Earnings have forced them to slash their overall demand.

Adding to that, the Manufacturing Production data is also expected to display a vulnerable performance. The economic data is expected to slip lower to 0.9% against the former release of 2.3% on an annual basis. Adding to that, the monthly data is expected to display a de-growth of 1.8% against the previous print of 1.4%.

On the Eurozone front, Eurostat will report the Industrial production data, which are seen lower at 0.2% and 0.8% from their prior releases on a monthly and an annual basis respectively.

 

 

 

 

 

  

 

EUR/USD renews intraday low near 1.0315 during Friday Asian session, snapping four-day uptrend around the monthly peak. In doing so, the major currenc
  • EUR/USD remains sidelined around monthly top, recently pressured near intraday low.
  • RSI conditions, sustained break of five-week-old resistance keep buyers hopeful above 1.0280 short-term key support.
  • 61.8% Fibonacci retracement guards immediate recovery, 200-SMA acts as an extra downside filter.

EUR/USD renews intraday low near 1.0315 during Friday Asian session, snapping four-day uptrend around the monthly peak. In doing so, the major currency pair extends the latest pullback from the 61.8% Fibonacci retracement level of its downside move between late June and mid-July.

Although the pullback from an important Fibonacci retracement level suggests further downside of the quote, a convergence of the previous support line from early July and 50% Fibonacci retracement level challenges the bears around 1.0280. Also pushing back the downside bias is the recently firmer RSI.

Even if the EUR/USD pair breaks the 1.0280 support confluence, the 200-SMA level surrounding 1.0220 and a one-month-old upward sloping support line near 1.0190 will challenge the bears.

Following that, a downward trajectory towards the 23.6% Fibonacci retracement level around 1.0110 can’t be ruled out.

Alternatively, recovery moves need validation from the 61.8% Fibonacci retracement level surrounding 1.0365.

Also challenging the EUR/USD bulls is the June 30 swing high of 1.0490, a break of which could propel prices towards a late June peak of 1.0614.

EUR/USD: Four-hour chart

Trend: Limited downside expected

 

The US dollar index (DXY) extended its gains to near 105.20 after sensing an intense buying interest while revisiting the six-week low at 104.64. The
  • The DXY is hoping for a break above 105.20 on advancing hawkish Fed bets.
  • Investors are ignoring the one-time slowdown in the US Inflation rate.
  • A higher US Michigan CSI will strengthen the DXY bulls further.

The US dollar index (DXY) extended its gains to near 105.20 after sensing an intense buying interest while revisiting the six-week low at 104.64. The asset defended itself from refreshing a six-week low below 104.64. Now, the DXY has turned sideways but remains above 105.00 and is expected to record more gains on violating the immediate hurdle of 105.20.

Inflation exhaustion signals fade

Markets were cheering a downward shift in the US Consumer Price Index (CPI), which landed at 8.5% lower than the expectations of 8.7% and the prior release of 9.1%. Now, investors have started focusing on the extent of the interest rate hike by the Federal Reserve (Fed) in its September monetary policy meeting.

A one-time slowdown in the US inflation is not sufficient to have a ball as price pressures are still extremely deviated from the desired levels. Therefore, the Fed will continue on its path of accelerating interest rates. For the record, the extent of hawkish guidance will trim abruptly.

US Michigan CSI eyed

The Michigan Consumer Sentiment Index (CSI) data is expected to improve to 52.2 from the prior release of 51.5. A consecutive improvement is expected in the confidence of consumers after the data slipped to 50 for the first time in the past 20 years. An occurrence of the same will display that consumers have started showing their confidence in the economy and the overall demand will improve going forward.

 

 

 

 

Gold price (XAU/USD) stays depressed at around $1,788 as sellers flirt with the immediate support line during Friday?s Asian session. In doing so, the
  • Gold price remain mildly offered as bears attack short-term key support line.
  • Market’s inaction amid a light calendar restricts immediate XAU/USD moves.
  • Inflation, Fed and China are in focus after the recent risk-positive data stream.
  • Preliminary readings of August month Michigan Consumer Sentiment Index will be important for clear directions.

Gold price (XAU/USD) stays depressed at around $1,788 as sellers flirt with the immediate support line during Friday’s Asian session. In doing so, the yellow metal hesitates to welcome bears amid a sluggish session and a light calendar, as well as due to the cautious sentiment ahead of the first impressions of the US Michigan Consumer Sentiment Index (CSI) for August, expected at 52.5 versus 51.5 prior.

Also read: Michigan Consumer Sentiment Index Preview: Good news for the dollar but not for households

The XAU/USD prices dropped during the last two consecutive days despite the US dollar’s five-day downtrend as the Fed policymakers resist cheering downbeat inflation data from the US. Also challenging the gold buyers were fears surrounding China, one of the world’s largest commodity users.

On Thursday, US Producer Price Index (PPI) for July tracked the headline Consumer Price Index (CPI) while easing to 9.8% YoY versus 11.3% prior and 10.4% market forecasts. That said, the monthly PPI dropped to the lowest levels since May 2020, to -0.5% compared to 1.0% expected and 0.2% prior, which in turn signaled more easing of inflation fears.

In addition to the recently easing inflation woes, the softer prints of the US Weekly Jobless Claims also portrayed improvement in the employment scenario, tracking the recent job numbers from the world’s largest economy, which in turn helped to build the risk-on mood. That said, US Initial Jobless Claims eased to 262K for the week ending August 6 versus 263K expected and downwardly revised 248K prior.

Recently, President and Chief Executive Officer of the Federal Reserve Bank of San Francisco Mary Daly mentioned that she is open to 75bps rate hike in September. Previously, Minneapolis Fed President Neel Kashkari and Chicago Fed President Charles Evans sounded grim. That said, Fed’s Kashkari mentioned that he hasn't "seen anything that changes" the need to raise the Fed's policy rate to 3.9% by year-end and to 4.4% by the end of 2023. Further, Fed policymaker Evens stated, “The economy is almost surely a little more fragile, but would take something adverse to trigger a recession.” Fed’s Evans also called inflation "unacceptably" high.

On the same line were the headlines surrounding China. Reuters relied on sources to mention that the saying US President Biden rethinks steps on China tariffs in wake of Taiwan response. Additionally, a jump in the coronavirus cases from China, to 700 new confirmed cases in the mainland on August 10 versus 444 a day earlier, also weighs on the pair. Furthermore, Taiwan’s criticism of the “One China” policy and US House Speaker Nancy Pelosi’s support for Taipei also challenged the market optimism.

Against this backdrop, Wall Street began the day on a positive side before closing mixed while the US 10-year Treasury yields rallied 10 basis points (bps) to 2.88% at the latest. It’s worth noting that the S&P 500 Futures print mild gains around 4,215 and the US Treasury yields remain firmer by the press time.

To sum up, gold sellers are in the driver’s seat and are likely to keep reins but need validation from the key US data.

Technical analysis

Gold prices seesaw around a three-week-old support line after reversing from the weekly resistance line, as well as the 61.8% Fibonacci retracement level of the June-July downturn. That said, the RSI’s downside break of the short-term support also keeps sellers hopeful.

However, a convergence of the 50-SMA and the 50% Fibonacci retracement level, around $1,780-79, needs to validate the south-run.

Also acting as strong support is the convergence of the 200-SMA and the 38.2% Fibonacci retracement level, near $1,756.

Meanwhile, recovery moves may initially aim for the 61.8% Fibonacci retracement near $1,804 before challenging an upward sloping resistance line from August 02, close to $1,808 by the press time.

In a case where the XAU/USD rises past $1,808, July’s peak near $1,815 might act as the last defense of gold sellers.

Gold: Four-hour chart

Trend: Further downside expected

 

Reuters reports that San Francisco Federal Reserve Bank President Mary Daly said on Thursday that a 50 basis point interest rate hike in September "ma

Reuters reports that San Francisco Federal Reserve Bank President Mary Daly said on Thursday that a 50 basis point interest rate hike in September "makes sense" given recent economic data including on inflation, but that she is open to a bigger rate hike if data warrants.

''Saying that she does not want to be 'headfaked' by the recent improvement in inflation readings, Daly told Bloomberg TV in an interview that she has an "open mind" on the possibility of a 75 basis point hike.

Financial conditions need to remain tight to continue to bridle economic growth and bring down inflation, she said.''

Earlier, Daly had already been reported by the FT saying that she did not rule out a third consecutive 0.75 percentage point rate rise at the central bank’s next policy meeting in September, although she signalled her initial support for the Fed to slow the pace of its interest rate increases, the Financial Times reported.

"We have a lot of work to do. I just don’t want to do it so reactively that we find ourselves spoiling the labour market," the central banker said while also indicating that she would be watching the next consumer price and non-farm payroll reports to better calibrate her decision.

Meanwhile, Thursday's data showed US producer prices (PPI) unexpectedly fell in July amid a drop in the cost of energy products. This followed Wednesday's surprise news that consumer prices (CPI) were unchanged in July due to a drop in gasoline prices. Both the greenback and US Treasury yields rallied after dropping sharply earlier. DXY is back trading around 105.10. 

 

As per the prior analysis, USD/CAD Price Analysis: Bulls could be about to clean up, the price is in a phase of accumulation currently and a resurgenc
  • USD/CAD bulls are lurking and the US dollar is firmer.
  • Bulls need to commit to a break of 1.2780 and then 1.2790/00.

As per the prior analysis, USD/CAD Price Analysis: Bulls could be about to clean up, the price is in a phase of accumulation currently and a resurgence in the greenback would be expected to see USD/CAD rally in due course.

The following is an update of the prior analysis. 

USD/CAD daily chart, prior analysis

The price extended a touch lower on Thursday, but the bullish thesis remains in play, as per the following hourly and 15-minute charts:

USD/CAD 15-min chart, live market

The price has been moving sideways within a consolidation price discovery phase of accumulation. This was flagged as a possibility in the prior analysis:

''From a 15-min perspective, the price action could develop over the coming sessions as follows. In a fast market, the price would be expected to correct steeply, but in a long drawn-out process in which there is a lack of commitment from the bulls, the ride could be a bumpy one along the support area as illustrated above. This would potentially result in an even lower low yet to come before the bulls fully commit to the correction in a phase of accumulation.''

The sentiment surrounding the greenback is turning more positive towards the end of the week so we could now start to see more commitment from the bulls over the coming sessions:

A break of 1.2780 and then 1.2790/00 will be key.

Japan Foreign Investment in Japan Stocks climbed from previous -120.3B to 61B in August 5
Japan Foreign Bond Investment rose from previous 37.1Bto 827B in August 5
The AUD/NZD pair has turned sideways at around 1.0400 after a downside move from 1.0500. The asset is on the verge of printing a fresh weekly low if t
  • AUD/NZD is expected to display significant losses after surrendering the cushion of 1.0300.
  • The RBNZ is likely to announce a half-a-percent rate hike for the fourth time consecutively.
  • A lower Australian Consumer Inflation Expectations print has failed to support aussie bulls.

The AUD/NZD pair has turned sideways at around 1.0400 after a downside move from 1.0500. The asset is on the verge of printing a fresh weekly low if the kiwi bulls manage to drag the cross below the immediate support of 1.0300. A release of an upbeat Business NZ PMI has strengthened the kiwi bulls.

The Business NZ PMI data has landed at 52.7, higher than the expectations of 52.5 and the prior release of 50. This is going to delight the Reserve Bank of New Zealand (RBNZ) in its fight against inflation. Next week, the RBNZ will announce an interest rate decision in its monetary policy meeting. RBNZ Governor Adrian Orr is expected to step up its Official Cash Rate (OCR) by 50 basis points (bps) consecutively for the fourth time. An announcement of the same will elevate the OCR to 3%.

As per the Reuters survey, the RBNZ will elevate its OCR to 4.00% by mid-2023. And, the Inflation is expected to fall within the target range of 2-3% in the H1CY2023. It seems like the RBNZ’s goal of bringing price stability is visible now.

On the Aussie front, lower Consumer Inflation Expectations data has failed to support the aussie bulls. A slippage in aussie Consumer Inflation Expectations, which presents the consumer expectations of future inflation during the next 12 months will force a decline in the hawkish guidance by the Reserve Bank of Australia (RBA).

 

 

 

 

WTI crude oil prices remain sidelined at around $93.30-35 during Friday?s Asian session, pausing a two-day recovery around the weekly top. The black g
  • WTI retreats from one-week high, probes two-day uptrend.
  • OPEC, EIA anticipate world energy demand to ease in 2022, and increase next year.
  • Mixed sentiment, light calendar could restrict short-term moves.
  • US Michigan Consumer Sentiment Index eyed for clear directions.

WTI crude oil prices remain sidelined at around $93.30-35 during Friday’s Asian session, pausing a two-day recovery around the weekly top. The black gold’s latest inaction could be linked to the light calendar and mixed catalysts. However, downbeat demand forecasts for 2022 by the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA), published on Thursday, appear to weigh on the quote.

That said, OPEC said that it lowered the 2022 full-year demand growth forecast to 3.1 million barrels per day (bpd) from 3.36 million bpd reported previously, per Reuters. "2023 world oil demand to rise by 2.7 million bpd, unchanged from the previous forecast," the forecasts add. The OPEC update also mentioned that the 2022 global economic growth forecast was lowered to 3.1% (prev. 3.5%), 2023 view was trimmed to 3.1% with significant downside risks prevailing.

On the other hand, the EIA said that it expects the global oil demand to rise by 2.1 million barrels per day in 2023 to surpass the pre-Covid levels at 101.8 million bps. “Demand growth is expected to slow from 5.1 mln bpd in 1Q22 to just 40,000 bpd by 4Q22,” adds EIA. The report also mentioned that the world oil supply hit a post-pandemic high of 100.5 million bpd in July.

Elsewhere, market sentiment remains mixed and joins the recent rebound in the oil prices to weigh on the black gold. While portraying the mood, Wall Street began the day on a positive side before closing mixed while the US 10-year Treasury yields rallied 10 basis points (bps) to 2.88% at the latest.

Behind the moves could be the comments from Minneapolis Fed President Neel Kashkari and Chicago Fed President Charles Evans challenged the market optimism earlier on Thursday. That said, Fed’s Kashkari mentioned that he hasn't "seen anything that changes" the need to raise the Fed's policy rate to 3.9% by year-end and 4.4% by the end of 2023. Further, Fed policymaker Evens stated, “The economy is almost surely a little more fragile, but would take something adverse to trigger a recession.” Fed’s Evans also called inflation "unacceptably" high.

On the same line were the headlines surrounding China. Reuters relied on sources to mention that the saying US President Biden rethinks steps on China tariffs in wake of Taiwan response. Additionally, a jump in the coronavirus cases from China, to 700 new confirmed cases in the mainland on August 10 versus 444 a day earlier, also weighs on the pair. Furthermore, Taiwan’s criticism of the “One China” policy and US House Speaker Nancy Pelosi’s support for Taipei also challenged the market optimism.

It’s worth noting that the softer prints of the US Jobless Claims and Producer Price Index (PPI) for July underpinned the risk-on mood and restricted the black gold’s downside.

Moving on, a light calendar at home requires the WTI crude oil traders to keep their eyes on the qualitative catalysts for fresh directions ahead of the US Michigan Consumer Sentiment Index (CSI) for August, expected at 52.5 versus 51.5 prior.

Also read: Michigan Consumer Sentiment Index Preview: Good news for the dollar but not for households

Technical analysis

A two-month-old descending resistance line precedes the 21-DMA to restrict immediate WTI rebound near $93.40 and $94.15 levels in that order. Given the recently firmer MACD, coupled with the gradual rebound from the yearly low, the commodity buyers are likely to keep reins.

 

Silver price (XAG/USD) remains pressured at around $20.30, keeping the previous day?s bearish bias during Friday?s Asian session. In doing so, the bri
  • Silver price holds lower ground near the short-term key support comprising 50-day EMA, three-week-old ascending support line.
  • Receding bullish MACD signals, sustained pullback from 61.8% Fibonacci retracement tease sellers.
  • Bulls need validation from $21.00 to retake control.

Silver price (XAG/USD) remains pressured at around $20.30, keeping the previous day’s bearish bias during Friday’s Asian session. In doing so, the bright metal holds on to the latest downside break of the 50% Fibonacci retracement level of the June-July fall amid recently easing bullish signals of the MACD.

That said, the quote’s U-turn from the 61.8% Fibonacci retracement level earlier in the week also keeps XAG/USD sellers hopeful to conquer the $20.20 support confluence including the 50-DMA and an upward sloping trend line from July 25.

It’s worth noting that the silver sellers might search for the daily closing below the $20.00 threshold to validate the weakness past $20.20.

Following that, a south-run towards the five-week-long horizontal area near $19.55-45 can’t be ruled out.

Meanwhile, the 50% and the 61.8% Fibonacci retracement levels, respectively near $20.35 and $20.85 could restrict short-term upside moves of the silver price.

Should the quote manage to cross the $20.85 hurdle, the mid-June swing low near $21.00 will act as an extra filter to the north before directing the XAG/USD buyers towards the June 27 peak of $21.53.

Silver: Daily chart

Trend: Further weakness expected

 

The NZD/USD pair has continued its four-day winning streak and is likely to recapture its two-month high at 0.6260 as Business NZ has reported upbeat
  • NZD/USD is advancing towards its two-month high at 0.6260 as Business NZ PMI lands higher at 52.7.
  • A fourth consecutive 50 bps rate hike is expected by the RBNZ.
  • The impact of the lower US CPI print is fading away and investors are focusing on Fed’s next meeting.

The NZD/USD pair has continued its four-day winning streak and is likely to recapture its two-month high at 0.6260 as Business NZ has reported upbeat PMI data. The economic data has landed at 52.7, higher than the expectations of 52.5 and the prior release of 50.

An upbeat PMI data has strengthened the kiwi bulls against the greenback. Also, it may back the former to print a fresh two-month high.

Going forward, the kiwi bulls are likely to dance to the tunes of the Reserve Bank of New Zealand (RBNZ) as the central bank will announce an interest rate decision on Wednesday.

As per the Reuters poll, the RBNZ will elevate its Official Cash Rate (OCR) by 50 basis points (bps) consecutively for the fourth time, taking the interest rates to 3%. Also, the insights from Reuters’ survey indicate that the RBNZ will elevate its OCR to 4.00% by mid-2023. And, the Inflation is expected to fall within the target range of 2-3% in the H1CY2023.

Meanwhile, the US dollar index (DXY) is likely to display a minor correction after facing hurdles around 105.20. The upside seems intact as investors have ignored the evidence of exhausting inflation and are now focusing on the extent of the rate hike that the Federal Reserve (Fed) will feature in its monetary policy meeting in September.

There is no denying the fact that inflation exhaustion signals cheered the market participants. However, price pressures are still on the rooftop and highly deviated from the desired levels. So Fed’s rate announcement will continue further.

 

 

  

 

 

The USD/CHF stumbles for the sixth consecutive day and breaks support provided by the 200-DMA at 0.9427, shifting the major?s bias downwards, with sel
  • USD/CHF broke below the 200-DMA, ending the major’s upward bias.
  • In the near term, the USD/CHF is neutral to downwards, but buyers reclaiming 0.9450 exerts upward pressure on the major.

The USD/CHF stumbles for the sixth consecutive day and breaks support provided by the 200-DMA at 0.9427, shifting the major’s bias downwards, with sellers reclaiming the latter, extending the USD/CHF losses in the week to 2.17%. At the time of writing, the USD/CHF is trading at 0.9408.

USD/CHF Price Analysis: Technical outlook

From a daily chart perspective, although breaking below the 200-day EMA, the USD/CHF risks are skewed to the upside. Thursday’s price action formed a hammer, preceded by a downtrend. That said, the major might re-test the 200-day EMA as a resistance level. If the latter holds, that could pave the way towards the March 31 low at 0.9194.

USD/CHF Daily chart

Zooming into the one-hour scale, the USD//CHF chart portrays the pair as neutral-to-downwards, but a positive divergence between the RSI and price action suggests an upward correction is on the cards. If that scenario plays out, the USD/CHF first resistance would be the confluence of the 50-hour EMA and the R1 pivot at 0.9447. Break above will expose the R2 daily pivot at 0.9484, followed by 0.9500.

USD/CHF 1-hour chart

USD/CHF Key Technical Levels

 

Analysts at the investment bank Morgan Stanley (MS) think that the British Pound (GBP) has a limited scope of portraying a heavy downside. "We turn be

Analysts at the investment bank Morgan Stanley (MS) think that the British Pound (GBP) has a limited scope of portraying a heavy downside.

"We turn bearish skew for GBP but see another sharp leg lower in GBP as unlikely. The BoE delivered a 50bp hike, in line with market expectations, but this decision was accompanied by a very bleak set of forecasts and an explicit warning of a protracted UK recession starting from 4Q22," mentioned MS ahead of the preliminary readings of the UK’s second quarter (Q2) Gross Domestic Product (GDP).

The US bank also adds, "It is these weak growth expectations which we think will continue to keep GBP on the back foot against its G10 peers. However, given how low growth expectations already are and how bearish sentiment is on GBP, we think the risk of a further sharp leg lower in GBP has decreased.”

Also read: UK GDP Preview: Early confirmation of BOE’s recession forecast

New Zealand Food Price Index (MoM) came in at 2.1%, above expectations (1.2%) in July
GBP/JPY holds lower grounds inside an immediate 30-pip trading range above 162.10 during Friday?s initial Asian session. In doing so, the cross-curren
  • GBP/JPY fades bounce off weekly low ahead of the preliminary UK Q2 GDP.
  • Multiple failures to cross 50-day EMA, previous support line from March favor sellers amid steady RSI, bearish MACD signals.
  • 200-day EMA offers strong support, six-week-old horizontal line adds to upside filters.

GBP/JPY holds lower grounds inside an immediate 30-pip trading range above 162.10 during Friday’s initial Asian session. In doing so, the cross-currency pair fails to extend the late Thursday’s rebound from the weekly bottom ahead of the preliminary readings of the UK’s second quarter (Q2) Gross Domestic Product (GDP).

Also read: UK GDP Preview: Early confirmation of BOE’s recession forecast

Technically, the pair has been on the bear’s radar for the last two weeks after it dropped below an upward sloping trend line from March to late July. Also keeping the sellers hopeful is the quote’s multiple failures to cross the 50-day EMA resistance, as well as bearish MACD signals and the steady RSI.

That said, GBP/JPY sellers currently aim for the 38.2% Fibonacci retracement level of March-June upside, near 161.95 ahead of challenging multiple supports around 161.15-10.

It should be noted, however, that the quote’s weakness past 161.10 appears difficult as the 160.00 psychological magnet will precede the 200-day EMA level surrounding 159.50 to challenge the bears.

Alternatively, the 50-day EMA level near 163.30 guards the GBP/JPY pair’s immediate recovery ahead of the support-turned-resistance line around 164.10.

Following that, a daily closing beyond the 23.6% Fibonacci retracement level of 164.55 becomes necessary for the GBP/JPY bulls to mark another attempt in crossing the 1.5-month-long horizontal hurdle close to 166.25-35.

GBP/JPY: Daily chart

Trend: Further upside expected

 

New Zealand Business NZ PMI above forecasts (52.5) in July: Actual (52.7)
?The Reserve Bank of New Zealand (RBNZ) will stick to its hawkish stance and deliver a fourth straight half-point rate hike on Wednesday in its most a

“The Reserve Bank of New Zealand (RBNZ) will stick to its hawkish stance and deliver a fourth straight half-point rate hike on Wednesday in its most aggressive tightening in over two decades to try to rein in stubbornly-high inflation,” as per the latest Reuters poll published early Friday morning in Asia.

Key findings

All 23 economists in the Aug. 8-11 Reuters poll forecast rate setters at the RBNZ would hike its official cash rate by another 50 basis points at its Aug. 17 meeting, taking it to 3.00%. It was 1.00% before the COVID-19 pandemic.

All but one of the 23 economists polled also forecast rates to reach 3.50% or higher by the end of 2022 in what would be the most aggressive policy tightening since the official cash rate was introduced in 1999.

While the RBNZ has signaled plans to increase the rate to 4.00% by mid-2023, almost matching the U.S. Federal Reserve, few economists in the poll said it would go that far.

Only five of 23 economists predicted rates would reach 4.00% by end-2022, up from one in the previous poll.

Twelve of 19 respondents forecast the cash rate to either stay steady at 3.50% or be lower by end-2023. The remaining seven predicted it would climb to 3.75% or higher by then.

Inflation was expected to fall within the target range of 2%-3% in the second half of next year, a separate Reuters poll showed.

Also read: NZD/USD: RBNZ’s tone should underpin the kiwi – ANZ

The GBP/USD pair is hovering around the immediate hurdle of 1.2200 after a modest rebound from 1.2185. The asset defended Wednesday?s low at around 1.
  • GBP/USD is facing barricades around 1.2200 as investors await UK GDP data.
  • A vulnerable UK GDP will accelerate troubles for the BOE.
  • Higher Initial Jobless Claims have supported the DXY at lower levels.

The GBP/USD pair is hovering around the immediate hurdle of 1.2200 after a modest rebound from 1.2185. The asset defended Wednesday’s low at around 1.2180 but is now displaying a torpid rebound, which could be fragilized effortlessly by the market participants. The cable is expected to remain subdued as investors are awaiting the release of the Gross Domestic Product (GDP) data. Apart from that, the release of the Industrial Production and Manufacturing Production data holds utmost importance.

As per the market consensus, the UK economy has shrunk by 0.2% in the second quarter of CY2022 vs. the expansion of 0.8% recorded in Q1CY22. Also, the annual data is expected to shift lower to 2.8% from the prior release of 8.7%. An occurrence of the same is likely to create more troubles for the Bank of England (BOE). The central bank is already stuck in the laborious job of dealing with ramping up inflation and over that, a slump in growth rates will restrict the BOE to combat price pressures with full power.

Adding to that, the Manufacturing Production data is also expected to display a vulnerable performance. The economic data is expected to slip lower to 0.9% against the former release of 2.3% on an annual basis. Adding to that, the monthly data is expected to display a de-growth of 1.8% against the previous print of 1.4%.

Whereas the Industrial Production data is seen higher by 20 basis points on yearly basis but the monthly culture is likely to land in negative territory.

On the dollar front, the US dollar index (DXY) defended the downside bias confidently and now, has advanced to near 105.20. Printing of higher jobless claims by the first-timers supported the DXY from refreshing its monthly lows. The economic data landed at 262k, mostly in line with the expectations but lower than the prior release of 248k.

 

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