The pair is entering into a swing area between 0.9342 and 0.9382. That swing area is defined by swing highs going back to September 2021 November 2021 January, March and April 2022 before the race to the upside in April and early May of this year. Also within the swing area sits a upward sloping trendline which currently cuts across near 0.9357.
The swing area - and trendline - should provide some cause for pause for the sellers as risk can be defined and limited against the area. Traders should look to lean against the support area, with a stop on a break below the 0.93425 level.
Having said that, with the price below the 200 day MA (and 50% retracement at 0.94103), it would now take a move back above the 200 day moving average at 0.942862 to give the buyers some comfort that the selling is potentially over. Absent that, the sellers hold the technical edge.
- Dow industrial average is trading up 217 points or 0.67% at 33531S&P index is up 28.41 points or 0.62% 4236NASDAQ index is up 88 points or 0.69% 12941.47Russell 2000 is up 19.5 points or 0.99% at 1988.68
The US PPI came in lower than expected which is helping to keep the USD down. In the morning video, I take a look at the 3 major pairs vs the USD (EURUSD, USDJPY and GBPUSD) and outline the bias, the risk and the targets for each.
Good fortune with your trading.
There was a fairly significant revision, but the claims rebounded back toward the original levels from last week and seen most recently near the 260K. The trend has been more to the upside but the employment report from Friday showed a much stronger than expected gain in jobs as service sector continues to rebuild from post pandemic declines.
The US stocks moved higher after the better-than-expected PPI, but there is some retracement of the spike higher.
This is the cherry-on-top after yesterday's CPI data. It adds to the belief that inflation has peaked. The question now is whether it will fall back to 2% at this time next year or 4%.
The US dollar is at the lows of the day after the data, breaking yesterday's lows on most fronts. USD/JPY is down 105 pips to 131.80.
As the NA session begins, the NZD is the strongest and the GBP is the weakest. Yesterday, the USD fell sharply after the weaker than expected CPI report. The USD is following that move lower with another modest decline today ahead of the PPI data and the US initial jobless claims. The PPI is expected to rise by 0.2% vs 1.1% last month with ex food and energy up 0.4%. The YoY headline number is expected to fall to 10.4% from 11.3%, with the ex food and energy falling to 7.6% from 8.2%.
Stocks are higher. Disney leads the Dow with a gain up to $122.70 vs a close of $112.43 after reporting better earnings and revenues (and subscriptions). They also announced a new price increase. The major indices soared yesterday after the better CPI data.
- NZD leads, GBP lags on the dayEuropean equities mixed; S&P 500 futures up 0.4%US 10-year yields down 2 bps to 2.76%Gold up 0.1% to $1,794.63WTI crude up 0.7% to $92.55Bitcoin up 3.0% to $24,623
The hype this week was all about the US CPI data and the reaction yesterday did not disappoint. However, it seems like market players are running out of steam today or it may just be another summer's day in Europe as things settle down and we are seeing light changes overall for the most part.
European indices are now little changed after a positive open, trading more mixed while US futures are still keeping slightly higher but the gains are rather measured. S&P 500 futures are up 11 points, or 0.3%, while Nasdaq futures are up by only 0.1% on the day.
There are sparse details on this with German finance minister Lindner only stating that the tax relief plan would be in the realms of €10 billion. This is on top of the €30 billion package unleashed by the government earlier which included a fuel tax cut and a public transport ticket valid across Germany priced at just €9 a month for June, July and August.
The pair traded to fresh highs in two months after the US CPI data yesterday but the daily close fell short of breaching the 100-day moving average (red line). That key resistance level is once again the focus today and we are seeing buyers look to test waters above that at 0.7085 at the moment.
Hold above and the bearish bias in the pair will be put off as there is the scope for price action to trade towards the 200-day moving average (blue line), seen at 0.7150 currently. These key technical levels have been vital in definining and limiting price moves in AUD/USD, as evident from the chart above since May trading.
There were big moves across dollar pairs in trading yesterday and USD/CAD was no exception as it cast aside the memory of the jump to 1.2980 last Friday in a drop back below 1.2800 in the aftermath of the US CPI data release. There hasn't been much relief since the drop with the slight retracement earlier stalling at the 100-day moving average (red line) at 1.2793 - a level that was broken yesterday and which helped to stall the downside trend initially on 1 August.
The break below the key technical level is a boost to sellers and opens up the path towards testing the 200-day moving average (blue line) next at 1.2741. That is the key support level to watch now as a break below that will pave the way for a further downside leg in the pair.
On Friday last week, USD/JPY moved up from 133.15 to 135.50 after the hot US jobs report before consolidating in and around the 135.00 mark before yesterday's US CPI data. The releases saw consumer inflation ease, at least on the surface, and that was enough for the pair to be dragged down on dollar selling and a fall in Treasury yields.
The initial decline was towards 133.00 but that extended to near 132.00 yesterday before the close settled around 132.87. But as we dig into the new day, price is creeping lower again as the dollar remains sluggish with equities slightly higher and bond yields retreating a little as well at the moment.
The pair caught a strong tailwind to push higher yesterday from 1.2100 to a high of 1.2275 but buyers could not hold gains through to the daily close - seen at 1.2210. That is keeping the key trendline resistance (white line) from the late May to early August highs at around 1.2225 still in play and is one to watch in the sessions ahead as the dollar stays sluggish.
A break above that will put the 1 August high at 1.2293 into focus before we look towards 1.2400 again.
After nearly a month of consolidation, the pair finally found reason to break out of its recent trading range. The US CPI data was a catalyst for a push to the upside but that owes more to dollar weakness than the euro getting things together. In any case, the shove higher is a new technical development and as traders, we always have to respect that.
EUR/USD managed to break above its 50.0 Fib retracement level at 1.0283 but the gains fell short of breaching the 61.8 Fib retracement level at 1.0361 and the 1.0400 mark. Those are now key resistance levels to watch before any potential return back to 1.0500 and the 100-day moving average (red line) just above that at 1.0530 currently.
Bitcoin has added 7.4% to $24.6K in the last 24 hours. It's not the magnitude of the move that draws attention but rather the ability to rewrite previous local highs. Ethereum has gained 13% to $1900 in the same time frame. Top altcoins add between 4.7% (BNB) and 13.4% (Solana).
The total capitalisation of the crypto market, according to CoinMarketCap, rose 7.4% to $1.16 trillion overnight.
This was a contributing factor to the drop in inflation figures seen in the July report yesterday. I talked more on the details earlier here. In any case, the further fall will provide added relief for consumers in terms of energy consumption but it hasn't quite translated to food prices - which is still on the high side as seen from yesterday.
For equities, it's all about the supposed appearance of slowing inflation and weaker economic conditions which brings us closer to the Fed pivot. Or at least that is what markets are choosing to believe right now. We're going to have to run it all back again in a month's time with another set of the same economic releases before the FOMC meeting.
Elsewhere, US futures are holding higher as well with S&P 500 futures up 16 points, or 0.4%, on the day.
There isn't much to take note of as any larger expiries are seen some distance away from current spot prices currently.
The only one decently close is AUD/USD at 0.7000, though price action is more centered around testing its 100-day moving average at 0.7085 at the moment. That is the key technical level to watch but if the dollar does retrace losses, then the expiries could help to limit any downside push barring a major change in market sentiment after yesterday.
The entire start of the week served as a placeholder to the US CPI data release and well, at least the main event delivered. There were some sizable moves in markets yesterday but things have calmed down considerably so far today. The narrow ranges among dollar pairs exemplifies the inaction for the time being:
Equities are keeping the good mood from yesterday going so far, with S&P 500 futures also seen up 8 points, or 0.2%, at the moment. Markets are toning down their expectations for a 75 bps rate hike by the Fed next month but we'll have to run it all back again at the start of September with the same set of data points before the FOMC meeting.
Odds of a 75 bps rate hike fell off from ~68% to ~30% in the aftermath of the US CPI data but have retraced slightly back to ~43% now.
A downside surprise on estimates for US CPI in the month of July saw the dollar sink alongside bond yields, while equities rallied hard in the immediate reaction. While the greenback was dumpstered and equities ran with gains, bond yields actually recovered somewhat with 10-year Treasury yields erasing the drop from yesterday to keep back at 2.79% currently.
As much as broader markets are looking for a Fed pivot, policymakers aren't pulling back on expectations just yet. For example, Daly suggested she would be supportive of a 50 bps rate hike next month but still sees rates rising to just under 3.50% by year-end. And that doesn't mean that they will pause at that juncture.
- There's good news on the month-to-month dataBut inflation remains far too high and not near our price stability goalThis is why we don’t want to declare victory on inflation coming downJumping with the idea that 75 bps is what we need and being prescriptive is not optimalA 50 bps rate hike is my baselineFull interview (might be gated)
- South Korea’s technology exports declined for the first time in more than two years in July, in a sign that global demand is cooling as concerns mount about the outlook for the world economy.-Separately, South Korea exports for the first 10 days of August were +8.7% y/y (semiconductors -5.1% y/y though)
CNBC have totalled up the combined losses from breaches of cross-chain cryptocurrency bridges so far this year.
A total of around $1.4 billion has been lost to breaches on these cross-chain bridges since the start of the year, according to figures from blockchain analytics firm Chainalysis. The biggest single event was the record $615 million haul snatched from Ronin, a bridge supporting the popular nonfungible token game Axie Infinity, which lets users earn money as they play.
- Top 50 publishers (last 24 hours)