The USD is moving lower vs the major currencies to start the NY session and the trading week. What are the technicals saying? What are the risks? What are the major targets?

There was barely a hint of a Fed pivot and meme stock mania has come back with a vengeance.

Gamestop was just halted, up 12.7% while AMC is up 17% and BBBY is up 54%.

Although Nvidia shares are down sharply as they announced a revision to their Q2 and Q3 revenue forecasts, the overall US stock market is shrugging that new off and heading higher in early trading for the week.

A snapshot of the market currently shows:

Etheruem has completed one big technical lap, can it complete another?

Ethereum is up 7% today as it reaches an important technical target, completely wiping out the June loss. In late July it took a run at the $1800 level but fell just short. After a retracement to $1550 it re-gathered momentum and completed the job today.

The major US stock indices are getting back some of their gains in premarket trading as Nvidia sends shockwaves as a lower revenues expectations for the Q2.

They see Q2 earnings coming at $6.7 billion vs. $8.1 billion. For Q3 they see $6.7 billion vs. expected a $8.38 billion. They are blaming gaming revenue for the shortfall.

The USD is moving lower vs the major currencies to start the NY session and the trading week. What are the technicals saying? What are the risks? What are the major targets?

Prime brokerage desks at Morgan Stanley and Goldman Sachs today both report that reporting that net exposure was drawn down in the past week. The continued sales highlight how professional investors are wary of the Fed and the economy.

Meanwhile, it's straight-up FOMO in meme-land. Last week was HKD and the latest is Bed, Bath and Beyond. It shot to $8.16 from $6.07 on Friday and is up to $11.15 in the premarket.

The NZD is the strongest and the USD is the weakest as the NA session begins. It is the day after the stronger than expected US jobs report. If the Fed is data dependent, that was not a good start for the path of rates going forward. Over the weekend, Fed's Bowman said 75 BPs should be on the table. Fed's Daly said the Fed needs to be open minded and there are 2 more inflation reports and one more jobs report before the next Fed meeting. See you in September....

The inflation act in the US passed in the Senate over the weekend. It will be voted on in the House this week and is expected to be passed. The bill is to expand spending on healthcare and renewable energy, will create a minimum 15% corporate income tax and 1% levy on stock buybacks among other things.

It's a mid-August day without any meaningful economic data.

Normally that means a quiet market but these aren't normal times. The US dollar is on the defensive today, particularly against commodity currencies. AUD and NZD are strongly higher while a slide in oil prices has the loonie trailing.

The jump higher in the dollar after the US jobs report on Friday was encouraging but there still needs to be more in order to vindicate a return back to the year's highs for the greenback. For now, the price action today suggests that market players are not convinced and USD/JPY tipping back below 135.00 is but a testament to that.

While buyers managed to recover well from a drop towards 130.00 last week, the rebound here isn't suggestive of a return towards 140.00 yet either. For that, the bond market needs to play ball and for now, that isn't quite the case. 10-year Treasury yields are down 4 bps today to near 2.79% upon encountering resistance at the 100-day moving average:

This isn't a new development but it just reaffirms that we are not looking towards that despite the fact that a looming gas crisis is looming over the country and Europe in general. For some context, Russia had touted that the new pipeline would bring about additional 55 billion cubic meters of gas per year to Germany.

Last week the CPI print data for the CHF was below expectations and as a reaction the Swiss franc depreciated. Analysts at Pantheon say inflation will peak in August and as a result CHF will see a fall in September. This can also mean the SNB is likely to not be as hawkish at the next meeting as previously anticipated.

We finished the last week with a negative catalyst for risk coming from the US labour market report. The headline number surprised to the upside beating all forecasts, the unemployment rate fell, and the average hourly earnings increased. That’s what a “data-dependent” Fed absolutely doesn’t want to see, especially the increase in wages, and calls for another tough action on the rates front. The market odds of a 75 bps hike at the September meeting increased to 68% from the 40% before the release.

Besides the lagging labour market report, we also got the leading US ISM Manufacturing PMI which showed two major things: 1) the leading component “New Orders” fell even more into the contractionary territory to 48.0 versus the prior 49.2 and 2) prices paid saw the fourth largest decline on record coming at 60 from the prior 78.5. This just shows that tighter monetary conditions, decline in economic activity and the global slowdown are weighing both on demand and inflation,...

Bitcoin has been down 1.2% over the past seven days, trading at $23,600. These are tiny moves by crypto market standards. Indeed, the first cryptocurrency has been dealing with little amplitude over the past week.

Ethereum has added the same amount of 2.6% to $1720 in the last 24 hours and seven days. The top altcoins' 7-days performance ranges from -0.11% (Solana) to +19% (Avalanche).

Markets are still digesting how the hot US jobs report last week will have an impact on the FOMC meeting next month. After running with the idea of a more hawkish Fed on Friday, we are seeing some of that luster fade. Fed funds futures are still siding with heightened odds of a 75 bps rate hike, still seen ~68%. That is up from around ~42% on Friday before the NFP.

But the dollar is seen giving back some of its gains today alongside Treasury yields. 10-year yields are down 4 bps on the day to 2.79%, once again keeping below its 100-day moving average at 2.86%. Meanwhile, the greenback is seen slightly lower against the euro, pound, franc, and loonie while the aussie and kiwi are holding modest gains against the dollar today.

Stocks are continuing the late recovery from last week with European indices opening higher as US futures also tick up on the day. That is helping to see the aussie and kiwi stretch their light gains from earlier to a decent showing now. AUD/USD is up 0.6% on the day to just above 0.6950 currently:

After a bit more of a tentative start to the day, equities are turning more positive now with S&P 500 futures seen up 17 points, or 0.4%, on the day. This is keeping commodity currencies more buoyed as we start the session with AUD/USD up 0.6% to 0.6950 - pushing past its 100-hour moving average at 0.6940. Meanwhile, USD/CAD is down by 0.3% to fresh lows of the day at 1.2896.

The gains here are in part a catch up to the late recovery in US stocks on Friday, after having been beaten down after the hot NFP data. The narrative for equities now is that bad news is good news; vice versa. The underlying market mood today is more tepid though, with US futures keeping rather flat as we look to get into European trading.

Is the Fed pivot dead? Well, not exactly. But the early whispers are certainly not ringing anymore after the hot US jobs report on Friday. That is leaving markets to believe that we are at least likely to see a 50 bps rate hike in September, with 75 bps still on the table. It's now over to the remaining data points before the FOMC meeting next month to vindicate which decision the Fed might take.

In any case, policymakers will continue to defend the narrative to markets that this isn't the recession you're looking for. But as mentioned in the linked post, stagflation risks are building and that should not be ignored either.

The military drills and operations were supposed to end yesterday and China were to wrap things up today. But it looks like that won't be the case with the military stating that drills will continue around Taiwan on Monday as well. There have been some contentious observations with regards to what China is planning, with talk that the military tried to simulate an invasion on Taiwan as well in the past few days.

Hot. Hot. Hot. There was only one word to describe the US jobs report on Friday last week. ?

And in the context of recession worries, the numbers helped to allay fears to a certain extent despite the fact that GDP figures continue to disappoint in the US. One can argue that labour market data is always lagging but for now, policymakers can keep up with their ongoing narrative to markets: This isn't the recession you're looking for.