The USD is extending gains and is the strongest of the major currencies. The GBP and the EUR are the weakest.
The EURUSD is breaking below the lower extreme that confined the pair in July and into August at 1.0096. The low swing area between 1.0096 and 1.0121 is now risk stay below keeps the bears more in control.
The GBPUSD is also making new lows and in the process is moving below the swing low from June at 1.1933. In July, the price trade above and below that level with a low for the year at 1.1759. The low price just reached 1.19218. The price is running away from the 1.2000 natural support level.
The USDJPY is trading at the highest level since July 28, moving above a swing area between 135.29 and 135.575. That area is now close risk. Stay above is more bullish. The pair is testing the 61.8% retracement of the move down from the July 14 high at 135.945.
While the USD is moving higher, rates remain negative but off their low levels for the day.
Admittedly, rates are off there lows for the day, but still negative. Fed’s George and Bullard are speaking more hawkish only about inflation. Bullard has been the most hawkish of all Fed officials is looking for 3.75% – 4% Fed target by the end of the year. The current rate is only 2.5%. So he sees 150 basis points more by the end of the year. There are 3 more meetings in 2022.
The US stocks remain mixed with the Dow down -0.24%. The broader S&P is up 0.12% and the Nasdaq is up 0.29%.
There is a 57% chance for 75 basis points at the September meeting.
Fed’s Kashkari is scheduled to speak shortly.Full Article
The USD/JPY pair struggles to capitalize on its gains recorded over the past two sessions and meets with some supply ahead of the 135.50 area. Spot prices drop to a fresh daily low during the early North American session, albeit quickly bounce back to the 135.00 psychological mark.
A big divergence in the monetary policy stance adopted by the Bank of Japan and the Federal Reserve continues to undermine the Japanese yen, which, in turn, acts as a tailwind for the USD/JPY pair. In fact, the BoJ has repeatedly said that it would retain its ultra-easy policy settings. In contrast, the Fed is expected to stick to its policy tightening path despite signs of easing US inflation.
The bets were reaffirmed by the minutes of the July 26-27 FOMC policy meeting, which indicated that policymakers would not consider pulling back on rate hikes until inflation came down substantially. Apart from this, better-than-expected US macroeconomic releases assist the US dollar to stand tall near the monthly low. This is seen as another factor lending some support to the USD/JPY pair.
Data released this Thursday showed that the Philly Fed Manufacturing Index climbed to 6.2 in August, beating consensus estimates for an improvement to -5 from the -12.3 reported in the previous month. Separately, the US Initial Jobless Claims unexpectedly fell to 250K during the week ended August 12 from the previous week’s downwardly revised reading of 252K (262K reported previously).That said, retreating US Treasury bonds yields seem to hold back the USD bulls from placing aggressive bets and capping the upside for the USD/JPY pair, at least for the time being.
Looking at the charts the pair is being further restrained by the 50-day SMA which is capping gains at the day’s highs and needs to be clearly vaulted before bulls can be confident of continuing their short-term uptrend. Nevertheless, the fundamental backdrop supports prospects for a further near-term appreciating move for the USD/JPY pair, suggesting that any meaningful dip could be seen as a buying opportunity and the possibility of a break higher remains alive.
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Spot gold is losing ground for a fourth consecutive day, trading at fresh weekly lows at around $1,757 a troy ounce. The bright metal suffers from renewed dollar strength, as US macroeconomic data suggest the economy remains resilient to the latest global woes, leaving room for the US Federal Reserve to maintain its aggressive stance.
The US central bank released the Minutes of its latest meeting on Wednesday, which showed many policymakers were worried about the risk of raising the rate benchmark to a level it would become more of a problem than a solution. Market players initially saw it as dovish. Furthermore, considering the extent of the next hike is now in doubt, as the Fed decided to cut its forward guidance.
Nevertheless, the latest US figures hint at a much better situation than initially feared. Inflation has finally begun easing while the employment sector remains solid. Additionally, other indicators related to business activity have surprised to the upside.
At the time being, European and American indexes trimmed early losses and post modest gains, while government bond yields ease, reflecting a better market mood amid decreasing risks of an economic downturn.
Technically, the XAUUSD pair is at risk of falling further, piercing a critical Fibonacci support level at $1,759.10, the 38.2% retracement of the latest daily rally between $1,680.82 and $1,807.86. In the daily chart, gold failed to recover above its 20 SMA and quickly accelerated its slide, while the 100 SMA crosses below the 200 SMA, both far above the shorter one. Technical indicators, in the meantime, maintain their downward slopes after moving into negative territory.
The bearish potential is even clearer in the 4-hour chart, as technical indicators turned firmly lower below their midlines, while the 20 SMA crosses below the 100 SMA, providing dynamic resistance at around the daily high. The next Fibonacci support level comes at the $1,744.30 level, a probable bearish target for the upcoming sessions.
Support levels: 1,744.30 1,735.90 1,725.10
Resistance levels: 1,760.00 1,769.90 1,783.10Full Article
The AUD/USD trims some Wednesday losses, registering modest losses after bouncing off the 50-day EMA during the European session. Factors like Fed speakers pushing against markets expecting Fed rate cuts in 2023, alongside broad US dollar strength, keep investors’ sentiment mixed. At the time of writing, the AUD/USD is trading at 0.6917, below its opening price, after hitting a daily high at 0.6969.
Before Wall Street opened, the US Department of Labor revealed that unemployment claims for the week ending on August 13 increased by 250K, less than the 265K estimated, while also previously week’s data was downwardly revised. That said, US economic data revealed in the week, led by industrial production, solid retail sales, and a strong labor market, would further cement the case for additional tightening by the Federal Reserve.
In the meantime, the US housing market continues deteriorating. Existing Home Sales for July dropped 5.9%, at a rate of 4.8 million units in July, the lowest level since May 2020, when sales hit their lowest point during the Covid-19 lockdowns.
Elsewhere, San Francisco Fed’s Mary Daly pushing back against a “dovish” tilt by the Fed, perceived by market participants on the release of the FOMC minutes on Wednesday, turned sentiment sour. The greenback is staying a comeback, with the US Dollar Index up 0.63%, above the 107.00 thresholds.
In the Asian session, a softer than expected Australian job report slightly weighed on the AUD/USD. The Australia Bureau of Statistics reported that the unemployment rate dropped to 3.4% from 3.5% estimates. Still, Full Employment Change slashed 40K jobs from the economy, less than a 25K increase estimated by the street.
The AUD/USD ticked lower towards 0.6927, but money market futures still price in further rate hikes by the Reserve Bank of Australia (RBA).
Further data revealed during the week showed that wage prices rose more modestly than estimated, which sent Australia’s bond yields down, dragging the AUD/USD from above the 0.7000 figure to 0.6910.
Therefore, the AUD/USD would likely remain neutral-to-downward biased due to a more aggressive than expected Federal Reserve.
USD/CAD is 0.26% higher at the time of writing, entering the midday session of the New York trade. The bulls have taken the price up to a key resistance area, with the price rallying from a low of 1.2880 reaching today’s high so far of 1.2946.
The market has been dominated by speculation around the Federal Reserve. The US dollar index hit a three-week high on Thursday as investors reevaluated Wednesday’s minutes from the July meeting as more hawkish than first interpreted. Additionally, the US data has been favourable to the bulls that will likely warrant a string of aggressive rate hikes from the central bank.
Analysts at TD Securities explained that the minutes also note ”a risk of remaining in the restrictive territory, which could imply a lean against immediate cuts even during a major slowdown.” Jackson Hole offers a venue to explore this more deeply for which markets will be tuned into on August 27 – 29.
In addition, Federal Reserve Bank of San Francisco President Mary Daly said the central bank should raise interest rates “a little” above 3% by the end of the year to cool inflation. This is on contrary to the market’s belief yesterday that officials would then reverse course.
Analysts at Rabobank argued that both Daly and the minutes of the Fed’s latest policy minutes have suggested that ”the Fed could favour a ‘raise and hold’ strategy, suggesting that rates could be higher for longer through next year and beyond relative to the levels the market has been expecting. This is not good news for equity bulls; however, it is supportive for the medium-term outlook for the USD.”
Another factor supporting the greenback for its safe haven qualities comes with the potential for more geopolitical chaos, including further weaponization of supply chains, as analysts at TD Securities noted that tests the mettle of risk seekers. ”This should reinforce nascent correlations that show G10FX very positively correlated with global equities, adding to further USD resilience that supports our EUR/USD short and bias to leg into USD/CAD topside around the Bank of Canada’s decision.”
As per the prior series of technical analysis, USD/CAD Price Analysis: Bulls eye 1.3000 for the sessions ahead, the bulls move din on the resistance that is guarding the 1.3000 psychological area as the following prior analysis and update illustrates:
As shown, the price followed the projected price trajectory and is embarking on a break of prior highs for a path to the higher 1.3000 targets:
The EUR/USD dropped sharply during the American session and hit at 1.0107, the lowest level since July 27. It remains near the lows, under pressure amid a stronger Us dollar across the board.
The greenback strengthened even as US yields remained steady and also as stocks in Wall Street sideways. The DXY is up 0.55%, at monthly highs near 107.30.
Regarding economic data, the weekly report showed Initial Jobless Claims declined to 250K, below market consensus; the Philly Fed jumped to 6.2 in August from -12.3, also surpassing expectations. On the negative front, Existing Home Sales tumbled to 4.81M, posting the sixth monthly decline in a row.
The EUR/SD is facing increasing bearish pressure and is near a critical support at 1.0110. A break below 1.0100 would expose the parity level, ending with weeks of a range. The bearish pressure in the short-term will likely persist while under 1.0135.
The euro needs to recover 1.0135 to avoid more losses. The next resistance stands at 1.0160 followed by the strong barrier near 1.0200.
Dogechain is Dogecoin’s layer-2 scaling solution. Unlike typical scaling solutions, Dogechain was developed by a team on Polygon Edge. Dogechain’s launch acted as a fuel for bullish sentiment among DOGE holders.
Through Dogechain, a newly-launched blockchain platform DOGE users can bridge over their tokens and use them for DeFi, NFTs, and more. Interestingly Dogecoin creators and the Dogecoin Foundation’s developers are not involved in the Dogechain project.
Dogechain is a non-traditional layer-2 scaling solution for Dogecoin, built on Polygon Edge. A modular and extensible framework, Polygon Edge allows developers to build Ethereum-compatible blockchain networks, sidechains and general scaling solutions. The non-traditional scaling solution increases the social dominance and mentions of the meme coin across social media platforms. Based on data from LunarCrush, a crypto intelligence tracker, social activity peaked in the Dogecoin network. Proponents argue that a short-term Dogecoin rally is likely.
Dogecoin price yielded 15% gains to holders over the last week. The idea of a layer-2 solution for DOGE is considered the equivalent of the creation of DeFi protocols, NFTs and dApps on Dogecoin.
Just as Cardano’s Vasil hard fork and Ethereum’s Merge are game changers for the network, Dogechain is considered a catalyst for DOGE price. Dogecoin started out as a meme coin, after a spike in utility and adoption. DOGE is now accepted across merchants worldwide, through payment processors like NowPayments. With Dogechain, that advances a few steps, further boosting the project’s utility value.
Analysts argue that Dogecoin price is ready for a recovery. Analysts at FXStreet believe Dogecoin price is likely to flip bullish if specific conditions are met. For more information, check the video below:
Multiple buy signals come to life as LUNA price pushes its bullish mission to $3.00.
Traders should consider booking early profits at $2.00, citing immense resistance along a descending trend line.
LUNA price heads north after breaking a two-week losing streak from August’s peak at $2.61. This turnaround could suggest that retail investors are returning amid growing speculation for a bullish impulse targeting $3.00.
Odds appear to be leaning on the upside as LUNA price bounces off support at $1.88. The most challenging task for the bulls is to confirm a break beyond the 50-day Simple Moving Average (SMA) at $2.00. A four-hour to a daily close above this resistance will encourage buyers to put aside their doubts and get on board for gains eyeing $3.00.
LUNA/USD four-hour chart
The Relative Strength Index (RSI) in the same four-hour timeframe shows that bears are resilient and would need more persuasion if LUNA price is to cement its uptrend. Therefore, traders must keenly follow the RSI’s movements in the near term. If it makes a comeback above the midline and forms a bullish divergence with the price, buyers will win the tug of war and secure the recovery path.
Aiding the new uptrend is a buy signal from the TD Sequential indicator. As observed on the three-hour chart below, this call to investors to consider buying LUNA manifested in a red nine candlestick. It hints at a weakening downtrend, giving way to a potential uptrend.
Usually, a buy order is recommended when the low of the sixth and seventh candles in the count is exceeded by the low of the eighth and ninth bars.
LUNA/USD three-hour chart
For traders, it would be safer to settle for profit at $2.00, keeping in mind that LUNA price has not broken above the descending trend line on the four-hour chart since early August.
The Parabolic SAR indicator on the three-hour chart may hinder a significant recovery unless it flips below LUNA price. If buyers lose grip of the expected uptrend, losses could build up to $1.80 and $1.60 sequentially.Full Article
Maj. European indices are ending the day mostly higher:
Looking at France’s CAC, traders are battling it out between some key technical levels. Looking at the daily chart above, the 200 day moving average at 6606.03 stalled the rise from Tuesday and Wednesday. It would take a move above that moving average to increase the bullish bias.
Drilling to the hourly chart, the lower 100 hour moving average is trying to hold support. A move below that level would give sellers more comfort.
So buyers and sellers are battling it out between key moving average levels on both the daily and hourly charts.Full Article
The GBP/USD remains defensive after tumbling below the 20 and 50-DMAs on Wednesday, extending its losses for the second straight day. Factors like San Francisco Fed’s Mary Daly pushing back against a “dovish” tilt by the Fed, perceived by market participants on the release of the FOMC minutes on Wednesday, turned sentiment sour. The greenback is staying a comeback, with the US Dollar Index up 0.48%, above the 107.00 threshold.
The GBP/USD is trading at 1.2005, below its opening price, after hitting a daily high at 1.2079 early in the European session.
Mary Daly, San Francisco Fed’s President, commented that it is too early to declare victory on inflation and said that 50 or 75 bps is reasonable for the September meeting, via CNN. She added that core inflation is still increasing and that the market lacks understanding, but consumers understand that rates won’t go down right after going up.
In the meantime, US Initial Jobless Claims for the week ending on August 13 dropped to 250K, less than 265K estimated by analysts, while the housing market continued to cool down due to further evidence of Federal Reserve rate hikes. Existing Home Sales for July dropped 5.9%, at a rate of 4.8 million units in July, the lowest level since May 2020, when sales hit their lowest point during the Covid-19 lockdowns.
Elsewhere, on Wednesday, the UK reported inflation in July, which cleared the 10% threshold for the first time in 40 years. The Office for National Statistics revealed that the Consumer Price Index (CPI) rose 10.1%, from a year earlier, after recording a 9.4% in June. After the report, money market futures priced in nearly 200 bps of rate hikes, in the BoE rate to 3.75%, by May of 2023.
The GBP/USD is still neutral to downward bias, but central bank monetary policy convergence could lead to range-bound trading. With rates in both countries elevating, growth differences between them will enter into play to dictate the direction of the pair.
The USD/MXN is rising for the third consecutive day, although so far it failed to print fresh weekly highs. The upside remains capped below 20.10. The next critical resistance area is seen around 20.15/20, an area that contains horizontal resistances and also the 100-day Simple Moving Average.
A firm break above 20.25 would open the doors more gains targeting the 20.50 area.
In the very short-tern, the bias is to the upside, with technical indicators flat to bullish. The momentum is not strong enough and appears to be fading. The bias will weaken with a decline back under 20.00. While a daily close well above 20.00 would be a positive sign for the bulls.
A key support emerges at 19.90 that if fails to hold, USD/MXN could drop further to test again the 19.80 area.