Articles

US ISM Manufacturing PMI Preview: Slowing growth or recession?

US ISM Manufacturing PMI Preview: Slowing growth or recession?

253380   August 31, 2022 22:21   FXStreet   Market News  

  •  The ISM Manufacturing PMI is foreseen at 52 in August, reflecting expansion.
  •  The ISM Prices Paid Index is expected to contract to 55.5 from 60 in the previous month.
  •  The USD retains its strength despite struggling to extend its gains.

The US Institute for Supply Management will release the August Manufacturing PMI on Thursday, September 1. The index is expected to have declined from 52.8 in July to 52, hinting at slowing economic progress but signaling expansion.

Prices pressure under the spotlight

Among the sub-components of the report, the most interesting forecast is that for Prices Paid as it reflects business sentiment around future inflation. The index is expected to retreat sharply from 60 in the previous month to 55.5. While lower-than-previous figures are usually understood as negative for the dollar, easing price pressures are for sure good news for the US.

 The US Federal Reserve has pledged to maintain its aggressive quantitative tightening to bring record inflation back to acceptable levels of around 2%, regardless of the damage its policies can do to businesses or households. Chief Jerome Powell acknowledged the negative effects of higher rates but reiterated they would keep draining massive covid-related liquidity.

Painful growth already priced in

After peaking at a record 64.7 in March 2021, the index reflects slowing economic progress, although expansionary territory (more than 50). The deceleration gained pace in the second quarter of 2022, and the index is dangerously approaching the 50 barrier, which separates growth from contraction.

If the index comes out above 50, the impact on financial markets could be limited as painful progress is already priced in. Speculative interest, however, should become concerned if it falls below the threshold, as it would help confirm the arrival of a recession in the world’s largest economy.

Possible USD reactions

The American currency is the strongest across the FX board, although there are tepid signs of bullish exhaustion. Nevertheless and as risk aversion continues to lead, the USD may extend its gains should the figure come out much worse than anticipated, pushing investors into safety.

An upbeat report, on the other hand, may bring some relief to market players and help high-yielding currencies to recover some ground. In such a scenario, and for the time being, the EUR has more chances of rallying, as it seems to be the strongest dollar’s rival.

Sellers seem reluctant to add shorts below parity, although bulls remain on the sidelines. EUR/USD has an immediate resistance at around 1.0050 but would need to advance beyond the next relevant level, at 1.0120, to shrug off the negative stance and be able to extend its advance. A near-term support level is 0.9970, with a break below it exposing the multi-year low at 0.9898.

Full Article

China’s property market is in a ‘severe depression’ top developer says
China’s property market is in a ‘severe depression’ top developer says

China’s property market is in a ‘severe depression’ top developer says

253379   August 31, 2022 22:09   Forexlive Latest News   Market News  

Most people are watching Europe and the unfolding energy crisis but the collapse in confidence in Chinese real estate could also be a multi-year drag on growth.

The WSJ today reports on comments from Country Garden Holdings, which for years ranked as the top developer in China in terms of sales. It cited weakening expectations, sluggish demand, declines in property prices and resurgent covid.

“All these exert mounting pressure on all participants in the property market, which has slid rapidly into severe depression,” the company said.

To illustrate, it earned $89m in the first half compared $2.2b a year earlier. That’s a relatively rosy performace compared to some of its competitors, which are struggling with solvency and inventory that won’t move.

country garden holdings

Full Article

EUR/USD to retest the 0.9900/10 zone on a sustained push under 0.9985 – Scotiabank
EUR/USD to retest the 0.9900/10 zone on a sustained push under 0.9985 – Scotiabank

EUR/USD to retest the 0.9900/10 zone on a sustained push under 0.9985 – Scotiabank

253378   August 31, 2022 22:05   FXStreet   Market News  

EUR/USD is capped at around 1.0050. Analysts at Scotiabank expect the world’s most popular currency pair to retest the 0.9900/10 area on a drop below 0.9985.

Swaps are not yet fully priced for a 75 bps hike

“After another failed test of 1.0050 earlier in the session (minor double top), a sustained push under 0.9985 (neckline trigger) will tilt risks towards a retest of the 0.9900/10 area.”

“Swaps are not yet fully priced for a 75 bps hike, reflecting 67 bps of tightening at the Sep meeting, but the trend is leaning towards the risk of a more aggressive hike which may provide the EUR with some underpinning below 1.00 for now.”

Full Article

GBP/USD: The only major point of note is the 1.1425 low from 2020 – Scotiabank
GBP/USD: The only major point of note is the 1.1425 low from 2020 – Scotiabank

GBP/USD: The only major point of note is the 1.1425 low from 2020 – Scotiabank

253377   August 31, 2022 22:05   FXStreet   Market News  

GBP/USD is floundering in the low 1.16s. Economists at Scotiabank expect the pair to continue its slide.

GBP to retain a weak undertone

“Short, medium and long-term trend oscillators remain aligned bearishly against the GBP, implying that GBP rebounds are liable to remain shallow (1.17/1.18 range) and short-lived.”

“There is little in terms of notable support for the GBP below the market – the 1.16 and 1.15 points provide some psychological support but the only major point of note is the 1.1425 low from 2020.” 

“Sterling is liable to retain a soft undertone at least until the new government team and its policies take shape.”

Full Article

Downside risks for GBP/USD to the 1.10 zone in the next few months – Scotiabank
Downside risks for GBP/USD to the 1.10 zone in the next few months – Scotiabank

Downside risks for GBP/USD to the 1.10 zone in the next few months – Scotiabank

253376   August 31, 2022 22:02   FXStreet   Market News  

How low can the pound go? The GBP/USD pair could dive as low as 1.10, in the opinion of economists at Scotiabank.

GBP will not react well to renewed equity market weakness 

“Beyond the stagflation risk, the GBP will not react well to renewed equity market weakness as central banks persist with interest rate increases while the domestic political backdrop remains unhelpful (a new PM, Brexit issues unresolved and independence movements at home stirring again).” 

“The broad, trade-weighted index (TWI) measure of the pound could fall another 4-5% broadly or so before reaching the lows seen around the 1992 Exchange Rate Mechanism debacle, the 2008 financial crisis, the 2016 Brexit vote and the 2020 pandemic. The fact that broad TWI losses stalled around 73.5 on each of those very different calamities for the pound suggests it is a point worth keeping a close eye on moving forward. A return to that point in this cycle might imply – roughly – downside risks for GBP/USD to the 1.10 zone and upside risks for EUR/GBP to the 0.90 area in the next few months.”

Full Article

United States Chicago Purchasing Managers’ Index above forecasts (52) in August: Actual (52.2)
United States Chicago Purchasing Managers’ Index above forecasts (52) in August: Actual (52.2)

United States Chicago Purchasing Managers’ Index above forecasts (52) in August: Actual (52.2)

253375   August 31, 2022 22:02   FXStreet   Market News  

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.




Feed news

Full Article

FDA approves omicron covid-19 booster shots
FDA approves omicron covid-19 booster shots

FDA approves omicron covid-19 booster shots

253374   August 31, 2022 21:56   Forexlive Latest News   Market News  

Booster shots will be rolled out shortly that target omicron. Hopefully this change can prevent omicron altogether, or come close. Of course, it’s only a matter of time until the virus mutates again. It will also be interesting to see the uptake on this round of shots.

Full Article

US stocks higher in early US trading
US stocks higher in early US trading

US stocks higher in early US trading

253373   August 31, 2022 21:49   Forexlive Latest News   Market News  

The major US stock indices are tradiing higher at the start of the US session. Yesterday, was the same and the priced dumped and closed lower for the 3rd day in a row. Will traders dump again after overnight gains?

So far, the buyers are winning.

A snapshot 15 minutes into the open shows:

  • Dow industrial average is up 107.6 points or 0.34% at 31898.48
  • S&P index is up 2123 points or 0.55% at 4007.98
  • NASDAQ index is up 103.85 points or 0.87% at 11986.98
  • Russell 2000 is up 3.19 points or 0.17% at 1858.78

Looking at the debt market, yields are marginally higher:

  • 2 year 3.452%, +0.4 basis points
  • 5 year 3.28%, +1.2 basis points
  • 10 year 3.121%, +1.5 basis point
  • 30 year 3.229%, +0.7 basis points

Full Article

USD/CAD clings to modest gains near 1.3100 after Canada GDP data
USD/CAD clings to modest gains near 1.3100 after Canada GDP data

USD/CAD clings to modest gains near 1.3100 after Canada GDP data

253372   August 31, 2022 21:45   FXStreet   Market News  

  • USD/CAD touched its highest level since mid-July above 1.3100.
  • Canadian economy expanded at a softer pace than expected in Q2.
  • Greenback struggles to gather strength after weak employment data.

The USD/CAD pair gathered bullish momentum and touched its highest level since mid-July at 1.3132 before erasing a portion of its daily gains. As of writing, the pair was up 0.1% on the day at 1.3107.

Canadian economy loses momentum

The data from Canada showed on Wednesday that the economy expanded at an annualized rate of 3.3% in the second quarter. This reading came in weaker than the market expectation for a growth of 4.4% and caused the loonie to lose interest. 

On the other hand, the ADP reported that employment in the US private sector rose by 132,000 in August, missing the market expectation for an increase of 288,000 by a wide margin. This data caused the US Dollar Index (DXY) to lose its traction and made it difficult for USD/CAD to preserve its bullish momentum. Ahead of Wall Street’s opening bell, DXY stays flat on the day at around 108.90.

Meanwhile, crude oil prices started to rebound, helping the commodity-related CAD show some resilience against its rivals. The barrel of West Texas Intermediate, which dropped to a nine-day low of $88.20 earlier in the day, was last seen trading above $90.

There won’t be any other high-tier macroeconomic data releases in the remainder of the session but month-end flows toward the London fix could ramp up the market volatility.

Technical levels to consider

Full Article

Gold Price Forecast: Every tick lower in XAU/USD is raising the risk of a capitulation event – TDS
Gold Price Forecast: Every tick lower in XAU/USD is raising the risk of a capitulation event – TDS

Gold Price Forecast: Every tick lower in XAU/USD is raising the risk of a capitulation event – TDS

253371   August 31, 2022 21:40   FXStreet   Market News  

Gold has come under renewed bearish pressure and hit a fresh monthly low below $1,710. Strategists at TD Securities note that any dip in the yellow metal increases the odds of a massive capitulation event in gold.

Silver prices are vulnerable

“Gold markets still feature an extremely concentrated and bloated position held by family offices and proprietary trading shops. Few traders are now holding an extremely bloated position. Further, this position does not appear to be associated with a stagflationary narrative. As prices approach this cohort’s pandemic-era entry levels, the risk of a large-scale capitulation is growing. This fits well with the risk of a breakout in the broad dollar index, which could coincide with a meltdown below the $1,675 range.”

“Considering that industrial demand has also resumed its slump, after the mean-reversion in demand signals showed signs of overshooting, silver prices are also vulnerable given little exposure to the rise in supply risk premia that has supported the base metals complex.” 

“While palladium also proved vulnerable to demand headwinds, a recent CTA selling program has been whipsawed, translating to modest buying support that should soon run out of steam. Unless prices break north of $2,133, we expect a CTA selling program to imminently weigh on palladium.”

Full Article

EUR/USD leaves behind daily lows near 0.9970
EUR/USD leaves behind daily lows near 0.9970

EUR/USD leaves behind daily lows near 0.9970

253370   August 31, 2022 21:40   FXStreet   Market News  

  • EUR/USD bounces off earlier lows in the 0.9970 zone.
  • The dollar gives away part of the recent advance past 109.00.
  • EMU flash inflation figures surprised to the upside in August.

Following a knee-jerk to the 0.9970 region, EUR/USD managed to regain traction and reclaim the parity zone on Wednesday.

EUR/USD meets support around 0.9970

EUR/USD now looks to add to the positive start of the week, although it remains at the mercy of inconclusive risk appetite trends for the time being.

In the meantime, higher-than-expected inflation figures in the euro area for the current month appear to have lent further conviction to the investors’ perception of a 75 bps rate hike at the ECB event in September, which seems to have lent some wings to the single currency.

In the US docket, the revised ADP report showed the US private sector added 132K jobs in August, less than initially estimated.

What to look for around EUR

EUR/USD now treads water amidst the renewed bid bias in the greenback as well as some worsening conditions in the risk complex.

So far, price action around the European currency is expected to closely follow dollar dynamics, geopolitical concerns, fragmentation worries and the Fed-ECB divergence. However, potential shifts to a more hawkish stance from ECB’s policy makers regarding the bank’s rate path could be a source of strength for the euro.

On the negatives for the single currency emerge the so far increasing speculation of a potential recession in the region, which looks propped up by dwindling sentiment gauges as well as an incipient slowdown in some fundamentals.

Key events in the euro area this week: EMU Flash Inflation Rate, Germany Unemployment Change, Unemployment Rate (Wednesday) – Germany Retail Sales, Final Manufacturing PMI, EMU Final Manufacturing PMI, EMU Unemployment Rate (Thursday) – Germany Balance of Trade (Friday).

Eminent issues on the back boiler: Continuation of the ECB hiking cycle. Italian elections in late September. Fragmentation risks amidst the ECB’s normalization of its monetary conditions. Impact of the war in Ukraine and the persistent energy crunch on the region’s growth prospects and inflation outlook.

EUR/USD levels to watch

So far, spot is losing 0.11% at 1.0001 and the breach of 0.9899 (2022 low August 23) would target 0.9859 (December 2002 low) en route to 0.9685 (October 2022 low). On the other hand, the next up barrier comes at 1.0090 (weekly high August 26) seconded by 1.0202 (high August 17) and finally 1.0223 (55-day SMA).

Full Article

Goldman Sachs now expects the ECB to hike by 75 bps in September
Goldman Sachs now expects the ECB to hike by 75 bps in September

Goldman Sachs now expects the ECB to hike by 75 bps in September

253369   August 31, 2022 21:12   Forexlive Latest News   Market News  

Today’s eurozone preliminary CPI was up 9.1% y/y compared to 9.0% expected led by a 38% rise in energy prices. That was the final straw for Goldman Sachs, which also cited ‘upside risks to near-term growth(?)’.

Even as the odds of a 75 bps hike have risen, policymakers are continuing to deliver hawkish talk. That’s a strong sign that an agressive hike is coming.

The decision is Sept 8 and will be the highlight on next week’s economic calendar.

Full Article

Forward · Rewind