The USD is little changed and mixed as North American traders enter for the day. The greenback is trading lower against the AUD and NZD, higher against the EUR, JPY, GBP and CHF, and nearly unchanged against the CAD.
The major currency pairs remain confined to relatively narrow trading ranges. In the morning Kickstart video, I take a technical look at the EURUSD, USDJPY and GBPUSD and outline the key levels that will define the bias for each pair. What would give the buyers more control? What would shift the advantage toward the sellers? What are the risks and targets that traders should be watching?
The goal is to identify the levels that could unlock the next move and provide a roadmap for the North American session. Be aware. Be prepared. Let’s get started.
The low-to-high trading ranges show:
- EURUSD: 22 pips
- USDJPY: 40 pips
- GBPUSD: 27 pips
- USDCHF: 15 pips
- USDCAD: 22 pips
- AUDUSD: 19 pips
- NZDUSD: 16 pips
The relatively narrow ranges leave the door open for extensions as North American traders enter and the new trading day progresses.
U.S. Treasury yields are modestly higher, although the changes are less than one basis point across the curve:
- 2-year yield: 4.2299%, up 0.6 basis points
- 5-year yield: 4.3891%, up 0.3 basis points
- 10-year yield: 4.6663%, up 0.2 basis points
- 30-year yield: 5.1858%, nearly unchanged
The US treasury will complete the coupon auctions by selling 7-year notes at 1 PM today. The 2 and 5 were met by above average demand so far.
In other markets, crude oil is trading near $82.20 and is little changed on the day. Gold is also nearly unchanged at $4,598.41, while silver is up 0.52% at $68.46. Bitcoin is trading at $79,544, up 0.66%.
U.S. stock futures are mixed, with technology shares outperforming following stronger-than-expected earnings from Nvidia:
- Dow industrial average futures: down 53 points
- S&P index futures: up 18 points
- Nasdaq index futures: up 259 points
Nvidia shares are up $12.33, or 5.88%, in premarket trading after the company beat expectations on both earnings and revenue.
- Adjusted EPS: $2.22 versus $2.09 expected
- Revenue: $96.22 billion versus $92.27 billion expected
Revenue increased 106% from a year earlier, while data-center revenue reached $89.0 billion, up 117%. Nvidia also guided third-quarter revenue to approximately $108 billion, above the $103.8 billion consensus estimate. The results and stronger guidance are helping support the Nasdaq ahead of the opening.
Fed’s Kevin Warsh is scheduled to speak tomorrow at the Jackson Hole summit. Ahead of that appearance, Kansas City Fed President Jeffrey Schmid maintained a cautious, inflation-focused stance.
Schmid said inflation remains stubborn and sticky and that the Fed still needs to return it to its 2% target. He also warned that the energy shock is beginning to filter into the broader economy.
At the same time, Schmid said policymakers need more information and acknowledged that it remains unclear how restrictive current monetary policy is. He added that the midterm elections would not affect the Fed’s October decision, defended the central bank’s credibility and said he probably would have supported a rate hike at the July meeting.
Overall, his comments suggest that persistent inflation will limit the Fed’s flexibility and leave policymakers with a difficult decision at their next meeting.
The ECB meeting minutes showed unanimous support for keeping interest rates unchanged. Policymakers judged that a pause was appropriate given the uncertainty surrounding the inflationary impact of the energy shock.
Members agreed that inflation risks remain tilted to the upside, although underlying inflation remains contained and longer-term inflation expectations are anchored. The ECB will reassess the outlook in September after receiving updated projections and additional information on inflation, wages and growth.
Although no decision was pre-committed, members generally agreed that another rate hike would likely be necessary unless the inflation outlook improves significantly. The eurozone economy has also remained more resilient than expected despite the Middle East conflict, higher energy prices and elevated uncertainty.
ECB Governing Council member Dimitar Radev spoke earlier and said that the October and December meetings remain “live” for additional tightening. He warned that waiting for clear evidence of second-round inflation effects could leave the ECB behind the curve.
Radev described a 2.5% policy rate as roughly neutral but stressed that future decisions will depend on incoming economic data, updated projections and the impact of tighter financial conditions. His comments lean hawkish, although he stopped short of committing to further increases beyond September. Nevertheless, there have been reports from “sources” that the ECB will raise rates in September.
On the North American economic calendar, the major releases arrive at 8:30 AM ET:
- Initial jobless claims: 208K expected versus 206K previously
- Continuing claims: 1.790 million expected versus 1.799 million previously
- Advance goods trade balance: −$100.5 billion expected versus −$101.4 billion previously
- Advance wholesale inventories: +0.2% expected versus +0.3% previously
- Advance retail inventories excluding autos: −0.4% expected versus −0.2% previously
- Canadian current account: −C$2.00 billion expected versus −C$7.18 billion previously
- Canadian average weekly earnings: +3.45% previously
This article was written by Greg Michalowski at investinglive.com.