official Market Update by Solidecn.com

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AUDUSD

• Lower CPI data weakens the Australian dollar
• Goldman Sachs predicts a lower target rate for the RBA
• AUDUSD react to the key level at 0.679

Australian inflation slowed more than expected in the second quarter due to a decline in domestic holiday and gasoline costs, suggesting less pressure for another rate hike and causing a sharp weakening of the Australian dollar.

 

Annual headline inflation fell to 6.0% in June from 7.0% in March, which was weaker than the 6.2% consensus and the RBA's own 6.3% forecast. Importantly, the RBA's preferred measure - core inflation - the trimmed mean - slowed to 5.9% from 6.6%, which was slightly less than the market and RBA's expectation of 6.0%.

 

 

On a quarterly basis, the Australian consumer price index rose 0.8% in Q2, which is the weakest quarterly pace since September 2021. Economists believe this signals a peak in the interest rate cycle, despite a shift in inflation from goods to services. This shift might push the Reserve Bank of Australia (RBA) to raise rates by 0.25 percentage points in August and September. As a result, Goldman Sachs lowered its peak cash rate prediction to 4.6% from 4.85%, and National Australia Bank expects the RBA to leave rates unchanged in August. Current OCR rate is 4.10%.

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Chart of the Day - EURUSD

 

FOMC announced a 25 basis point rate hike yesterday, following a pause in hiking at June meeting. Such a decision was widely expected and traders were eager to see whether Fed Char Powell offers some more hints on future moves during the press conference. However, no such hints were offered and Powell was cautious not to provide any forward guidance.

 

Investors will hear from the European Central Bank today at 1:15 pm BST and the decision is expected to be similar to yesterday's FOMC decision - a 25 bp rate hike and no hints on the future. Just like Powell, ECB President Lagarde is expected to stress that future decisions will be data-dependant. However, there is a feeling in the markets that today's 25 bp rate hike will be the final one in the current ECB hiking cycle. Nevertheless, a clear signal that this is the end of hiking would be very dovish and could trigger volatile moves on the markets, and this is a scenario that central banks try to avoid. Interestingly, even as markets seem to be convinced that ECB will end hiking earlier than Fed, EUR outperformed USD recently and the main currency pair disconnected from bond markets in June.

 

EURUSD should be on watch in the early afternoon as there is a number of events scheduled that could move the pair. The most important one is ECB rate decision at 1:15 pm BST, followed by Lagarde's presser at 1:45 pm BST. In between those two investors will be offered flash Q2 GDP reading from the United States that may also trigger moves on EURUSD.

 

 

Taking a look at EURUSD at the H1 interval, we can see that it is recovering from a recent correction. The pair broke above the 38.2% retracement of a recent correction this morning and continue to move higher. A near-term resistance zone to watch can be found in the 1.1150 area, marked with 50% retracement and the 200-hour moving average (purple line).

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Chart of the day EURJPY

 

EURJPY is one of the currency pairs that is experiencing elevated volatility today. Bank of Japan meeting is a prime reason behind JPY-volatility while slew of data releases from Europe as well as speeches from ECB members is ensuring EUR-volatility.

 

Bank of Japan decided to keep interest rates and other monetary policy settings unchanged at a meeting today. There were some expectations that BoJ may announce changes to yield curve control and it did… to some extent. BoJ said that bandwidth around target yield will remain unchanged at +-0.5% but it will allow greater flexibility, meaning that yields may be allowed to deviate as much as 1% from the target. While not a clear and explicit change to yield curve control parameters, the move is seen as paving that way for dropping YCC altogether in the future

 

Moving on to EUR-side, there were some interesting comments offered by ECB members this morning. Stournaras said that if a hike is delivered at the September meeting it will be the last one and rates will stay at the peak for a few months. Similar comments were voiced by Vasle who said that the September meeting may bring a hike or a pause in the cycle. Apart from ECB speeches, a number of macro reports from Europe was released today, including an unexpected pick-up in Spanish inflation in July. There is one more key piece of data from Europe scheduled for release today - German CPI report at 1:00 pm BST.

 

 

Taking a look at EURJPY chart at D1 interval, we can see that the pair is realizing an important technical pattern - double top. Pair broke below the neckline of the pattern in the 153.50 area, paving the way for a deeper drop. Textbook range of the downside breakout from the pattern suggests a possibility of EURJPY dropping to as low as 149.00. However, it should be noted that today's BoJ decision triggered massive volatility with the pair trading 1% higher at one point earlier today and 1% lower at another. Currently the pair is little changed on the day and the shape of today's daily candlestick shows that there is a lot of indecisiveness on the market.

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Chart of the Day - US500

 

The S&P 500 (US500) recently reached a critical resistance level at 4631, raising questions about the market's next moves. Last week, the Federal Reserve implemented a widely anticipated 25 bps interest rate hike, and market participants closely monitored Fed Chair Powell's press conference for hints about future policy decisions. However, Powell offered no clear signals, emphasizing the Fed's reliance on data for future choices. Economic data following the FOMC meeting pointed to a soft landing scenario, with US Jobless Claims surpassing expectations, but the US PCE and Employment Cost Index falling short of forecasts.

 

In the upcoming week, several economic data releases will play a crucial role in shaping market sentiment. These include the ISM Manufacturing PMI, US Job Openings, US ADP data, US Jobless Claims, ISM Services PMI, and the highly anticipated US NFP report. The market's focus on the soft-landing narrative suggests that positive data may push the market higher, while disappointing data could trigger downward movements. Despite some short-term caution, the S&P 500's overall trend remains bullish. However in the short-term a pullback or consolidation phase is expected before any potential further highs. Ultimately, the ongoing rally may lead the index to new all-time highs, with a healthy consolidation period in the weeks and months ahead.

 

 

Examining the daily timeframe, the S&P 500 encountered resistance at 4631, leading to a pullback as sellers took the opportunity to secure profits. Potential support levels for a pullback could be at 4550 and 4500. The index's price is currently trading near the upper boundary of an ascending channel (indicated by the blue line) that has been respected since February 2023. The next crucial resistance level to watch for is around 4700-4730 points.

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AUDUSD

 

RBA decided to keep rates unchanged at the second meeting in a row, pressuring AUD

 

AUDUSD is trading 0.7% lower, slightly more than an hour after RBA policy announcement. Reserve Bank of Australia has decided to hold rates unchanged for the second meeting in a row. Expectations ahead of the meeting were split - economists saw a chance for a 25 bp rate hike while money markets priced in an over-60% of rates staying unchanged. Statement was Fed-like with hints that further tightening is not off the table but will be data-dependent. A lower-than-expected CPI print for Q2 2023 likely gave RBA comfort to keep rates unchanged today.

 

 

Market participants seem split on what comes next. Some say that the RBA will deliver one more rate hike this year. However, money markets are rather conservative with pricing - peak is currently seen at around 4.25% in December, down from yesterday's pricing of 4.35% peak at the turn of 2023 and 2024. NAB and ANZ signal that one more hike may come what would support AUD. However, other see AUDUSD dropping to as low as 0.6400 should global slowdown triggered by US recession materializes.

 

Market pricing for rate hikes at future RBA meetings is low but at the same time it should be noted that market does not expect cuts until the end of 2024 either. 

 

 

AUDUSD is dropping significantly today, although it still trades relatively far above local lows from the previous week. The pair is trading sideways in a wedge pattern.

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GBPAUD - Chart of the Day

 

The Reserve Bank of Australia (RBA) surprised markets with a dovish policy decision today. RBA left rates unchanged, with the main cash rate staying at 4.10%. Median consensus among economists surveyed by Bloomberg was for a 25 basis point rate hike. Meanwhile, money markets saw a less than 40% chance of a 25 bp rate move today. Ultimately, it turned out that the market was right and economists seem to have overestimated the impact of solid jobs data on RBA stance and underestimated impact of lower-than-expected Q2 CPI data. While statement released along with the decision did not rule out further hikes, there is a feeling that RBA may stay on pause now. Why? There is a number of reasons:

 

• Albeit still solid, labor market is loosening up
• Inflation trends develops better than expected
• Previous rate hikes are impacting economy, crimping demand

 

Having said that, RBA may want to stay on hold for now as its previous policy actions seem to be taking effect. Money markets also support this view - no change in the level of rates is priced in for September or October meetings.

 

 

Traders will get to hear from one more central bank this week - Bank of England on Thursday, 12:00 pm BST. Economists also expected BoE to deliver 25 basis point rate hike, just as they did in case of RBA. However, in this case there is no disconnect between economists and money markets - money markets fully price in a 25 bp BoE rate move this week. Moreover, a total of three 25 basis point rate hikes is priced in for the next three meetings. The biggest risk for GBP seems to be a potential dovish turn from BoE, similar to Fed and RBA. However, it looks rather unlikely that given current economic picture in the United Kingdom, Bank of England will decide to stay on hold and issue a dovish guidance.

 

 

Taking a look at GBPAUD at H1 interval, we can see that a recent drop on the pair was halted at the 200-hour moving average (purple line) in the 1.9085 area. Pair rallied today, driven by AUD weakness, and has almost fully erased the aforementioned drop. A near-term resistance zone to watch can be found ranging below 1.9350 mark.

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Chart of the Day - Gold

 

Fitch downgrading US credit rating from AAA to AA+ is the big news in the markets today. However, the market's reaction has been fairly muted given how significant this news can be. It should be noted that Fitch is the second major ratings agency to downgrade US credit from top-tier rating - S&P did so back in 2011 and has not upgraded it back since. Should the third major ratings agency - Moody's - follow suit and also downgrade US credit from AAA grade, this could have serious implications on US bonds. Some funds are obliged to hold only AAA grade bonds and once neither of three major agencies has such a rating on US credit, those funds may be obliged to sell their Treasury holdings, potentially triggering a slump in the TNOTE market.

 

However, the rationale behind Fitch downgrade is disputed. Fitch said that repeating debt ceiling disagreements over the past 20 years, last-minute solutions to debt ceiling problems, rising general government deficit as well as issues with US governance are the reasons behind the move. US officials rejected the rationale behind the decision saying that downgrade from Fitch is baseless and bizarre. 

 

Announcement from Fitch yesterday after close of the Wall Street session triggered some volatile market moves. US equity futures launched overnight trading with an around 0.4% bearish price gap. There were also some notable safe haven flows into USD, JPY and gold. However, a bulk of those moves have been reversed already.

 

 

Taking a look at GOLD chart at D1 interval, we can see that a potential major reversal pattern is building up. GOLD pulled back to the $1,940-1,950 price zone, where previous price reactions as well as the 50-session moving average (green line) can be found, but bearish momentum began to slow. Should we see a rebound off this area, the right should of a potential inverse head and shoulder pattern would surface. In such a scenario, neckline of the pattern at $1,980 will be on watch as a break above could trigger an almost $90 jump, which would push GOLD close to all-time highs.

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Chart of the Day - USDCAD

USDCAD is one of the pairs to watch in the early afternoon as the first Friday of a new month has come and therefore it is time for release of jobs data from the United States and Canada. Of course, report from the United States will be watched more closely than Canadian one but the fact that both will be released at the same time (1:30 pm BST) means that USDCAD is likely to become very volatile around that hour.

The US report is expected to show a 200k increase in non-farm payrolls, slightly lower than the 209k reported in June. Unemployment rate is seen staying at 3.6% while annual wage growth is seen slowing from 4.4 to 4.2% YoY. Fed Chair Powell stressed that the September decision will be data-dependent and there are 4 key US macro reports ahead of the September 20, 2023 meeting - 2 jobs reports and 2 CPI reports. NFP report for July is the first one of the four and will be watched closely. A higher-than-expected jobs gain and a smaller drop in wage growth would likely boost hawkish bets in the markets and may trigger gains on the USD market as well as declines on equities.

The Canadian report is not expected to have as much gravity as the Bank of Canada is largely seen as having already finished its rate hike cycle. Nevertheless, release is likely to trigger some short-term CAD-volatility.

Taking a look at USDCAD chart at D1 interval, we can see that the pair has experienced strong gains recently, driven by strengthening of US dollar (USDIDX - light blue overlay). However, advance was halted after the pair reached resistance zone ranging above 50% retracement of the downward move launched at the turn of May and June 2023 (1.3370 area). This is a price zone that had halted advance in early-July as well. A strong US report combined with weaker Canadian data could trigger a break above the aforementioned 1.3370 area. In such a scenario, the next resistance to watch can be found ranging above 61.8% retracement (1.3440). On the other hand, should we see CAD gain against USD - drop in USDCAD - the support level to watch can be found at 38.2% retracement (1.3300 area).

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Chart of the Day - Wheat

In terms of market-moving news, this past weekend has been very calm with neither politicians, nor central bankers delivering any significant comments. However, recent developments in the Russia-Ukraine war are pushing wheat as well as crude prices higher at the beginning of this week.

 

Russia has intensified shelling of Ukrainian ports after withdrawing from the Black Sea grain export agreement. Also, attacks of Ukrainian maritime drones on Russian Navy vessels have become more frequent recently. It was reported that apart from Russian Navy warships, a Russian oil tanker was also targeted this past weekend. This has led to a small jump in oil prices at the beginning of new week's trade as investors fear that it may limit Russia's ability to export its crude via Black Sea. However, it also means that return to the Black Sea grain export deal may be harder as hostilities at sea are picking up. As a result, we are observing an over-3% jump in wheat prices today.

 

 

Taking a look at WHEAT at D1 interval, we can see that the commodity has recently made another failed attempt at breaking above the 765 cents per bushel resistance zone. Price pulled back later on and declines were once again halted at the 625 cents per bushel support zone. Price is trying to bounce off this area today. A near-term resistance zone to watch can be found ranging around 665 cents per bushel, marked with previous price reactions as well as 50-session moving average (green line). However, if bulls fail to maintain control over the market and the price breaks below the aforementioned 625 support, a deeper drop may be looming. This is because the zone marks the neckline of a double top pattern. A break below the neckline would confirm the pattern and may trigger a drop with a textbook target range of 475 cents per bushel.

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Important Technical Setup on Gold

Gold is once again trading near its lowest levels in a month, but bulls are seeking hope in the recent rebound that occurred on Friday and was preceded by a small doji candlestick. Gold recovered from initial declines on Friday and gained significantly by the end of the day as US jobs data came in mixed and EURUSD rebounded.

 

Friday's candlestick could potentially mark a local low and also the right shoulder of an inverse head and shoulders pattern. Today, we are witnessing a pullback in gold, which puts the fate of the right shoulder at stake.

 

As seen in recent months, there is a significant correlation between gold and EURUSD. Having said that, rebound in EURUSD could be the best scenario for gold bulls. In theory, it may happen this Thursday when US CPI data for July is released at 1:30 pm BST. Market expects headline US CPI inflation to accelerate from 3.0 to 3.3% YoY, with a monthly increase of 0.2% MoM.

 

 

Neckline of the inverse head and shoulders pattern on GOLD can be found in the $1,980 area. Should we see price rise and break above this hurdle, it could pave the way for a larger upward move with a textbook range of the breakout from the pattern being $2,066 per ounce.

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Chart of the Day - USDJPY

The Bank of Japan (BoJ) clarified that its recent yield curve adjustment, announced on July 28th, was intended to sustain the current loose monetary policy rather than indicate policy normalization. The BoJ allowed the 10-year Japanese Government Bond yield to trade above 0.5% in a flexible manner, deviating from a strict cap approach. Despite global anticipation of policy normalization due to rising wages and inflation, the BoJ remains cautious, questioning whether inflation's rise is demand-driven and durable enough to exceed 2%, indicating that a shift in policy direction is not imminent.

 

USDJPY currency pair rises as the US dollar is recovering from losses experienced toward the end of the previous week. The positive momentum in the 10-year US treasury yield is playing a role in bolstering the dollar's performance, despite a retracement on Friday that didn't fully negate the broader upward trend. Investors are eagerly awaiting the upcoming release of the US Consumer Price Index (CPI), which is anticipated to be higher than the last month figures and expected to reach 3.3% Y/Y and core inflation to be the same as previous month at 4.8% Y/Y.

 

 

USDJPY currency pair is currently trading at 143.1, indicating a 0.43% increase for the day. The price recently found support at the level of 137.8 and has been steadily advancing since then. The next key target level is the previous local high at 145, which is anticipated to act as a significant resistance level. However, if the price fails to breach this level, a potential downward move to the levels of 143 or 140.4 could be anticipated.

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DE30 - Chart of the Day

Global markets have calmed after yesterday's turmoil that was triggered by a combination of a few factors - Moody's rating agency downgrading a number of US banks, Italy approving a windfall tax on 2023 bank profits and China releasing disappointing trade data for July. Major European stock markets indices launched today's trading with around 1% gains and an empty economic calendar suggests that things may remain calm until US CPI release tomorrow at 1:30 pm BST.

 

 

German DAX is trading 1% higher on the day. Taking a look at DAX futures (DE30) at D1 interval, we can see that the index is attempting to break back above the psychological 16,000 pts mark. Bulls managed to halt declines and defend the upward trendline in the 15,900 pts area. It should be noted that DE30 has been largely stuck in the sideways move in the 15,900-16,300 pts range over the past 3-4 months, spare for few false breakouts. A positive price reaction to the lower limit of the range suggests that a move towards the 16,300 pts may be next. However, a stronger catalyst may be needed to push the index above the trading range.

 

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US500

Today could be significant both for the shaping of the FED's future monetary policy and the direction of the main Wall Street indices, US100 and US500. The July reading will likely be the first in exactly a year when inflation was higher year-on-year compared to the previous month. According to the consensus, CPI inflation is expected to be 3.3% Y/Y, while in June it was 3.0% Y/Y. So far, the main indices have responded positively to lower readings, resulting in increases in US500 and US100 and a weakening dollar. However, today, a re

 

 

On US500 and US100, we observe an interesting situation. Both instruments are trading close to the lower limit of the upward channel, which has been respected since the beginning of March 2023. Therefore, if today's data falls below expectations, it may cause a rebound in the indices and euphoria in stocks driven by lowering inflation. Otherwise, the market may react with declines and break through the key support line.

 

 

On US500 and US100, we observe an interesting situation. Both instruments are trading close to the lower limit of the upward channel, which has been respected since the beginning of March 2023. Therefore, if today's data falls below expectations, it may cause a rebound in the indices and euphoria in stocks driven by lowering inflation. Otherwise, the market may react with declines and break through the key support line.

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Wheat - Chart of the Day

WHEAT quotations are gaining during today's session due to an attack by the Russian side on one of the Danube River ports. The head of the military administration of the Odessa region, Oleh Kiper, notified that warehouses and silos were significantly "affected," which is another escalation of the war in the Black Sea zone and another boost to volatility on wheat quotes. At this point, the exact scale of the damage is unknown. 

 

Wheat is still trading with a YTD loss of more than 20% due to abundant harvests in some parts of the northern hemisphere. The U.S. Department of Agriculture on Friday raised its estimate of Russian supplies for the 2023-24 season (domestic cargo estimates were raised to 48 million metric tons for the 2023-24 season. To put this in perspective, this means that nearly a quarter of the world's wheat trade will now come from Russia) and increased its forecast for U.S. wheat stocks by more than analysts had expected.

 

 

WHEAT quotations are starting today's session with an upward gap, nevertheless it is worth noting that this is mainly the result of a futures contract rollover. On the spot market, the grain's quotations are gaining 1.16% today.

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Bitcoin - Chart of the Day

Despite positive news in the cryptocurrency market, such as PayPal launching its own stablecoin and the approval of Bitcoin ETFs in Europe, cryptocurrencies remain under selling pressure. Delays in Bitcoin ETF applications by US funds, including BlackRock, have significantly contributed to the declines. Additional catalysts include issues with the decentralized exchange Curve and weaker macroeconomic sentiment in recent days.

 

 

In light of these events, yesterday Bitcoin once again broke below the $29,000 level and is currently trading around $28,600. The nearest support level is $28,300, which was tested overnight. After that, the Bitcoin price reacted strongly, rebounding by $400. If this year's upward trend is broken (blue line), we could expect the Bitcoin price to drop to $27,500 or even $26,200. On the other hand, with a positive catalyst, the Bitcoin price could swiftly return above $29,000, and even reach $29,700. Nevertheless, given the absence of positive news, further downward pressure can be expected in the coming weeks.

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Sharp Sell-off for Bitcoin

Bitcoin powerfully declines after WSJ rumors that SpaceX sold off entire, $373 mln Bitcoin holding

 

The sentiment of the cryptocurrency market has been quite weak for quite some time, and volatility remained at its lowest levels in 7 years. As expected, the period of consolidation and uncertainty ended with a spike in volatility. Bitcoin's price dived to the vicinity of $25,000 on a wave of some negative news. 

• Yesterday's strengthening of the dollar weakened Bitcoin, which began to lose rapidly during the Wall Street session, on a wave of general risk aversion;
• A report by The Wall Street Journal indicated that Elon Musk's SpaceX had liquidated a BTC holding worth $373 million, was met with a panic crypto market reaction, although Bitcoin had already been losing and was trading around $27,500 at the time of the news;
• At the same time, on-chain analysts point out that there is currently no evidence of a Bitcoin sale by SpaceX, and the WSJ report in fact spoke of a 'wrote-down' of the value of BTC held by Musk's company in 2022;
• At the same time, the SEC has received court approval to appeal the case against Ripple Labs, leading to a dynamic near-20% discount of the Ripple crypto in just a few hours
• Liquidations of long crypto bulls positions have already amounted to more than $1 billion, according to onchain data, the largest wave of bull liquidations since June 2022, when Bitcoin's price fell to $17,000.

 

Looking at BITCOIN chart, the price took a dive after the price fell below the EMA 100 average (blue line on the chart). Nevertheless, it is worth noting that the discount stopped at the level of a key support level, resulting from previous lows and the lower limit of the 1:1 system. If the level of USD 25250 is maintained, a return to growth is not excluded. On the other hand, if the price breaks below $24750 today, the downward movement may gain strength.

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AUDUSD - Chart of the day

The Australian dollar is one of the worst performing G10 currencies today. AUD is underperforming following the rate decision of the People's Bank of China. PBoC announced a 10 basis point cut to 1-year lending rate, to 3.45%, and decided to keep the 5-year rate unchanged at 4.20%. This was a disappointment as economists hoped that PBoC would decide on 15 basis point cuts to both 1- and 5-year rates. These expectations were propped up further over the weekend by reports saying that officials from People's Bank of China and Chinese financial market regulator met with Chinese bank executives and asked them to boost credit action in order to support economic recovery.

 

Decision made Chinese equities clear underperformers during today's Asia-Pacific trading session. However, it has also had a negative impact on Antipodean currencies with AUD and NZD being clear laggards among G10 currencies during the Asian session. This should not come as a surprise, especially in case of AUD, as China is a key trading partner for Antipodean countries.

 

 

Taking a look at AUDUSD chart at F1 interval, we can see that the pair has recently broken below the lower limit of the trading range, marked with 61.8% retracement of the upward impulse launched in October 2022. AUDUSD continued to move lower until the decline was halted at the 0.6400 support zone. While sellers fail to break below this hurdle, buyers also struggle to regain control and the pair continues to trade in the 0.6400 area. However, should we finally see a break below this zone, a downward move may deepen towards the textbook range of the breakout from the aforementioned trading range, which is around 0.6250.

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Economic Calendar: Second-tier US Data, Speaches from Fed members

• European indices set for higher opening.
• Second-tier data from the United States
• Possible decision on Grayscale Bitcoin ETF

Index futures point to a higher opening of the European cash session today. This comes after solid performance of tech shares fuelled gains on S&P 500 and Nasdaq during the Wall Street session yesterday and later on regional indices during the Asia-Pacific session as well. These gains come in spite of a renewed sell-off on US Treasuries market, which led 10-year yields to 16-year highs above 4.30%.

 

Economic calendar for the day ahead is light. Traders will be offered second-tier data from Poland and the United States. Some USD volatility may be present around 3:00 pm BST when existing home sales data for July and Richmond Fed index for August will be released. USD volatility may also be present during speeches from Fed members Barkin, Goolsebee & Bowman. Oil traders will focus on API report on inventories, which is expected to show a big draw but smaller than last week.

 

Also, SEC decision on Grayscale's application to convert its Bitcoin Trust into Bitcoin Exchange-Trade Fund (ETF) is expected today, somewhere around 4:00 pm BST. However, it should be said that the timing is tentative and that the SEC has already delayed the decision twice so it may not even be announced today. Nevertheless, positive ruling could give cryptocurrencies a boost so it is worth watching.

• 9:00 am BST - Poland, retail sales for July. Expected: 2.5% YoY. Previous: 2.1% YoY
• 3:00 pm BST - US, existing home sales for July. Expected: 4.15 million. Previous: 4.16 million
• 3:00 pm BST - US, Richmond Fed index for August. Expected: -8. Previous: -9
• 9:40 pm BST - API report on US oil inventories. Expected: -2.9 mb. Previous: -6.19 mb

 

Central bankers' speeches

• 12:30 pm BST - Fed Barkin
• 7:30 pm BST - Fed Goolsebee
• 8:30 am BST - Fed Goolsebee & Bowman

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US100 - Chart of the Day

Nasdaq-100 futures (US100) are attempting to climb above the 15,000 pts mark this morning. The index has been enjoying strong gains since Friday evening and the move higher accelerated yesterday. Sentiment towards the tech sector seems to be improving as Nvidia earnings releases approaches (Wednesday after session close). Results from Nvidia are expected to be a test for the AI-related bull market in tech shares. Investors seem to be optimistic with Nvidia shares rallying over 8% yesterday. Previous earnings release from the company triggered an around 25% jump in share price and launched a strong upward impulse on the broad market.

 

 

Taking a look at US100 chart at H4 interval, we can see that the index was pulling back during the first half of August, but declines were halted at the 14,625-pts support zone last week. The ongoing rebound push the index into an area, where the downward trendline as well as the upper limit of the Overbalance structure can be found. A break above the 15,045-pts zone could hint that the correction is over, and the index will resume gains. In such a scenario, the 15,400-pts zone is the next resistance to watch.

[Solid ECN ✔️]

Silver Gains 1.7%

Silver traders' position for a pause in rate hike cycle

 

Silver is trading around 1.7% higher today and almost 5% higher week-to-date. In spite of Chinese economy struggling, we have been observing gains not only on the precious metals markets recently but also on industrial metals markets. The latest rate cut from People's Bank of China was somewhat surprising with many being disappointed by a minor scale of the cut to 1-year lending rate and leaving the 5-year rate unchanged.

 

 

There has been a lot of speculation over a possible end of the rate hike cycle not only in the United States but also in euro area. While bond yields remain elevated, we can observe a small pullback in market rates today. Meanwhile, silver enjoyed a strong upward move that led to a break above the 50% retracement of the latest downward impulse. Silver bounced off the 22.20 area - a local low from June - and is now trading almost at $24 per ounce - above 50- and 200-session moving average. It should be noted that silver has been one of the best performing commodities over the 12-months but at the same time trades slightly lower year-to-date.