Sample Category Title

Daily Pivots: (S1) 0.9782; (P) 0.9813; (R1) 0.9863; More...

Intraday bias in USD/CHF remains on the upside and outlook is unchanged. Consolidation pattern from 1.0063 should have completed with three waves down to 0.9493 already. Further rally would be seen to retest 1.0063 high first. Decisive break there will resume larger up trend. On the downside, break of 0.9670 minor support will dampen this bullish view and turn intraday bias neutral first.

In the bigger picture, medium term up trend from 0.8756 (2021 low) is still in progress. Next target is 1.0342 (2016 high). Sustained break there will resume long term up trend from 0.7065 (2011 low). This will remain the favored case as long as 0.9471 resistance turned support holds.

Daily Pivots: (S1) 0.9989; (P) 1.0086 (R1) 1.0139; More...

Intraday bias in EUR/USD remains on the downside for the moment. Current down trend should target 100% projection of 1.1184 to 1.0348 from 1.0773 at 0.9937, which is close to parity. Firm break there could prompt downside acceleration to 161.8% projection at 0.9420. On the upside, break of 1.0189 minor resistance will turn intraday bias neutral again. But outlook stays bearish as long as 1.0358 support turned resistance holds.

In the bigger picture, down trend from 1.6039 (2008 high) is still in progress. Next target is 100% projection of 1.3993 to 1.0339 from 1.2348 at 0.8694. In any case, outlook will stay bearish as long as 1.0773 resistance holds, in case of rebound.

Daily Pivots: (S1) 1.1827; (P) 1.1932; (R1) 1.1998; More...

GBP/USD's down trend resumes after brief consolidations. Intraday bias is back on the downside for 100% projection of 1.2666 to 1.1932 from 1.2405 at 1.1671. Decisive break there will target a test on 1.1409 long term support. On the upside, above 1.2055 minor resistance will now indicate short term bottoming, and turn bias to the upside for stronger rebound.

In the bigger picture, fall from 1.4248 (2018 high) could be a leg inside the pattern from 1.1409 (2020 low), or resuming the longer term down trend. Deeper decline is expected as long as 1.2666 resistance holds. Next target is 1.1409 low. However, firm break of 1.2666 will bring stronger rise back to 55 week EMA (now at 1.3065).

Dollar is staying as the strongest major currency in the market for now. Yen and Swiss Franc are not performing too badly, as supported by mild risk-off sentiment. But Canadian Dollar is also resilient, awaiting BoC's decision on whether to deliver a jumbo rate hike. Aussie and Euro are currently the worst, while Sterling is also week. These three have already broken through recent lows against the greenback.

Technically, CAD/JPY is worth some attention for the coming days. Price actions fro m107.19 are clearly corrective while the cross is also supported comfortably above 55 day EMA. It has the better potential to follow USD/JPY for an upside breakout. Break of 107.19 will extend the larger up trend towards 110 handle next.

In Asia, Nikkei dropped -1.77%. Hong Kong HSI is down -1.12%. China Shanghai SSE is down -0.95%. Singapore Strait Times is up 0.11%. Japan 10-year JGB yield is down -0.0007 at 0.249. Overnight, DOW dropped -0.52%. S&P 500 dropped -1.15%. NASDAQ dropped -2.26%. 10-year yield dropped -0.011 to 2.991.

Fed Bostic supports another 75bps rate hike in Jul

Atlanta Fed president Raphael Bostic said yesterday, "the data that came in the last several months really pointed to a need for us to get closer to that neutral stance faster,"

"I'm confident that the economy will be able to withstand this next move. I would support a 75 basis point" rate hike at the July FOMC meeting, he added.

Beyond July, the decisions will depend on incoming economic data. "If demand comes down much faster than we expected or supply comes back, I will be comfortable pulling off" further rate increases, Bostic said.

Separately, St. Louis Federal Reserve president James Bullard said, "now we have lots of inflation, but the question is, can we get back to 2% without disrupting the economy? I think we can."

Australia Westpac consumer sentiment dropped to 83.8, comparable to previous major shocks

Australia Westpac Consumer Sentiment Index dropped from 86.4 to to 83.8 in July. The confidence has been falling every month this year, and it's now -19.7% below December's level.

Westpac said that both level and pace of deterioration are "comparable to previous major shocks". It added that rate fears were intensifying, with 73% polled expecting rates to rise more than 1%.

As for RBA policy, Westpac expects another 50bps rate hike on August 2, taking interest rate to 1.85%. That would be near to Westpac's assessed "neutral zone" of 1.5-2.0%. It expects RBA to adopt a "more cautious approach" once policy moved to "neutral", and pause the tightening first after August's hike.

Australia NAB business confidence dropped to 1, but conditions held up

Australia NAB business confidence dropped from 6 to 1 in June. Business conditions dropped from 15 to 13. Looking at some details, trading conditions dropped from 21 to 18. Profitability conditions dropped from 16 to 12. Employment conditions dropped from 12 to 10.

"Confidence sank below average in June as inflation and interest rate hikes clouded the outlook," said NAB Group Chief Economist Alan Oster. "Confidence in the retail sector took a significant hit, falling more than 20pts to be well into negative territory, reflecting concerns about the outlook for household spending."

"While confidence fell, business conditions held up in June," said Oster. "Conditions remain strong across the states and in most industries. Construction continues to be the only real outlier with building costs weighing, despite a healthy pipeline of work in the sector."

Looking ahead

Germany ZEW economic sentiment will be the main focus for the rest of the day.

GBP/USD Daily Outlook

Daily Pivots: (S1) 1.1827; (P) 1.1932; (R1) 1.1998; More...

GBP/USD's down trend resumes after brief consolidations. Intraday bias is back on the downside for 100% projection of 1.2666 to 1.1932 from 1.2405 at 1.1671. Decisive break there will target a test on 1.1409 long term support. On the upside, above 1.2055 minor resistance will now indicate short term bottoming, and turn bias to the upside for stronger rebound.

In the bigger picture, fall from 1.4248 (2018 high) could be a leg inside the pattern from 1.1409 (2020 low), or resuming the longer term down trend. Deeper decline is expected as long as 1.2666 resistance holds. Next target is 1.1409 low. However, firm break of 1.2666 will bring stronger rise back to 55 week EMA (now at 1.3065).

Economic Indicators Update

EURJPY is tumbling below the medium-term ascending trend line, changing the bullish outlook to neutral. The RSI is sloping downwards in the negative region, while the MACD is losing momentum below its trigger and zero lines. In trend indicators, the 20-day simple moving average (SMA) is turning lower, approaching the 40-day SMA for a possible bearish cross.

If sellers sink deeper, than the price may meet the 38.2% Fibonacci retracement level of the up leg from 124.40 to 144.25 at 136.75. Steeper declines under the line would have to tackle a more durable support section from the 50.0% Fibonacci at 134.30 and the 200-day SMA at 133.18. Extending lower could encounter the 132.60 barrier and the 61.8% Fibonacci at 131.90, shifting the outlook to bearish.

On the other hand, if buying interest picks up, early tough resistance could occur at the 23.6% Fibonacci of 139.55, where the 40-day SMA also resides. A violation of this level may shoot the pair to challenge the 20-day SMA at 141.00 ahead of 142.35. Even higher, the price may surge towards the more-than-seven-year peak of 144.25.

Overall, the very near-term picture remains negative below the ascending line; however, in the bigger picture, a bearish outlook may come only if there were a break below the 200-day SMA.

Markets

The dollar enjoyed another day in paradise yesterday. The greenback excelled at the start of the new week, sprinting higher against all of its most important peers during outright risk aversion. Recession fears already took over again after Friday’s solid payrolls brought some temporary comfort. The trade-weighted index (DXY) hit a new two-decade high of 108.02. That move coincided with USD/JPY breaking previous cycle highs to close at 137.44 (24-year high). Unwavering euro weakness added to EUR/USD’s protracted decline. The combination closed millimeters away from parity (1.004). EUR/CHF erased a two-day recovery to finish at 0.987. Sterling kept the upper hand over the common currency as well. Since breaking below the upward sloping trend channel, EUR/GBP fell about 1.5 big figures from 0.86 last Tuesday to 0.844 yesterday. Cable (GBP/USD) stuck to the YtD lows around 1.19 though. Meanwhile, several senior Tories warned for policy paralysis if outgoing PM Johnson sticks around until his successor has been chosen. This is due by September 5. Former Chancellor Sunak entered and is currently leading the early race. Moves in other markets were equally tainted by the risk off. Core bonds jumped with German Bunds outperforming UST’s in sessions that see liquidity increasingly drying up. German yields dropped between 7.2 (30y) and 10.1 (5y) bps. Peripheral spreads vs. Germany’s 10y rose by 2 bps. US yields were down 3.4 (2y) to 9.4 (20y) bps for the day. Equities fell 1-1.5% in Europe and between 0.5-2.3% in the US. Tech underperformed.
 
The negative mood spilled over into Asian dealings this morning. South Korean stocks lag (-2.2%). European equity futures suggest a red opening to the tune of -0.75%. The US yield curve flattens by 3.5 bps at the front and it remains dollar dominance on FX markets. EUR/USD came as close to parity as 6 pips. Given the lack of economic data we expect the current market atmosphere to set the tone for trading today. A test of the highly symbolic EUR/USD 1 level looks inevitable. A break paves the way to intermediate support around 0.96. But the actual reference is the all-time low of 0.823. The market is shunning the euro while stacking up dollars for the rainy days to come. It poses yet another difficult trade-off for the European Central Bank as it jolts imported inflation even further. That said, markets are much less convinced than just a few months ago about the amount of rate hikes the ECB will be able to deliver with the continent in (energy) crisis mode. That’s less the case for the Fed, with the US economy still proving resilient (eg. Friday’s payrolls). We’re keen to see whether US June inflation figures due tomorrow are able to diverge markets focus again. In Europe, a €8bn EU dual tranche transaction is upcoming today, comprising a new 7yr benchmark due 4 December 20029 and a tap of the EU 0.45% 07/2041 bond.

News Headlines

According to the data from the British retail consortium (BRC), the nominal value of retail spending in the UK for the third month in a row printed below the level of the same month last year at -1.0% y/y (from -1.1% in May). However, as the data are not corrected for price rises, volumes of sales are declining sharply. According to BRC ‘sales volumes are declining at a rate not seen since the depth of the pandemic, as inflation continues to bite and also are cutting back spending’. BRC also signals that shoppers are shifting spending to cheaper brands of foods and other goods as well as postponing some purchases.
 
According to the New York Fed June 2022 survey of consumers expectations, US consumers see inflation rising further in the one-year ahead period from 6.6% to 6.8%. However, medium term inflation expectations (3-y ahead) eased to 3.6% from 3.9%. US consumers also expect a sharp slowdown the rise of house prices one year from now at 4.4% down from 5.8%. The decline is the second largest on record and the expected rise marks the lowest since February 2021. US households see higher unemployment and a rising probability of losing their own job in the year ahead (11.9% from 11.1%). Median year-ahead household spending growth expectations retreated from its series high in May, declining by 0.6 percentage point to 8.4% but remains well above its 2021 average of 5.0%.

Things sure are looking messy out there right now, especially in Forex Land where the Euro is within a hair’s breadth of trading at parity with the US Dollar this morning. Overnight, the single currency slumped by 1.45% to 1.0040 as Euro yields edged lower as markets fell over themselves to price in a European recession. Energy, and by this, I mean Russian energy, lies at the heart of Europe’s turmoil, with news that Canada would release a specialised gas pipeline pump back to Russia to keep the petajoules flowing having no positive impact. My understanding is that as of yesterday, Nord Stream 1 which carries the fruits of Germany’s energy policies from Russia has entered its annual 10-day maintenance shutdown. The key question is, will the gas return after the 21st of July. Markets seem to be making up their mind already.

The slump by the Euro overnight also dragged Sterling down with it, which faces a messy leadership battle now post-Bojo. Today it was announced that the process would be concluded by err… September 5th. Wonderful. Risk sentiment indicators, the Australian and New Zealand Dollar, were also dragged down the Euro whirlpool as well as investors loaded up on US Dollars and a fair few US government bonds as well by the looks, as US yields fell overnight. Gold, the forgotten asset class, is also trading one-for-one with EUR/USD this morning as well.

As for EUR/USD itself, it has never looked back after it fell through the multi-decade support line at 1.0850 earlier this year. I have no doubt there are plenty of options-related buds just ahead of parity. Likely these are related to 1.0000 knockouts and one-touches and other arcane options “structures”. If previous form is followed, we are likely to see a slow erosion of those bids, along with some dead cat bonces, and when parity finally goes, the stop-losses will kick in sending EUR/USD quickly lower. My charts are thin on the ground at these subterranean levels, but somewhere around 0.9900 looks like the next stop for the train.

US data has thrown the cat amongst the pigeons of course. Friday produced another blockbuster Non-Farm Payrolls, which leapt higher to 372,000. Unemployment was unchanged at 3.60% suggesting Americans are returning to the workforce and are being slurped up by employers. That certainly rained on the “recession-is-nigh” party, something I have been saying isn’t a done deal to global deaf ears. The street is locked and loading another 75 basis points from the Fed at the end of the month. This Thursday’s US Inflation data will be the pivotal moment for financial markets this morning. If headline inflation stays at or above 8.80% YoY, and/or the core stays at 5.70% or above, get ready for a risk-aversion sell-off. Having said that, given the genetic propensity of the equity market FOMO gnomes to buy the dip, lower prints could spark a welcome relief rally in the stock, bond, and currency markets.

Another risk points the street is begrudgingly waking up to at last is China and covid-zero. The city of Wugang is being locked down today for three days, while cases are creeping higher in other parts of the Mainland. That is weighing heavily on China's equities right now with Mainlanders rightly worried that more lockdowns, especially in Shanghai or Beijing, could occur. That has overshadowed excellent lending data released this week, as banks respond to central government exhortations to get play their stimulus part. ASEAN markets are yet to wilt, although the Northern Asia heavyweights geographically collocated certainly are. That could be because of their correlation to the Nasdaq though. The value-heavy ASEAN stock markets are looking like a safety play this morning, I’m not sure how long that will last.

Japan’s Finance Minister Suzuki has been on the wires this morning as USD/JPY approaches 138.00 saying Japan will take “necessary steps” in the forex market, as necessary I suppose. He also said that they would be closely communicating with other FX authorities internationally. This is the usual rhetoric when things don’t go to plan, and I do not believe we are imminently going to see the Ministry of Finance intervening in USD/JPY. (sidenote: the MOF makes the call on intervention; the BOJ merely executes it.) I am a little surprised that USD/JPY has remained at these levels, just as I am certain other “authorities” have bigger fish to fry right now and don’t think the Yen’s depreciation is a threat to global financial stability. If the MOF intervenes, it’ll be doing it alone. Probably the best hope Japanese authorities have for some Yen relief is a slump in US yields triggering a culling of the heavily long USD/JPY open interest out there.

China will also be front-and-centre at the end of this week amongst the tier-1 US data dump. On Friday, it releases its House Price Index, Industrial Production, Retail Sales, Fixed Asset Investment, and Unemployment for June, as well as quarterly GDP Growth and Capacity Utilisation. Although virus nerves will captivate the short-term attention of traders and investors, the data will go a long way to answering how well-placed China is to weather another bout of Covid lockdowns.

Tomorrow, we get rate decisions from the Bank of Korea and Reserve Bank of New Zealand as well as China’s 1-year Medium Term Facility Rate. The lending numbers from China this week mean there is no urgency to lower the 1-year MTF. The Bank of Korea is on track to announce a punchy (by their standards), 0.50% rate hike after recent elevated inflation data and a rapidly weakening Won in the face of the Dollar juggernaut.

The Reserve Bank of New Zealand is being bandied around as the canary in the coal mine for other central banks, having started normalising policy sooner than other developed market central banks. That is giving the RBNZ far too much credit, only the Central Bank of Turkey has done a worse job. The RBNZ kept quantitatively easing as inflation exploded in New Zealand and sent house prices spiralling. Having sat like a possum in the headlights while the cost of living spiralled out of control and presided over the greatest transfer of wealth ever from our young people to our old people, they were then tardy and timid in stopping QE and then raising interest rates. They have nicely set up the country for an abrupt slowdown this year. A 0.50% rate hike is baked in, but the attention will be on whether they indicate a slower pace of hikes going forward. Given the stagflation nightmare they created, this would be a mistake and all I can say to any central bankers reading this newsletter is if the RBNZ blinks, you should absolutely do the opposite. The RBNZ is a reverse leading indicator, not a leading indicator. (NB: I am a Kiwi, and you may have noticed, that I am a bit upset with the RBNZ)

Data released today in Asia have been second-tier. Japan’s June PPI rose by 9.20% YoY, higher than expected, and the Bank of Japan sticking to an easy monetary policy, has kept up the pressure on the Yen. The Philippines' Balance of Trade was worse than expected, falling to $-5.678 billion in May as imports exploded. Once again, a deteriorating trade balance will keep the pressure on the Peso, already at record lows. Australian Consumer and Business Confidence data was weak, but a much lower Australian Dollar overnight is keeping local equities supported.

This afternoon sees the release of the German ZEW Economic Sentiment Index for July. It goes without saying it has serious downside risks and will be another headwind for the Euro and European equities this afternoon. India’s Inflation data this evening should see YoY Inflation remaining above 7.0% as the Indian Rupee slump continues and energy prices remain firm. The US 10-year note auction will be worth watching, with heavily US bond issuance this week. A weak bid-to-cover could give the US Dollar rally a reason to pause, while the API Crude Inventories could lift oil prices if the headline number falls sharply from last week’s 3.8 million-barrel gain.

Asian equities are mostly lower

Wall Street went back into recession mode overnight, with the growth-centric Nasdaq underperforming as tech heavyweights were sold off. The Nasdaq’s fall has translated directly into weakness with the correlated North Asia heavyweights, while the rest of Asia and Pacific has escaped mostly unscathed. Covid-19 fears in China continue to hang like a dark cloud over the region, however.

Overnight, the S&P 500 fell by 1.15%, with the Nasdaq tumbling by 2.26%, while the Dow Jones finished 0.52% lower. The giant Non-Farm Payrolls number has given Wall Street food for thought on US rate hikes, with the FOMC looming at the end of the month, even as haven flows sent US yields lower across the curve. In Asia, US futures continue to fall with futures on all three major indexes down by around 0.50%.

The continuing retreat of US futures, along with the Nasdaq slump overnight and lockdown fears in China sees most of Asia lower. Japan’s Nikkei 225 has slumped by 2.0%, with South Korea’s Kospi dropping by 1.20%. In Mainland China, lockdown fears see the Shanghai Composite 1.0% lower, with the CSI 300 falling by 1.20%. Hong Kong’s Hang Seng is also 1.20% lower.

In regional markets, a holiday in Singapore and Malaysia yesterday see the Straits Times managing to remain unchanged, but the KLCI has fallen by 0.45%. Taipei has tumbled 2.55% lower. Jakarta is down just 0.05%, with Bangkok and Manila easing by 0.40%. A lower Australian Dollar seems to be boosting the resource-heavy Australian markets today. The ASX 200 is 0.20% higher, while the All Ordinaries has gained 0.40%.

Asia is roughly mirroring the Wall Street growth/value split overnight. Unfortunately, European markets are unlikely to find much solace because of that. Energy concerns and a slump by Wall Street overnight are likely to see European bourses open well in the red this afternoon.

US Dollar tramples all before it

The US Dollar caught another flight-to-safety boost overnight, running rampant over DM currencies with the Euro, Sterling, Yen, and Australian Dollar coming in for particular attention. In Asia today, EUR/USD continues to flirt with parity, while the US Dollar has strengthened broadly across the Asia FX space.

The dollar index soared 1.23% higher to 108.21 overnight, gaining another 0.16% to 108.38 in Asia as Euro and Sterling losses continued. Overall, the technical picture remains constructive for the dollar index, although the daily relative strength index (RSI) is now in overbought territory, suggesting a temporary downward correction is possible. Having broken out of a 5-year triangle at 102.50 in April, its longer-term target remains in the 1.1700 area. More immediate resistance is at 108.45 and 110.00. Support is at the 1.0585 breakout point, and then 1.0500, followed by 1.0350 and 102.50. ​

EUR/USD tumbled by 1.43% to 1.0040 overnight, edging 0.17% lower to 1.022 today, having traded as low as 1.0006 earlier in the session. I expect there to be plenty of bids into parity initially, likely option and exporter-related. A break of 1.0000 is likely to trigger a sharp move lower as stop-losses and algos kick in. Since breaking a multi-year support line at 1.0850 in April, Euro has looked consistently weak, the recovery rally failing ahead of 1.0850 in a technical analysis nirvana. An oversold RSI allows for short-term recovery, with resistance at 1.0200 and 1.0270. Support is at 1.0000, and failure targets the 0.9900/25 area.

GBP/USD fell by 1.19%% to 1.1890 overnight, dragged lower by the Euro and a rampant US Dollar. With a new Prime Minister not due to be announced until early September, this uncertainty will continue to weigh on the sterling. In Asia GBP/USD has edged 0.20% lower to 1.1867. Immediate support is nearby at 1.1860 and 1.1800, with 1.1400 the medium-term target. Resistance is well defined at 1.2060 and 1.2200.

USD/JPY rallied by 0.98% to 137.40 overnight despite US yields easing. In Asia, it is steady at 137.30 as Finance Minister Suzuki’s comments add some two-way risk into being long USD/JPY at these levels, at least temporarily. USD/JPY has resistance at 138.00 and 140.00, with support at 136.00, 134.25 and 132.00. Only a sharp fall in US yields seems likely to turn USD/JPY lower.

AUD/USD slumped by 1.70% overnight to 0.6735 on a combination of haven-based US Dollar buying, a reversal in global investor sentiment, and China lockdown concerns. In Asia, it has eased 0.17% lower to 0.6725. A correction above resistance at 0.6900 looks unlikely for now, with risks skewed towards the downside and a test of 0.6600. NZD/USD also plummeted overnight and is facing a test of 0.6100 today.

Asian currencies fell overnight as investors moved into risk-aversion mode and bought US Dollars across the board. The Won, Baht and Yuan led losses, and today USD/Asia is higher by around 0.30%, with the Philippines Peso falling 0.60% after poor trade data, while USD/IDR is testing 15,000.00 and USD/MYR looks set to test 4.4500. USD/INR and USD/PHP are trading at record lows although the price action in USD/INR, USD/IDR, USDKRW, USD/PHP and USD/THB suggests that local central banks are offering US Dollars at these levels. That is likely to be smoothing rather than lines in the sand, and US inflation above 7.0% this Thursday will probably spur more selling. USD/CNH has also moved sharply higher in the last 24 hours, and any indication that China is enacting lockdowns again in major urban centres will see it and the rest of the Asia FX space move sharply lower.

Oil trades sideways overnight

Oil prices had another choppy session overnight but ultimately traded sideways, booking just modest losses. Markets remain torn between recession fears in the US, Europe, and China torpedoing growth and thus, oil consumption, and the still very tight supply/demand reality of the physical market. Little hope is being assigned to Biden’s visit to Saudi Arabia unlocking more production from them or the UAE. The price is likely to be very high to achieve that.

Brent crude finished 0.70% lower at $106.25 overnight, while WTI fell 1.30% to $103.35 a barrel. News that a court in Russia has overturned the environmental ban at the Kazakh’s Black Sea terminal in Russia, has sent oil prices slightly lower in Asia. That is likely to be temporary given the Russian judicial system, and it seems that China's lockdown fears are keeping oil prices offered in Asia. Brent crude is 0.80% lower at $105.35 a barrel, with WTI falling by 1.10% to $102.30 a barrel.

Reports that Iran is about to sell 100’s of drones, some armed, to Russia could be a body blow to any nuclear deal with the west. That means that the chances of Iranian crude returning legally to international markets in greater volumes is receding and could prove supportive of prices as the day goes on.

Brent crude has resistance at $107.50 and then its 2022 trendline breakout at $108.85, followed by the 100-day moving average (DMA) at 110.75. It has traced double bottom at $103.75 and $98.60, followed by the 200- day moving average (DMA) at $96.75 a barrel. WTI has resistance at $105.00 and then its 100-DMA at $107.50 a barrel. Support is at $101.00 and then $96.60.

Gold is soggy in Singapore

The wholesale retreat of investor sentiment overnight saw massive inflows into the US Dollar, pressuring gold once again. Gold fell 0.50% to $1734.00 an ounce overnight. In Singapore, gold has had a choppy $1723.00 to $1744.00 range this morning and appears to be trading tick-for-tick with movements in EUR/USD today. As such, a break of parity by EUR/USD will signal a test of $1700.00 by gold. As I write, gold is down by 0.30% to $1729.00 an ounce in Asia.

Since breaking $1780.00, gold’s technical picture has deteriorated rapidly, and it is clear it remains at the mercy of the US Dollar's direction. The only positive note to be seen is that its RSI is now in very oversold territory, allowing for a modest corrective rally to occur if a downward correction in the US Dollar happens. ​ Despite four sessions of sideways trading, gold remains anchored at the bottom of its range and only a miracle slump by the US Dollar this evening is likely to move it off the seafloor.

Gold has resistance at $1780.00, $1785.00, and $1820.00, its downward trendline. Support is at $1720.00, followed by $1675.00. Failure of longer-term support at $1675.00 sets in motion a much deeper correction, potentially reaching $1500.00 an ounce.

Short term Elliott Wave view in Gold (XAUUSD) suggests the decline from 6/17/2022 high is unfolding as a 5 waves impulse Elliott Wave structure to complete a wave 3 of higher degree. Down from 6/16/2022 high, wave ((i)) ended at 1783.55 and rally in wave ((ii)) ended at 1814.47. Internal subdivision of wave ((ii)) unfolded as a double correction Elliott Wave structure. Wave (w) of this double correction ended at 1808.8. Pullback in wave (x) ended at 1797.22, and final 3 swings as wave (y) ended at 1814.47 which also completed wave ((ii)).

The 30 minutes chart below shows wave ((iii)) decline starting from wave ((ii)). Wave ((iii)) lower has completed with subdivision as an impulse in lesser degree. Down from wave ((ii)), wave (i) ended at 1802.97 and rally in wave (ii) ended at 1812.06. Gold extended lower in wave (iii) towards 1762.48, and rally in wave (iv) ended at 1772.77. Final leg lower wave (v) finished at 1731.47 and wave ((iii)) was completed. Wave ((iv)) pullback did flat correction ending at 1752.32. Last drop in 5 swings ended wave ((v)) at 1722.25 which also completed wave 3. The metal should do a corrective rally in wave 4 before the decline resumes. Expect wave 4 rally to fail in 3, 7, or 11 swing for further downside.

XAUUSD 30 Minutes Elliott Wave Chart

Australia NAB business confidence dropped from 6 to 1 in June. Business conditions dropped from 15 to 13. Looking at some details, trading conditions dropped from 21 to 18. Profitability conditions dropped from 16 to 12. Employment conditions dropped from 12 to 10.

"Confidence sank below average in June as inflation and interest rate hikes clouded the outlook," said NAB Group Chief Economist Alan Oster. "Confidence in the retail sector took a significant hit, falling more than 20pts to be well into negative territory, reflecting concerns about the outlook for household spending."

"While confidence fell, business conditions held up in June," said Oster. "Conditions remain strong across the states and in most industries. Construction continues to be the only real outlier with building costs weighing, despite a healthy pipeline of work in the sector."

Full release here.

Australia Westpac Consumer Sentiment Index dropped from 86.4 to to 83.8 in July. The confidence has been falling every month this year, and it's now -19.7% below December's level.

Westpac said that both level and pace of deterioration are "comparable to previous major shocks". It added that rate fears were intensifying, with 73% polled expecting rates to rise more than 1%.

As for RBA policy, Westpac expects another 50bps rate hike on August 2, taking interest rate to 1.85%. That would be near to Westpac's assessed "neutral zone" of 1.5-2.0%. It expects RBA to adopt a "more cautious approach" once policy moved to "neutral", and pause the tightening first after August's hike.

Full release here.