Sample Category Title

Daily Pivots: (S1) 1.6278; (P) 1.6320; (R1) 1.6372; More...

Intraday bias in EUR/AUD remains neutral for consolidations above 1.6256 temporary low. But further decline would remain in favor as long as 1.6580 resistance holds. Below 1.6256 will resume the fall from 1.7180, and target 1.5996 key support level next.

In the bigger picture, outlook is mixed up by the deeper than expected fall from 1.7180. Yet as long as 1.5996 support holds, up trend from 1.4281 (2022 low) is still expected to resume at a later stage. Firm break of 1.7180 will pave the way to 61.8% projection of 1.4281 to 1.7062 from 1.5996 at 1.7715.

Daily Pivots: (S1) 0.9373; (P) 0.9396; (R1) 0.9413; More....

Intraday bias in EUR/CHF remains neutral for consolidations above 0.9351 temporary low. As noted before, rebound from 0.9209 could have completed at 0.9579 already. Deeper fall is expected as long as 0.9455 minor resistance holds. Break of 0.9351 will target 0.9209 low next. However, break of 0.9497 will turn bias back to the upside for 0.9579 resistance instead.

In the bigger picture, medium term corrective pattern from 0.9407 (2022 low) might have completed with three waves to 0.9928. Decisive break of 0.9252 (2023 low) will confirm long term down trend resumption. Next target will be 61.8% projection of 1.1149 to 0.9407 from 0.9928 at 0.8851. For now, outlook will stay bearish as long as 0.9928 resistance holds, even in case of strong rebound.

Daily Pivots: (S1) 1.1029; (P) 1.1062; (R1) 1.1080; More....

Intraday bias in EUR/USD remains neutral for the moment. While retreat from 1.1200 might extend lower, rally from 1.0665 is in favor to continue as long as 1.0947 resistance turned support holds. Above 1.1139 minor resistance will bring retest of 1.1200 first. Break there will target 1.1274 high next.

In the bigger picture, prior break of 1.1138 resistance indicates that corrective pattern from 1.1274 has completed at 1.0665 already. Decisive break of 1.1274 (2023 high) will confirm whole up trend from 0.9534 (2022 low). Next target will be 61.8% projection of 0.9534 to 1.1274 from 1.0665 at 1.1740. This will now be the favored case as long as 1.0947 resistance turned support holds.

Daily Pivots: (S1) 1.3091; (P) 1.3145; (R1) 1.3181; More...

Intraday bias in GBP/USD stays neutral as consolidation continues below 1.3265. While deeper retreat cannot be ruled out, downside should be contained well above 1.3043 resistance turned support to bring rebound. On the upside, above 1.3265 will resume larger up trend to 100% projection of 1.2298 to 1.3043 from 1.2664 at 1.3409.

In the bigger picture, up trend from 1.0351 (2022 low) is resuming. Next target is 38.2% projection of 1.0351 to 1.3141 from 1.2298 at 1.3364. For now, outlook will stay bullish as long as 1.2664 support holds, even in case of deep pullback.

Daily Pivots: (S1) 0.8470; (P) 0.8491; (R1) 0.8520; More…

Intraday bias in USD/CHF remains neutral for consolidations above 0.8399. Further decline is expected as long as 0.8540 resistance holds. Break of 0.8339 will target 61.8% projection of 0.9049 to 0.8431 from 0.8747 at 0.8365, and then 0.8332 low. However, considering bullish convergence condition in 4H MACD, firm break of 0.8540 will turn bias back to the upside for 0.8747 resistance instead.

In the bigger picture, price actions from 0.8332 (2023 low) are currently seen as a medium term corrective pattern, with fall from 0.9223 as the second leg. Strong support could be seen from 0.8332 to bring rebound. Yet, overall outlook will continue to stay bearish as long as 0.9243 resistance holds. Firm break of 0.8332, however, will resume larger down trend from 1.0146 (2022 high).

Daily Pivots: (S1) 145.13; (P) 145.69; (R1) 146.72; More...

Intraday bias in USD/JPY remains neutral for the moment. On the upside, firm break of 146.47 resistance will argue that pull back from 149.35 has completed, and rebound from 141.67 is going to resume. Intraday bias will be back on the upside for 149.35 first and then 100% projection of 141.67 to 149.35 from 143.43 at 151.11. On the downside, below 143.43 will target 141.67 low instead.

In the bigger picture, fall from 161.94 medium term top is seen as correcting whole up trend from 102.58 (2021 low). Deeper decline could be seen to 38.2% retracement of 102.58 to 161.94 at 139.26, which is close to 140.25 support. In any case, risk will stay on the downside as long as 55 W EMA (now at 149.47) holds. Nevertheless, firm break of 55 W EMA will suggest that the range for medium term corrective pattern is already set.

Daily Pivots: (S1) 1.3470; (P) 1.3490; (R1) 1.3514; More...

Intraday bias in USD/CAD remains neutral for consolidations above 1.3439. Further decline is expected as long as 1.3617 resistance holds. Break of 1.3439 and sustained trading below 61.8% retracement of 1.3091 to 1.3946 at 1.3418 will pave the way to 1.3091/3176 support zone next.

In the bigger picture, current development suggests that corrective pattern from 1.3976 (2022 high) is extending with another falling leg. While deeper decline could be seen, strong support should emerge above 1.2947 resistance turned support to bring rebound. Rise from 1.2005 (2021 low) is still in favor to resume at a later stage.

Daily Pivots: (S1) 0.6739; (P) 0.6778; (R1) 0.6803; More...

AUD/USD is extending the consolidation pattern from 0.6823 and intraday bias remains neutral. On the upside, break of 0.6823 will target 0.6870 resistance. Firm break there will target 100% projection of 0.6269 to 0.6870 from 0.6348 at 0.6949. However, break of 0.6696 support will indicate short term topping, on bearish divergence condition in 4H MACD, and turn bias back to the downside for deeper pullback.

In the bigger picture, overall, price actions from 0.6169 (2022 low) are seen as a medium term corrective pattern, with rise from 0.6269 as the third leg. Firm break of 0.6798/6870 resistance zone will target 0.7156 resistance. In case of another fall, strong support should be seen from 0.6169/6361 to bring rebound.

In a typical Monday’s Asian trading session, the forex markets remained relatively subdued, with only modest movements observed. A mild sense of risk aversion was noted in the stock markets of Hong Kong and China, which exerted slight downward pressure on commodity currencies. This sentiment was largely driven by the disappointing official China PMI manufacturing data released over the weekend, which reported a fourth consecutive month of contraction. However, the impact on the markets was somewhat mitigated by the relatively better Caixin PMI manufacturing data, providing a partial offset to the overall negative outlook.

Looking ahead, this week will be pivotal in shaping market expectations for Fed's policy easing path for the remainder of the year. A rate cut is almost certain after Fed Chair Jerome Powell stated at the Jackson Hole Symposium that the "time has come" for a policy adjustment. However, there is still considerable uncertainty regarding the magnitude of the initial cut and the pace of any subsequent reductions. Key indicators such as ISM manufacturing and services indexes, along with the all-important non-farm payrolls report, are expected to offer critical insights into the Fed’s next steps.

A key currency pair to monitor this week is USD/CAD, as BoC is widely expected to announce its third consecutive interest rate cut. Technically, decline from 1.3946 is seen as a falling leg inside the range pattern from 1.3976 (2022 high). The fall halted just ahead of 61.8% retracement of 1.3091 to 1.3946 at 1.3418. Further decline is in favor as long as 1.3617 resistance holds. Firm break of 1.3418 will target 1.3091/3176 support zone next.

In Asia, at the time of writing, Nikkei is up 0.16%. Hong Kong HSI is down -1.79%. China Shanghai SSE is down -0.68%. Singapore Strait Times is up 0.31%. Japan 10-year JGB yield rose 0.0186 to 0.912.

Japan's PMI manufacturing finalized at 49.8, close to stabilization amid rising cost burdens

Japan’s Manufacturing PMI for August was finalized at 49.8, showing a slight improvement from July’s 49.1, but still indicating a marginal contraction. S&P Global noted that the sector is moving closer to stabilization, with a renewed rise in production. This marks the first increase in purchasing activity in two years.

According to Usamah Bhatti at S&P Global Market Intelligence, the latest figures paint a "mixed picture" as the sector hovers near stabilization. The renewed rise in production and a softer decline in new orders have encouraged firms to increase staffing levels, while the pace of destocking has slowed. Additionally, there have been signs of improved supplier performance, particularly in the availability of inputs like electrical components.

However, the data also pointed to significant cost pressures, with the strongest rise in input costs since April 2023. Despite this, companies have been reluctant to pass these higher costs onto customers fully, leading to the slowest rate of charge inflation since mid-2021.

China's Caxin PMI manufacturing rises to 50.4, modest return to expansion

China's Caixin PMI Manufacturing rose slightly in August, reaching 50.4 from July's 49.8, signaling a modest return to expansion. The improvement reflects faster output growth and stabilization in employment after an 11-month decline. Meanwhile, average selling prices and input costs continued to decline, indicating ongoing deflationary pressures within the sector.

Wang Zhe, Senior Economist at Caixin Insight Group, noted that while PMI manufacturing returned to expansionary territory, the growth remains "limited". He highlighted the significant challenges China faces in stabilizing its economic growth, particularly given the government's ambitious annual targets. Key issues include weak domestic demand, uncertainties in external demand, and low market optimism, all of which could hinder sustained growth.

In contrast, the official NBS data released over the weekend painted a more subdued picture. NBS PMI Manufacturing fell from 49.5 to 49.1 in August, indicating a deeper contraction in the sector. While PMI Non-Manufacturing ticked up slightly from 50.1 to 50.3, the PMI Composite dropped for the fifth consecutive month, landing at 50.1—the lowest since December 2022.

NBS statistician Zhao Qinghe attributed the decline in manufacturing to several factors, including extreme weather, off-season production in certain industries, insufficient demand, and fluctuations in commodity prices.

NFP to steer Fed's easing path, BoC to lower rates again

This week holds significant implications for Fed ahead of its September 17-18 meeting, as key economic indicators, including the ISM manufacturing and services reports, and the all-important non-farm payroll data, are set to be released.

The labor market, in particular, is under scrutiny following Fed Chair Jerome Powell's recent remarks at the Jackson Hole symposium, where he emphasized the commitment to maintaining a robust labor market while progressing toward price stability.

Powell explained that with the labor market already less tight than pre-pandemic conditions, Fed does not anticipate it to be a major source of inflationary pressure in the near term. He also emphasized that policymakers "do not seek or welcome further cooling in labor market conditions".

So all in all, any marked deterioration in employment conditions could prompt Fed to adopt a more aggressive easing stance.

Besides, the markets could be particularly sensitive to the upcoming NFP too. Last month's data sparked concerns by triggering the Sahm Rule, a reliable recession indicator, and prompted huge selloff in the stock markets. Unemployment rate's jump from 4.1% to 4.3% in July pushed the three-month average above the 12-month low by more than the critical 0.5% threshold, a level historically associated with the onset of a recession.

This development raises the stakes for this week's report, as a further increase in unemployment could reinforce fears of a deeper economic downturn and, at the same time, force Fed's hand in policy adjustment.

In parallel, global markets are also focused on BoC, which is widely expected to cut its interest rate by 25 bps for the third consecutive meeting, bringing the rate down to 4.25%. A recent Reuters survey indicated unanimous expectation among economists for this outcome, with a majority predicting additional cuts in October and December, lowering rates to 3.75% by year-end. BoC Governor Tiff Macklem's comments will be closely monitored for further dovish signals. Meanwhile, Canadian employment data is also set to be released this week.

In Europe, the focus will be on Switzerland's CPI and GDP data. Markets are currently assigning a 70% probability of a 25 basis point rate cut by SNB at its next meeting on September 26. There is also a 30% chance of a more substantial 50 bps reduction. These expectations hinge on upcoming Swiss CPI and GDP data, which, if weaker than expected, could bolster the case for a larger cut.

Australia's Q2 GDP figures will provide critical insight ahead of RBA's next meeting on September 24. Despite the global trend towards easing, RBA has indicated that it is unlikely to reduce rates this year. Such expectations wouldn't change barring any disastrous GDP results. Australian traders will also keep an eye on China's Caixin PMI data, given its potential impact on the Australian economy.

Here are some highlights for the week

• Monday: Japan PMI manufacturing final; Australia building permits; China Caixin PMI manufacturing; Swiss retail sales; Eurozone PMI manufacturing final; UK PMI manufacturing final.
• Tuesday: New Zealand terms of trade; Japan monetary base; Australia current account; Swiss CPI, GDP; Canada PMI manufacturing; US ISM manufacturing.
• Wednesday: Australia GDP; China Caixin PMI services; Eurozone PMI services final, PPI; UK PMI services final; Canada trade balance, BoC rate decision; US trade balance, factory orders, Fed's Beige Book.
• Thursday: Japan average cash earnings; Australia trade balance; Swiss unemployment rate; UK PMI construction; Eurozone retail sales; US ADP employment, jobless claims; ISM services.
• Friday: Japan household spending leading indicators; Germany industrial production, trade balance; France trade balance, industrial production; Swiss foreign currency reserves, SECO consumer climate; Eurozone GDP revision; Canada employment, Ivey PMI; US non-farm payrolls.

AUD/USD Daily Report

Daily Pivots: (S1) 0.6739; (P) 0.6778; (R1) 0.6803; More...

AUD/USD is extending the consolidation pattern from 0.6823 and intraday bias remains neutral. On the upside, break of 0.6823 will target 0.6870 resistance. Firm break there will target 100% projection of 0.6269 to 0.6870 from 0.6348 at 0.6949. However, break of 0.6696 support will indicate short term topping, on bearish divergence condition in 4H MACD, and turn bias back to the downside for deeper pullback.

In the bigger picture, overall, price actions from 0.6169 (2022 low) are seen as a medium term corrective pattern, with rise from 0.6269 as the third leg. Firm break of 0.6798/6870 resistance zone will target 0.7156 resistance. In case of another fall, strong support should be seen from 0.6169/6361 to bring rebound.

Economic Indicators Update

Key Highlights

• EUR/USD started a downside correction from the 1.1200 zone.
• It traded below a key bullish trend line with support at 1.1125 on the 4-hour chart.
• GBP/USD is consolidating near the 1.3120 level and might correct lower.
• USD/JPY might aim for a fresh increase if it clears the 146.50 resistance.

EUR/USD Technical Analysis

The Euro climbed higher and tested 1.1200 against the US Dollar. Recently, EUR/USD started a downside correction below 1.1150 and 1.1120 levels.

Looking at the 4-hour chart, the pair traded below a key bullish trend line with support at 1.1125. There was a move below the 23.6% Fib retracement of the upward move from the 1.0777 swing low to the 1.1200 high.

The pair is now trading near the 100 simple moving average (red, 4-hour) and testing the 38.2% Fib retracement of the upward move from the 1.0777 swing low to the 1.1200 high.

On the upside, the pair could face resistance near the 1.1075 level. The next key resistance sits near the 1.1120 level. A clear move above the 1.1120 level could set the pace for a move toward the 1.1150 level. Any more gains might call for a test of the 1.1200 zone.

On the downside, immediate support sits near the 1.1035 level. The next key support sits near the 1.0985 level. The main support is now forming near 1.0950 and the 200 simple moving average (green, 4-hour).

A downside break below the 1.0950 level could set the pace for a larger decline. The next major support is near the 1.0900 level.

Looking at GBP/USD, the pair started a downside correction below 1.3180 and might even revisit the 1.3050 level.

Upcoming Economic Events:

• Germany’s Manufacturing PMI for August 2024 - Forecast 42.1, versus 42.1 previous.
• Euro Zone Manufacturing PMI for August 2024 – Forecast 45.6, versus 45.6 previous.