Sample Category Title

US retail sales rose 1.0% mom to USD 709.7B in July, above expectation of 0.3% mom. Ex-auto sales rose 0.4% mom to USD 576.1B, above expectation of 0.1% mom. Ex-gasoline sales rose 1.0% mom to USD 657.1B. Ex-auto& gasoline sales rose 0.4% mom to USD 523.4B.

Total sales for the May through July period rose 2.4% from the same period a year ago.

Full US retail sales release here.

• The market seems to be focused now on growth-related macro data rather than inflation risk.
• Another softer US retail sales may spark another recession aka hard-landing fear.
• The rise of the VVIX / VIX ratio may see another potential spike in the VIX.
• Watch the 19,230 key short-term resistance on the Nasdaq 100.

In July, the Nasdaq 100 was the worst-performing benchmark US stock indices where it recorded a monthly loss of -1.6% versus the S&P 500 (+1.1%), Dow Jones Industrial Average (+4.4%), and Russell 2000 (+10%).

In addition, the global synchronized risk-off behaviour that took shape in the past three weeks led to a larger drawdown in the Nasdaq 100 versus other US stock indices as it plummeted by -16% from its July high to 5 August 2024 low as momentum-driven strategies trimmed their long positions on US mega-cap technology stocks that have a significant combined weightage in the Nasdaq 100.

Since the climatic sell-off seen in global stock indices on Monday, 5 August, the implied volatility of the S&P 500, the VIX has declined from a 52-week high of 65.73 to 16.20 on Wednesday, 14 August has led to a return of risk appetite; the Nasdaq 100 rebounded by 9% so far from its 5 August low.

However, at least in the short term, three factors may pause the current rally seen in the Nasdaq 100.

The hard landing scenario alarm bell may ring again if US retail sales disappoint

Fig 1: US Unemployment Rate, ISM Manufacturing/Services Employment PMI & Retail Sales trends (Source: Trading View, click to enlarge chart)

Despite a soft July US CPI print released on Wednesday, 15 August that indicated the inflationary trend in the US continued its deceleration path, it did not yield its prior positive impact on the Nasdaq 100 as the Nasdaq 100 underperformed (almost unchanged) versus the S&P 500 (+0.38%).

Hence, the market seems to be more focused on economic growth-related macro data now rather than inflation risk due to the fear of a US recession or hard-landing scenario that may be already in motion with the US Federal Reserve being late on embarking its interest rate cut cycle.

The next key US growth-focused data will be retail sales for July which is out later today; so far it has been on a path of slower growth since the March print of 3.6%, if the July number comes in lower than the 2.3% y/y recorded in June, it will be the fourth consecutive month of a growth slowdown in consumer spending which may bring the recession aka hard-landing scenario in the US back to the forefront again.

The volatility of implied volatility (VVIX) is falling at a slower pace

Fig 2: VVIX & VIX medium-term trends as of 15 Aug 2024 (Source: Trading View, click to enlarge chart)

In the past two weeks since 5 August, the implied volatility of the S&P 500 (VIX) has fallen but the pace of the higher-order implied volatility of the VIX (VVIX) has declined at a slower pace than the VIX.

Therefore, the VVIX / VIX ratio has increased since 5 August which suggests that there is still a degree of uncertainty in the US stock market. Right now, the VVIX / VIX ratio is at 6.59 at this time of the writing, just a whisker away from a significantly high level of 6.77 that led to past multi-week and multi-month corrective decline sequences in the S&P 500; for example, from 27 Jul 2023 to 27 October 2023.

Hence, the risk of another spike in the VIX cannot be ruled out.

Short-term bullish momentum has waned in the Nasdaq 100

Fig 3: Nasdaq 100 CFD short-term trend as of 15 Aug 2024 (Source: Trading View, click to enlarge chart)

In the lens of technical analysis, the short-term bullish momentum of the minor uptrend phase for the Nasdaq 100 CFD (a proxy of Nasdaq 100 E-mini futures) has started to show signs of exhaustion via the recent bearish divergence condition flashed out by the hourly RSI momentum indicator at its overbought region.

If the 19,230 short-term pivotal resistance is not surpassed to the upside, the Nasdaq 100 CFD faces the risk of a near-term corrective decline to expose the intermediate supports of 18,680 and 18,435/310.

On the flip side, a clearance above 19,230 invalidates the bearish scenario for the continuation of the uptrend phase for the next intermediate resistances to come in at 19,600 and 19,900.

• Gold prices rebounded after a post-CPI selloff, aided by a struggling US Dollar Index.
• A sustained move above $2500/oz for gold may require an additional catalyst, like geopolitical risks.
• The DXY faces challenges and is likely to remain subdued, with technical indicators suggesting a potential retracement. Will it Materialize?

Gold prices rebounded after a post-CPI selloff that pushed the precious metal down to around $2438/oz. The US Dollar Index (DXY) struggles aided gold’s recovery in the latter part of the US session, a trend that has persisted into the London open.

Yesterday’s selloff was somewhat unexpected, given that US CPI figures were below expectations. Market participants reduced their rate cut expectations, which may have contributed to the dip in gold prices.

It’s likely that a portion of the anticipated interest rate cuts has already been factored in by the market. However, the extent of this pricing remains uncertain, and market participants are expected to stay cautious as gold approaches the $2500/oz mark.

While rate cuts generally benefit the non-yielding precious metal, a sustained move above the $2500/oz level may require an additional catalyst, such as geopolitical risks. Even then, the move might not be sustainable.

US Dollar Index (DXY)

The US Dollar Index (DXY) remains muted in early trading, persistently hovering below the 102.64 resistance level. Market participants appear satisfied with current inflation figures, shifting the focus to whether the Federal Reserve will implement a 25 or 50 basis point cut in September.

The DXY is grappling to recover some of its recent losses, and this struggle seems likely to persist. Technically, the DXY shows potential for a retracement, but the dominating influence of fundamental factors may limit any significant recovery.

US Dollar Index Daily Chat, August 15, 2024

Source:TradingView.com

Support

• 102.40
• 101.20
• 100.26 (200-day MA)

Resistance

• 103.00
• 103.65
• 104.00

Economic Data Ahead

Several significant data releases this week could affect the US Dollar, and consequently, gold prices. Today, we expect the US industrial production data, followed by tomorrow’s US housing starts and the preliminary University of Michigan Sentiment data.

Additionally, some Federal Reserve policymakers are scheduled to speak, although these events are unlikely to cause any substantial shifts in the US Dollar regardless of the outcomes.

Technical Analysis Gold (XAU/USD)

From a technical perspective, gold aims to recover from consecutive losing days. Despite closing in the red yesterday, the precious metal reached a fresh high of 2480.00 before the selloff commenced.

Examining the daily chart, we observe a pattern of higher lows and higher highs, although breaking above 2480 has been challenging. The price range of 2350 to 2500, established since early July, is likely to persist until the Federal Reserve’s September meeting.

On an intraday basis, key resistance levels are at 2472 and 2480, while crucial support levels to watch are at 2450 and yesterday’s low of 2438. Keep in mind that with upcoming US data, any move above the 2480 level is unlikely to be sustained, as buying pressure for the precious metal remains strong.

GOLD (XAU/USD) Daily Chart, August 15, 2024

Source: TradingView (click to enlarge)

Support

• 2450
• 2438
• 2432

Resistance

• 2472
• 2480
• 2500

Looking at the 4-hour time frame of the Kiwi with ticker NZDUSD, we can see a strong rebound after a completed final subwave “v” of C of (C), as Zealand beat jobs data, so seems like a new three-wave A-B-C rally can be in play within higher degree wave (D) that can recover the price back to the upper triangle line. Wave A looks to be finished after RNBZ delivers surprise 25 BPS rate cut to 5.25%, so seems like it’s now making a pullback in wave B that can retest 0,59x support area before a continuation higher for wave C towards 0,61 – 0,62 resistance zone.

Yesterday, important U.S. inflation data was released, as reported by ForexFactory:

→ Core CPI (MoM): actual = 0.2%, forecast = 0.2%; previous = 0.1%;

→ CPI (YoY): actual = 2.9%, forecast = 3.0%; previous = 3.0%.

Today, market participants learned about the change in the UK’s monthly GDP: actual = 0.0%, forecast = 0.0%; previous = 0.4%.

However, these news releases had little impact on the GBP/USD exchange rate, likely because the actual figures were in line with expectations.

Today's technical analysis of the GBP/USD chart shows that the price is consolidating within a narrowing triangle (marked in green). The upper line of this triangle aligns with a fan line that has been expanding downwards, with price action tracing the fan's contours since the second half of July.

Which Way Will the Triangle Break?

If the bulls take the initiative and attempt to break upwards out of the triangle, they may quickly encounter resistance around the 1.2900 level—this is not only a round psychological number but also the 50% retracement level of the bearish impulse from the July 17 peak to the August 8 low (A→B).

Today, data on U.S. retail sales and the labour market will be released at 15:30 (GMT+3). There’s a possibility these reports could surprise the market, leading to sharp movements in GBP/USD and disrupting the current state of temporary stability.

Trade over 50 forex markets 24 hours a day with FXOpen. Take advantage of low commissions, deep liquidity, and spreads from 0.0 pips. Open your FXOpen account now or learn more about trading forex with FXOpen.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Market Picture

The cryptocurrency market retreated 2.9% over the past 24 hours to $2.08 trillion from levels near $2.15 trillion, which had been resistance for the past ten days. Despite moderate optimism in equities following the inflation data, cryptocurrencies failed to find sufficient demand. The negative performance of cryptocurrencies could herald another round of outflows from risk assets, especially ahead of the weekend.

Bitcoin fell to $58K, a loss of 4.5% in 24 hours. The sell-off started with the crossing of the 50- and 200-day moving averages. According to statistics, when a ‘death cross’ is formed, it takes an average of one month to recover to the starting point.

Ethereum, which rolled back to $2620, experienced a similar drop. The rally lost momentum near the 61.8% level of the initial decline, creating the risk of another $500 pullback.

News Background

Cointelegraph writes that Solana’s (SOL) rise to $190 looks more realistic than $300-1000 due to competition from L2 for Ethereum and the risks of waning hype around meme coins. The journalists called SOL overvalued compared to L2 tokens for Ethereum.

Former employees of the TON Foundation have set up a venture capital firm, TON Ventures, and raised an initial investment of $40 million. The project will support startups on The Open Network (TON). The TON cryptocurrency hit new highs in more than three weeks, climbing above $7 intraday.

Rising stablecoin issuance could be the key to Bitcoin’s continued rally, according to 10x Research. The issuers of the largest stablecoins, Tether and Circle, issued nearly $2.8 billion worth of assets last week, indicating that some institutional investors are injecting fresh capital into the crypto market.

According to SEC filings, investment bank Goldman Sachs and trading firm DRW Holdings own crypto ETFs worth $418.7 million and $238.6 million, respectively.

According to Growthepie, the daily number of transactions in Ethereum-based Layer 2 (L2) solutions has reached a record 12.5 million, up more than 140% since the beginning of the year. The Coinbase-backed Base blockchain has largely driven the growth. At the same time, the number of active addresses in the L2 segment began to decline, peaking in mid-July.

According to Token Terminal, BlackRock is preparing to launch its blockchain, which will be an analogue of Coinbase’s L2 network.

Daily Pivots: (S1) 188.05; (P) 188.74; (R1) 189.62; More...

Intraday bias in GBP/JPY stays neutral and outlook remains bearish with 38.2% retracement of 208.09 to 180.00 at 190.73 intact. On the downside, below 186.46 minor support will turn intraday bias back to the downside for retesting 180.00 low. Break there will resume the fall from 208.90 to 178.32 support next. However, firm break of 190.73 will extend the rebound to 61.8% retracement at 197.35, even as a corrective move.

In the bigger picture, fall from 208.09 medium term top is seen as correcting the up trend from 123.94 (2020 low). Deeper decline is in favor as long as 55 W EMA (now at 189.18) holds. But strong support could emerge between 178.32 and 38.2% retracement of 123.94 to 208.09 at 175.94 to bring rebound. Meanwhile, sustained trading above 55 W EMA will suggest that the range for the medium term corrective pattern is already set.

Daily Pivots: (S1) 161.02; (P) 161.81; (R1) 163.02; More...

Intraday bias in EUR/JPY stays neutral and outlook remains bearish with 38.2% retracement of 175.41 to 154.40 at 162.42 intact. On the downside, below 157.71 minor support will bring retest of 154.40 first. Break there will resume the fall from 175.41 to 153.15 support next. However, sustained break of 162.42 will bring strong rise to 61.8% retracement at 167.38, even as a corrective move.

In the bigger picture, fall from 175.41 medium term top should be correcting the whole rise from 114.42 (2020 low). Deeper decline could be seen as long as 55 W EMA (now at 161.88) holds. But strong support should emerge between 153.15 and 38.2% retracement of 114.42 to 175.41 at 152.11 to bring rebound, at least on first attempt. Meanwhile, sustained trading above 55 W EMA will argue that the range of the medium term corrective pattern has already been set.

Daily Pivots: (S1) 0.8554; (P) 0.8573; (R1) 0.8605; More....

Intraday bias in EUR/GBP is turned neutral first with current retreat, and more consolidations could be seen below 0.8624. But outlook stays bullish as long as 38.2% retracement of 0.8382 to 0.8624 at 0.8532 holds. Firm break of 0.8624 will resume the rally from 0.8382. However, decisive break of 0.8532 will bring deeper fall to 61.8% retracement at 0.8474.

In the bigger picture, while the rebound from 0.8382 is strong, there is no confirmation of trend reversal yet. As long as 0.8643 resistance holds, down trend from 0.9267 could still resume through 0.8382 at a later stage. However, firm break of 0.8643 will indicate that such down trend has completed, and turn outlook bullish for 0.8764 resistance next.

Daily Pivots: (S1) 1.6596; (P) 1.6648; (R1) 1.6748; More...

Intraday bias in EUR/AUD remains neutral as range trading continues. Outlook stays bullish with 1.6474 support intact. On the upside, above 1.6798 minor resistance will bring retest of 1.7180 resistance first. Firm break there will resume larger up trend to 1.7715 fibonacci projection level next. However, firm break of 1.6474 will dampen the bullish view and bring deeper pullback towards 1.5996 support.

In the bigger picture, corrective fall from 1.7062 medium term top should have completed at 1.5996. Larger up trend from 1.4281 (2022 low) is resuming. Next target is 61.8% projection of 1.4281 to 1.7062 from 1.5996 at 1.7715. This will now remain the favored case as long as 1.6474 support holds.