Sample Category Title

Daily Pivots: (S1) 0.9496; (P) 0.9521; (R1) 0.9521; More....

EUR/CHF's rebound from 0.9209 short term bottom is still in progress. Intraday bias stays on the upside for 55 D EMA (now at 0.9592). On the downside, below 0.9423 minor support will turn intraday bias neutral first.

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.

• AUDUSD retraces 61.8% of the July-August selloff
• But meets tough resistance at 50-day SMA

AUDUSD has surged by around 4.5% from the August 5 low of 0.6347 but the recovery has hit a snag at the 50-day simple moving average (SMA) in the 0.6635 region. After two days of unsuccessful attempts to overcome this barrier, the price has now slipped below the 61.8% Fibonacci retracement of the July-August slump at 0.6625.

The technical indicators remain positive but are sending mixed signals about the near-term price action. The stochastic oscillator is in the overbought region and trending lower, suggesting some losses could be on the cards. But the RSI is ticking up just above 50, signalling that the recovery has more to go.

If the bulls manage to clear the 50-day SMA, the next key hurdle is likely to be the 0.6700 level, which corresponds with the 78.6% Fibonacci. Surpassing this would turn the focus to July’s seven-month high of 0.6798 when it came just shy of the 0.6800 mark.

However, if the upswing runs out of steam, there’s likely to be some support at the 20-day SMA, which is slightly below the 50% Fibonacci of 0.6572. Slipping below this level could accelerate the declines towards the 38.2% Fibonacci of 0.6519.

All in all, AUDUSD’s rebound seems secure for now, but a climb above the 50-day SMA is needed to shift the short-to-medium-term outlook to bullish, while a drop below the 20-day SMA could switch the pair back to bearish mode.

Daily Pivots: (S1) 1.0981; (P) 1.1014; (R1) 1.1046; More.....

Intraday bias in EUR/USD remains on the upside for the moment. Current rise from 1.0665 in in progress for 100% projection of 1.0665 to 1.0947 from 1.0776 at 1.1058. Decisive break there could prompt upside acceleration through 1.1138 resistance to 161.8% projection at 1.1232. On the downside, below 1.0985 minor support will turn intraday bias neutral first. But outlook will stay bullish as long as 1.0880 support holds.

In the bigger picture, price actions from 1.1274 are viewed as a corrective pattern that's could still extend. Break of 1.1138 resistance will be the first signal that rise from 0.9534 (2022 low) is ready to resume through 1.1274 (2023 high). However, break of 1.0776 support will extend the correction with another falling leg back towards 1.0447 support.

Daily Pivots: (S1) 1.2806; (P) 1.2838; (R1) 1.2857; More...

Intraday bias in GBP/USD remains on the upside for the moment. Pull back from 1.3043 could have completed at 1.2664 already. Further rise should be seen to retest 1.3043 resistance first. Firm break there will resume whole rally from 1.2998 to 61.8% projection of 1.2298 to 1.3043 from 1.2664 at 1.3124, which is close to 1.3141 high. On the downside, below 1.2754 minor support will turn intraday bias neutral first.

In the bigger picture, as long as 1.3141 resistance holds (2023 high), medium term corrective pattern from there could still extend with another falling leg. But even in that case, downside should be contained by 1.2036/2298 support zone. Meanwhile, decisive break of 1.3141 will confirm resumption of whole up trend from 1.0351 (2022 low).

Daily Pivots: (S1) 0.8625; (P) 0.8643; (R1) 0.8669; More….

Intraday bias in USD/CHF is mildly on the downside at this point. Rebound from 0.8431 might have completed at 0.8701 already. Deeper fall would be seen back to retest 0.8431 low. On the upside, however, firm break of 38.2% retracement of 0.9223 to 0.8431 at 0.8734 will bring stronger rally to 61.8% retracement at 0.8920, even as a corrective move.

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) 146.40; (P) 147.00; (R1) 147.91; More...

Intraday bias in USD/JPY remains neutral for the moment. Outlook stays bearish with 38.2% retracement of 161.94 to 141.67 at 149.41 intact and intraday bias stays neutral. Below 145.42 minor support will turn bias to the downside for 141.67. Break there will resume the fall from 161.94 to 140.25 support next. Nevertheless, decisive break of 149.41 will bring stronger rally to 61.8% retracement at 154.19, even as a corrective move.

In the bigger picture, fall from 161.94 medium term 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 149.77) holds. Nevertheless, firm break of 55 W EMA will suggest that the range for medium term corrective pattern is already set.

Daily Pivots: (S1) 1.3694; (P) 1.3709; (R1) 1.3730; More...

Intraday bias in USD/CAD stays on the downside at this point despite weak downside momentum. Fall from 1.3946 would extend towards 1.3588 key support. On the upside, above 1.3674 minor resistance will turn bias back to the upside for stronger recovery.

In the bigger picture, price actions from 1.3976 (2022 high) are viewed as a corrective pattern, that might have completed at 1.3176 (2023 low) already. Firm break of 1.3976 will confirm resumption of whole up trend from 1.2005 (2021 low). Next target is 61.8% projection of 1.2401 to 1.3976 from 1.3176 at 1.4149. This will be the favored case as long as 1.3588 support holds, in case of pullback.

In focus today

Today's main event will be Norges Bank announcing their policy rate decision. We expect Norges Bank to keep the policy rate unchanged at 4.50%. Developments since June have gone slightly in both directions, so we do not expect Norges Bank to send any new policy signals, but the risk is tilted towards a more dovish statement. However, the recent sharp repricing of the monetary policy outlook leaves the bar for a disappointment low. The rate decision is announced at 10.00 CET.

In Sweden, we get the Prospera inflation expectations at 8.00 CET. As it is the monthly survey release it covers only money market participants' views, and it comes as a final piece of the puzzle ahead of the Riksbank policy meeting next week. The survey will most likely show inflation expectations close to target on all horizons, and as such not alter the market's pricing of gradual rate cuts ahead.

In the UK, we get GDP figures for both Q2 and June at 8.00 CET. Analysts expect growth of 0.6% q/q in Q2 (prior 0.7%), and 0.0% growth m/m in June (prior 0.4%).

At 14.30 CET we get the retail sales numbers out of the US. According to Reuters polls analysts expect headline retail sales to come in at 0.3% m/m (prior 0.0%), whereas core retail sales are expected to come in at 0.1% m/m (prior 0.4%).

Fed's Musalem (voting member) and Harker (not voting member) both speak at 15.10 CET and 19.10 CET, respectively.

Economic and market news

What happened yesterday

In the US, both headline and core CPI came in at 0.2% m/m seasonally adjusted in line with expectations. It marked the third consecutive month of core inflation standing at 0.2% m/m seasonally adjusted, hence the inflationary trend is on the right track in the US, despite still too high headline inflation.

In Sweden both the headline CPIF and CPIF excl. energy surprised to the upside compared with analysts' expectations. Headline CPIF rose to 1.7% y/y (prior 1.3% y/y) with especially hotels and restaurants contributing towards this. CPIF excl. energy fell to 2.2% y/y (prior 2.3% y/y). The Riksbank had forecast CPIF at 1.8% and CPIF excl. energy at 2.2%, hence this should justify a cut of 25bp at next week's policy meeting, something which both we and markets expect as it is also fully priced in.

In the UK CPI came in slightly lower than expected as headline CPI printed 3.4% y/y and core CPI printed 2.2% y/y both 0.1p.p. lower than consensus amongst analysts.

What happened overnight

China released their monthly batch of data overnight, which came in close to expectations but still paint a weak picture of the economy. Retail sales increased from 2.0% y/y to 2.7% y/y (consensus 2.6% y/y), which is still very weak spending by Chinese households. There are also few signs of improvement in the housing crisis. New home prices declined 0.65% m/m again in July after 0.67% m/m in June while home sales stayed around a level of 90m m2, still much below the pre-pandemic level of 160m m2. Industrial production dropped from 5.3% y/y to 5.1% y/y (consensus 5.2% y/y) and down from a level close to 7% during spring. In sum, the data confirms that China is still mired in a housing crisis, weak consumer spending and a loss of momentum in industrial activity in recent months. It calls for a new round of stimulus to reach the government's 5% target and we expect to see new stimulus announcements soon.

In Japan, GDP growth for Q2 this year came in at 0.8% q/q beating consensus amongst analysts of 0.5%. This follows three weak quarters. Most importantly, private consumption increased by 1%. Despite the renewed focus on the weak yen, a return to growth and private spending moving in the right direction were probably prerequisites for the Bank of Japan to move along with normalising policies. Equity markets have reacted positively to the data release with the Nikkei 225 up around 1.1% this morning.

UK GDP showed no growth in June, matched expectations. Services output fell by -0.1% mom after five consecutive monthly increases. Production grew by 0.8% mom. Construction grew by 0.5% mom.

For Q2, GDP grew 0.6% qoq, matched expectations. Services grew by 0.8% qoq. Production fell -0.1% qoq. Construction also fell -0.1% qoq.

Full UK GDP release here.

It's been two weeks since I left, and in that time, the markets plunged into chaos. Now that I'm back, things have finally returned to calm waters.

Quick thoughts on the August meltdown

The fact that the Japanese yen saw a heavy post-Bank of Japan (BoJ) reaction is of course due to the accumulation of a high amount of short yen positions over the past few years on the divergence between the BoJ and the other central bank policies. And the very-late normalization of the BoJ has given hope that the abnormally soft BoJ policy is over. But there is little chance we see the BoJ act again to normalize further anytime soon. This is the message that the BoJ members – which were apparently not expecting such a BIG reaction - have been trying to give to calm down the upset traders. The USDJPY almost hit the 140 level last week during a massive carry unwind. The pair has rebounded since then and is trading near the 147 level at the moment and could eventually return and stabilize around the 150 level until further notice.

And for the US, the weak jobs data of two weeks ago - that helped trigger a further mayhem across the global markets - doesn’t mean that the US economy will collapse by next month. And investors know that. The proof is how fast the prices in the S&P500 rebounded with the sight of the slightest good news from last week’s weekly jobless claims from the US- a data point which is very much volatile and normally doesn’t trigger a notable market reaction. All eyes are on the weekly claims today.

Good news from inflation data

Anyway, good news is that inflation numbers from the US and the UK came in softer-than-expected this week. Inflation in the UK inflation rebounded from 2% to 2.2% in July versus a rebound to 2.3% expected by analysts while core inflation eased from 3.5% to 3.3% - more than expected by analysts. Headline inflation in the US fell below the 3% mark.

More importantly, the services inflation - which is what made inflation numbers so sticky in the developed world - also showed a better cooling last month. Time will tell how much of the services disinflation was due to Taylor Swift but the latest figures hint that the Federal Reserve (Fed) could start cutting the rates in September and other major central banks like the European Central Bank (ECB) and the Bank of England (BoE) could continue lowering theirs to the year end. As such, in the aftermath of the latest data from the major economies, the BoE is expected to announce two more 25bp rate cuts by the end of the year, the ECB is seen cutting its rates by 65bp - say two more times this year and up to six times by the end of 2025. And the Fed is seen cutting its rates by a whooping 100bp this year. A possible 50bp cut in September followed by two 25bp cuts for the last two FOMC meetings of the year.

Activity on Fed funds futures gives around 63% chance for a 25bp cut and 37% chance for a 50bp cut next month. The suspense could last until the next jobs report which will give a clearer idea on how much of the weakness of the latest jobs data was due to Hurricane Beryl – meaning how much of it was a temporary slowdown. I believe that a 25bp is more plausible based on the current data. Therefore, the weakness of the US dollar will certainly get balanced out if the Fed cut expectations slow down. As such, I expect the USD index to see support near the ytd low levels and limited room for a further upside momentum in the EURUSD above the 1.10 mark.