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Daily Pivots: (S1) 157.93; (P) 158.39; (R1) 158.88; More...

Intraday bias in USD/JPY remains neutral for the moment. On the downside, break of 157.16 and sustained trading below 55 D EMA (now at 157.72) will bring deeper correction to 38.2% retracement of 140.25 to 161.94 at 163.65. But strong support should be seen there to bring rebound. Meanwhile, break of 159.44 minor resistance will turn bias back to the upside for stronger rebound towards 161.94 high.

In the bigger picture, as long as 151.89 resistance turned support holds, long term up trend could still continue through 161.94 at a later stage. Next target will depend on the depth of the current correction from 161.94. However, sustained break of 151.89 will argue that larger scale correction or trend reversal is underway.

Daily Pivots: (S1) 0.6711; (P) 0.6738; (R1) 0.6761; More...

AUD/USD recovered quickly after breaching 0.6723 support and intraday bias remains neutral. Further rally is expected as long as 0.6723 minor support holds. On the upside, above 0.6798 will resume the rally from 0.6361 and target 61.8% projection of 0.6361 to 0.6713 from 0.6619 at 0.6837. Decisive break there could prompt upside acceleration through 0.6870 resistance to 100% projection at 0.6971. On the downside, however, firm break of 0.6723 support will turn intraday bias to the downside for deeper pullback.

In the bigger picture, price actions from 0.6169 (2022 low) are seen as a medium term corrective pattern to the down trend from 0.8006 (2021 high). Fall from 0.7156 (2023 high) is seen as the second leg, which could have completed at 0.6269 already. Rise from there is seen as the third leg. Break of 0.6870 will target 100% projection of 0.6269 to 0.6870 from 0.6361 at 0.6962.

Daily Pivots: (S1) 1.3659; (P) 1.3683; (R1) 1.3699; More...

USD/CAD's rebound lost momentum after hitting 1.3707 and intraday bias is turned neutral first. Outlook is unchanged that corrective pattern from 1.3845 might have completed with three waves to 1.3588, after hitting 38.2% retracement of 1.3716 to 1.3845 at 1.3589 twice. Above 1.3707 will target 1.3790 resistance first. Break of 1.3790 will argue that larger rise from 1.3716 is ready to resume through 1.3845.

In the bigger picture, price actions from 1.3976 (2022 high) are viewed as a corrective pattern. In case of another fall, strong support should emerge above 1.2947 resistance turned support to bring rebound. Firm break of 1.3976 will confirm up 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.

Daily Pivots: (S1) 172.21; (P) 172.57; (R1) 173.00; More...

Intraday bias in EUR/JPY remains neutral at this point. Corrective fall from 175.41 could still extend lower. But downside should be contained by 170.87 and bring rebound. On the upside, above 173.42 will turn bias back to the upside for retesting 175.41. However, firm break of 170.87 will argue that larger correction is already underway and target 167.52 and possibly below.

In the bigger picture, as long as 170.87 resistance turned support holds, the long term up trend is still expected to continue. Next target is 100% projection of 139.05 to 164.29 from 153.15 at 178.38. However, firm break of 170.87 will bring deeper fall to 167.52 support. Decisive break there will confirm that larger correction in in progress for 153.15/164.29 support zone.

Daily Pivots: (S1) 1.6129; (P) 1.6164; (R1) 1.6219; More...

EUR/AUD is staying below 1.6211 support turned resistance despite current strong rebound. Intraday bias remains neutral and further decline is still in favor. On the downside, break of 1.5996 will resume larger fall to 1.5846 support next. However, firm break of 1.6211 will argue that larger corrective fall might have completed, and turn bias back to the upside for 1.6418 resistance next.

In the bigger picture, fall from 1.7062 medium term top is seen as a correction to the up trend from 1.4281 (2022 low) only. Strong support is still expected between 1.5846 and 38.2% retracement of 1.4281 to 1.7062 at 1.6000 to bring rebound. Break of 1.6418 resistance will argue that the correction has completed.

Daily Pivots: (S1) 0.9732; (P) 0.9751; (R1) 0.9760; More....

Intraday bias in EUR/CHF is turned neutral first as it's losing upside momentum as seen in 4H MACD. Further rise would remain in favor as long as 0.9677 support holds. Above 0.9772 temporary top will resume the rally from 0.9476 to retest 0.9928 high. However, break of 0.9677 will turn bias to the downside for deeper pullback.

In the bigger picture, rebound from 0.9252 medium term bottom might not be completed yet. But even in case of resumption, strong resistance could emerge from 1.0095 to limit upside. Medium term outlook will be neutral at best as long as 1.0094 structural resistance holds. Meanwhile, break of 0.9476 will bring retest of 0.9252 low.

Platinum (PL) is still looking to resume the next bullish cycle. The metal still needs to break above 1348.2 to confirm that the next leg higher has started. Below we updated the Monthly and Daily Elliott Wave chart for the metal.

Platinum (PL) Monthly Elliott Wave Chart

Monthly chart of Platinum above shows Grand Cycle wave ((II)) correction ended at 562. The metal has turned higher in wave ((III)) with subdivision as a nesting impulse. Up from wave ((II)), Wave (I) of ((III)) ended at 1348.2. Pullback in wave (II) of ((III)) ended at 802.1 and the metal has traded sideways since then. Up from wave (II), wave ((1)) ended at at 1148.9. Pullback in wave ((2)) completed at 843.1. While dips stay above 843.1, the metal can see further upside.

Platinum (PL) Daily Elliott Wave Chart

Daily chart of Platinum above shows that pullback in wave (II) ended at 802.1. Up from there, wave ((1)) ended at 1148.9 and pullback in wave ((2)) ended at 843.1. The metal then nested higher with wave (1) ended at 1016 and wave (2) ended at 870.1. Up from there, wave 1 ended at 1105 and dips in wave 2 ended at 945.7. Near term while above 802.1, expect the metal to extend higher.

Gold (XAUUSD) has made a new all-time high which confirms the right side remains bullish in the near future. Cycle from 6.7.2024 low is currently in progress as a 5 waves impulse. Up from 6.7.2024 low, wave 1 ended at 2368.74 and pullback in wave 2 ended at 2293.46. Up from there, wave (i) ended at 2339.79 and dips in wave (ii) ended at 2318.10. Wave (iii) higher ended at 2368.06 and pullback in wave (iv) ended at 2347.79. Wave (v) higher ended at 2392.91 which completed wave ((i)) in higher degree as 1 hour chart below shows. Pullback in wave ((ii)) unfolded as a zigzag where wave (a) ended at 2350.7 and wave (b) ended at 2371.49. Wave (c) lower ended at 2349.1 which completed wave ((ii)) in higher degree.

The metal has extended higher in wave ((iii)). Up from wave ((ii)), wave (i) ended at 2424.55 and pullback in wave (ii) ended at 2390.95. Expect the metal to extend higher two more times to end wave v of (iii), then it should pullback in wave (iv) to correct cycle from 7.12.2024 low before turning higher again in wave (v) of ((iii)). Near term, as far as pivot at 2390.95 low stays intact, expect dips to find support in 3, 7, or 11 swing for further upside.

Gold (XAUUSD) 60 Minutes Elliott Wave Chart

XAUUSD Elliott Wave Video

https://www.youtube.com/watch?v=lL25oIxokMg

• Today's CPI showed some welcome reduction in headline inflation.
• Services sector inflation is easing only gradually.
• Recent activity data has suggested recessionary conditions for a few months now.
• The RBNZ indicated an openness to tempering the restrictiveness of conditions in July – today's data gives them room to act on that strategy.
• We now see inflation is likely below 3% in Q3 and the path towards 2% seems more assured.
• Around a 30% chance of an earlier easing at the RBNZ's in October Review now exists.
• The tone of the RBNZ August Statement, labour market, QSBO and GDP data due in coming months will be key in determining how live October is.
• We expect an initial 100 points of easing by mid-2025 in 25 basis point increments consistent with "tempering" restrictiveness.
• We continue to see a terminal OCR of 3.75 percent but will reach that point by early 2026 now.

The new OCR view.

We now expect the RBNZ to cut the OCR by 25 bp at the November Monetary Policy Statement. Thereafter we expect 25 bp cuts at each of the first three meetings of 2025 (February, April, and May) which will take the OCR to 4.5% by mid-2025. Thereafter we think the RBNZ will take a more cautious data dependent approach and reduce the OCR in 25 bp increments at the August and November 2025 Monetary Policy Statements bringing the OCR to 4% by end 2025. We see a final easing to 3.75% in early 2026 where we see the terminal rate.

This profile brings forward our previous OCR profile by around 6 months.

Rationale.

The RBNZ indicated in the July Review, unexpectedly, a willingness to consider "tapering" the degree of policy restriction. As we indicated in our review note, we thought the RBNZ's marked change in tone reflected the much weaker data flow seen in the last few months as well as greater confidence that inflation will be under 3% by "the second half of the year".

Today's CPI data was a key part of the case for bringing forward OCR cuts from our longstanding view that easing would begin in February 2025 as explained in our recent note. As is noted below, todays CPI seems to vindicate the RBNZ's view that inflation will soon be below 3%, giving them room to dial back restriction.

Additionally, we think the RBNZ will be revising down its near-term economic view. We see what now look like significant downside risks to our -0.2% Q2 GDP forecast given weak PMI data. Recent labour market indicators suggest upside risks to the unemployment rate (Westpac employment confidence, QSBO and weekly filled jobs). Its plausible the RBNZ is considering upgrading its unemployment rate forecasts again after a year or so of reducing them.

This lower inflation/growth combination looks consistent with some past episodes where the RBNZ has begun easing even while inflation was outside of the target range. These have been episodes where growth was weak and hence there was confidence that inflation would trend significantly lower given time and the usual lags. We think that the RBNZ is close to meeting this threshold now.

Risks and key immediate factors to focus on.

Our note last week describing the path to the first RBNZ easing still represents our view on the key factors to consider. Key will be the RBNZ's revised forecasts at the upcoming Monetary Policy Statement on 14 August. We would expect these forecasts to show a significant downgrade in inflation and OCR forecasts. In the case of the OCR we expect something closer to the scenario they presented in May 2023. This implied a probability of an easing in October and a very likely easing at the November Statement.

The table below summarizes some of the key factors to watch in the event the RBNZ eases sooner than November. The upcoming labour market will be of key focus as will emerging growth indicators and Q2 GDP. We think the RBNZ will be very data driven in terms of the timing of the first cut.

NZ First Impressions: Consumers Price Index, June quarter 2024.

Inflation was lower than expected in the June quarter, with consumer prices rising by 0.4%. That saw the annual inflation rate slowing to 3.3%.

Discussion.

• Consumer prices rose 0.4% in the June quarter. That saw the annual inflation rate slowing to 3.4% (down from 4.0% in the year the March).
• The June quarter inflation result was below our forecast and the RBNZ's last published forecast.
• Underlying the June quarter rise in prices were higher rents, as well as continued increases in insurance premiums and increases in road user charges. On the downside, we saw lower prices in areas related to travel, like airfares and accommodation. There were also lower prices for furnishings and video games.
• The key takeout was in the breakdown of tradables (imported prices) and non-tradables (largely domestic services). Tradables inflation is dropping back (-0.5% qtr / +0.3% yr) and was much weaker than we or the RBNZ had anticipated. That's consistent with weak household spending and is likely to continue.
• However, domestic inflation continues to be sticky. Non-tradables prices were up 0.9% in the June quarter (+5.4% yr). That result was exaggerated by a large increase in road user changes. However, the underlying detail point to lingering domestic inflation pressures. In part that's due to continued increases in insurance costs, as well as items like energy prices. But domestic price pressures remain widespread – prices for domestic services more generally are continuing to rise at a solid pace.
• Core inflation measures (which track the underlying trend in inflation) illustrated the dichotomy in the economy. Overall core inflation measures have dropped back from over 4% to around 3.5% (for example, inflation excluding food and energy has slowed to 3.4% this quarter). However, while measure of tradables inflation have fallen to low levels, measures of domestic inflation are still falling gradually and continue to run at rates of over 5%.

In the detail.

• Insurance costs (3% of the CPI, included in the 'Miscellaneous goods and services' group) were the largest contributor to inflation in the June quarter, rising by 3.1%.
• Rents were up 1.2% in the June quarter, and are up 4.8% over the past year.
• There was also a 0.9% rise in the cost of purchasing a new home (aka. construction costs). That was rise was stronger than we've seen in recent quarters and came despite a slowdown in construction activity. It will be worth watching to see if this strength continues.
• Household energy costs (3% of the CPI) rose 4% this quarter, underpinned by the increases in electricity costs.
• On the downside, passenger transport costs (3% of the CPI) fell 3% in the June quarter, with seasonal drops in both domestic and international airfares. Similarly, prices in the recreational and culture group (10% of the CPI) were down 4.5%, mainly as a result of lower holiday accommodation costs.
• We also saw softness in prices for imported items like furnishings.

Australia's Westpac leading index saw a slight improvement, rising from -0.28% to -0.13% in June. Despite this uptick, economic activity is expected to remain below trend until early 2025.

Westpac said while growth is expected to pick up slightly in the latter half of 2024 and into early 2025, it will still be modest, at an annual pace of 2.2%, and is about flat in per capita terms.

Full Australia Westpac leading index release here.