Sample Category Title

Daily Pivots: (S1) 137.17; (P) 137.55; (R1) 138.02; More....

EUR/JPY's rebound from 133.38 is still in progress and intraday bias stays on the upside. Sustained trading above 55 day EMA (now at 138.48) will suggest that whole correction from 144.26 has completed. Further rally would then be seen back to retest 144.26 high. However, break of 135.63 will turn bias back to the downside for 133.38 low instead.

In the bigger picture, up trend from 114.42 (2020 low) is seen as the third leg of the pattern from 109.30 (2016 low). Further rally is in favor as long as 134.11 resistance turned support holds, even in case of deep pull back. Next target is 149.76 (2015 high). However, sustained break of 134.11 will be a sign of medium term bearish reversal and turn focus to 124.37 support for confirmation.

Daily Pivots: (S1) 0.8418; (P) 0.8431; (R1) 0.8453; More...

EUR/GBP's recovery from 0.8338 is still in progress but intraday bias remains neutral. While stronger recovery might be seen, outlook will stay bearish as long as 0.8585 resistance holds. On the downside, break of 0.8338 will resume the decline from 0.8720 to retest 0.8201 low.

In the bigger picture, current development suggests rejection by 38.2% retracement of 0.9499 to 0.8201 at 0.8697. Medium term bearishness is maintained. Break of 0.8201 will resume larger down trend from 0.9499 (2020 high). Nevertheless, sustained break of 0.8697 will affirm the case that rise from 0.8201 is a medium term up trend itself.

Daily Pivots: (S1) 1.4536; (P) 1.4639; (R1) 1.4703; More...

Range trading continues in EUR/AUD and intraday bias remains neutral. While stronger recovery cannot be ruled out, upside should be limited below 1.4910 resistance to bring fall resumption. On the downside, break the 1.4508 will resume the decline from 1.5396 to retest 1.4318 low. However, firm break of 1.4910 will dampen this bearish view and bring stronger rally.

In the bigger picture, down trend from 1.9799 is still in progress. Break of 1.4318 low will target 61.8% projection of 1.9799 to 1.5250 from 1.6434 at 1.3623, which is close to 1.3624 long term support (2017 low). This will remain the favored case now as long as 1.5396 resistance holds.

Short Term Elliott Wave View in Silver suggests the rally from 7.14.2022 low is unfolding as a 5 waves impulse Elliott Wave structure. Up from 7.14.2022 low, wave ((i)) ended at 19.016 and dips in wave ((ii)) ended at 18.22. The metal then extended higher in wave ((iii)) towards 20.508 and dips in wave ((iv)) ended at 19.53. As the 30 minutes chart below shows, internal of wave ((iv)) unfolded as a double three structure. Down from wave ((iii)), wave (w) ended at 19.76, rally in wave (x) ended at 20.39, and final leg lower wave (y) ended at 19.53 which also completed wave ((iv)).

Wave ((v)) is in progress and should end soon. Up from wave ((iv)), wave (i) ended at 20 and pullback in wave (ii) ended at 19.78. The metal then extended higher in wave (iii) towards 20.74, and dips in wave (iv) ended at 20.57. Expect the metal to end wave (v) with 1 more leg higher and this should complete wave ((v)) of A as well. Metal should then pullback to correct cycle from 7.14.2022 low within wave B in larger degree 3, 7, or 11 swing before the rally resumes.

XAGUSD 30 Minutes Elliott Wave Chart

Stock markets kicked off the week mixed, the European markets were up yesterday, while Nvidia plummeted the mood in the US, sending Nasdaq slightly lower.

Nvidia shares dived 6.30% yesterday on news that the company missed its revenue projection by $1.4 billion due to slower demand for PCs and gaming. Nvidia pulled other US chipmakers into the negative along with it, and brought the question of whether the chip rally, which was triggered by a $52 billion government help is over. AMD fell more than 2% yesterday after having rallied 45% since the start of June. Micron lost more than 1.50%, following a 26% rally. Intel was little changed, but the stock price is down by 46% since last April.

Inflation expectations drop

The dollar index gave back gains following the blowout NFP figures printed on Friday.

Investors are confident that inflation in the US may have peaked last month, as the New York Fed's Survey of Consumer Expectations showed steep drops in inflation expectations in July.

For economists, inflation expectations are more important than the actual data, because it is believed to be self-fulfilling.

Plus, Federal Reserve (Fed) chair Jerome Powell mentioned the New York Fed's results as a reason for more aggressive rate increases at the June FOMC meeting.

Therefore, the latest NY Fed survey may have given some relief to the Fed, although, tomorrow’s CPI print will say the last word when it comes to the market sentiment.

A print in line with expectations, or ideally softer, should calm down the hawkish Fed expectations, whereas a figure above expectations, or God forbid, above last month’s 9.1% would send another shockwave to the market.

For now, there is reason to be optimistic as the drop in energy and commodity prices should have a cooling effect on inflation, yet, higher labour costs could keep inflation sticky at undesirably high levels.

Elsewhere

The EURUSD is steady around the 1.02 level, waiting for the dollar to soften on ‘good news’ to make a further attempt toward the 1.0350 mark, where stands the 50-DMA. Given that the European Central Bank played its biggest cards at last meeting, there is not much upside potential from the ECB standpoint. The dollar must soften to let the EURUSD gain field. And the dollar needs inflation to soften to give back some advance.

On the dollar-yen front, traders now call the end of a particularly winning long USDJPY trade this year. Although the divergence between a more aggressively hawkish Fed, and a carelessly dovish Bank of Japan (BoJ) remains in favour of a stronger dollar, most of the price action is already done and dusted. We expect profit taking, and a meaningful retracement in USDJPY’s value to at least below the 130 support, which was first tested at the beginning of this month, and which could easily be broken to the downside, if the dollar softened across the board with softer inflation, of course.

Market movers today

US NFIB Small Business Optimism index will be published for July and the focus will naturally be on how inflation and labour market indicators have performed amid the recent recession fears.

Chinese July Producer Prices will also be released overnight, consensus is looking for moderating price pressures following the recent signs of easing supply chain challenges.

The 60 second overview

Oil: A deal to revive the 2015 Iran nuclear deal could be close. The final details were put down in writing in Vienna yesterday and now it is a matter of whether US and EU are ready to accept the deal that could see a return of Iran's oil exports to the global market. A decision could come within weeks.

Germany: German forward power prices continue to surge. A new concern for power plants is the water level at the Rhine river. At a water level of 40 cm, the transportation of coal to plants to generate electricity will become severely hampered.

Equities: Equities finished close to unchanged on Monday. The negative correlation with the oil price continued, and as oil prices climbed somewhat higher, equity sentiment retreated. Similarly, the growth outperformance stalled despite a 10bp drop in yields although this also had to do from weak tech earnings reports in the US. Defensives somewhat more upbeat than cyclicals, illustrated in bond proxy real estate doing better than for instance tech companies. Dow 0.1%, S&P -0.1%, Nasdaq -0.1% but Russell 2000 adding 1% due to meme stock rally. US futures are pointing slightly higher this morning while European futures are lower.

FI: There was a decent rebound in the global bond market after the sell-off on Friday. However, we did see a spread widening between Italy and EU peers on the back of the negative rating event from Moody's. The front-loading of rate hikes from the Federal Reserve was supported by the labour market data on Friday, and forecasters are changing their forecast for 75bp rate hike in September and some could even see a 100bp rate hike.

FX: AUD, NZD and SEK gained vis-à-vis EUR, GBP and USD yesterday. The move erased some of the USD strength following the strong US jobs report on Friday and came despite a weak start to the week for commodity prices.

Credit: Credit spreads as measured by iTraxx Main ended the day slightly tighter by 2bp to 100bp yesterday, while Crossover was tighter by 14bp to 505bp. The USD primary market remained busy driven in particular by the FIG segment, with European names such as BNP (AT1 capital) and Credit Suisse (hold-co senior) also being active.

Daily Pivots: (S1) 0.9705; (P) 0.9756; (R1) 0.9792; More....

EUR/CHF is staying in consolidation from 0.9697 and intraday bias remains neutral. Firm break of 0.9697 will resume larger down trend to 0.9650 long term projection level. Strong support could be seen there to bring rebound. On the upside, break of 0.9799 minor resistance will turn bias to the upside for stronger rise to 0.9948 resistance. However, firm break of 0.9650 will target 100% projection of 1.1149 to 0.9970 from 1.0513 at 0.9334.

In the bigger picture, long term down trend from 1.2004 (2018 high) is expected to target 100% projection of 1.2004 to 1.0505 to 1.1149 at 0.9650. Firm break there will target 138.2% projection at 0.9033. On the upside, break of 1.0513 resistance is needed to indicate medium term bottoming. Otherwise, outlook will stay bearish in case of strong rebound.

The forex markets are very quiet in Asian session today, and could remain so for the day with an ultra light economic calendar. Australian Dollar and Swiss Franc are currently the stronger ones for the week, followed by Canadian and Kiwi. On the other hand, Dollar and Yen are both on the softer side, together with Sterling and Euro. Traders are probably still awaiting the bigger bets until US CPI release on Wednesday.

Technically, Swiss Franc is worth a watch today. GBP/CHF is now pressing 1.1525 low. Firm break there will resume larger down trend from 1.3070. And in any case, outlook will stay bearish as long as 1.1774 resistance, even in case of another recovery. At the same time, EUR/CHF is heading back to 0.9697 low, and break will resume long term down trend too.

In Asia, at the time of writing, Nikkei is down -0.92%. Hong Kong HSI is up 0.40%. China Shanghai SSE is up 0.25%. Singapore Strait Times is down -0.36%. Japan 10-year JGB yield is down -0.008 at 0.170. Overnight, DOW rose 0.09%. S&P 500 dropped -0.12%. NASDAQ dropped -0.10%. 10-year yield dropped -0.075 to 2.765.

Australia Westpac consumer sentiment dropped to 81.2 in Aug

Australia Westpac Consumer Sentiment Index fell -3% to 81.2 in August. The reading was on par with the lows of the Covid and Global Financial Crisis. Also, there was a cumulative decrease of -22.9% from recent peak made in November 2021.

Economic conditions for the 12 months dropped from 80.3 to 73.9. Economic conditions for the next five years dropped from 91.6 to 90.7. Unemployment expectations index dropped from 109.8 to 103.4. House price expectations index dropped from 104.9 to 97.1.

Regarding RBA's next meeting on September 6, Westpac expects the central bank to hike by another 50bps to 2.35%, leaving the cash rate in "neutral range". It expects RBA to then scale back the increase to 25bps per meeting until February 2023.

Australia NAB business confidence rose to 7, conditions rose to 20

Australia NAB Business Confidence rose from 2 to 7 in July. Business Conditions rose from 14 to 20. Trading conditions rose from 19 to 27. Profitability conditions rose from 13 to 17. Employment conditions rose from 11 to 17.

"Businesses are continuing to report that conditions are really strong," said NAB Group Chief Economist Alan Oster. "While some of the real time data we look at is showing signs of softening, there are no signs of that in the survey with demand at a really high level. Importantly, the strength is showing up across the board in terms of industries and across the country."

"Confidence bounced back in July, which was something of a surprise," said Oster. "Inflation and rising interest rates are clouding the outlook, and there are growing concerns about the global economy, but businesses seem to have a fairly positive outlook at the moment. Forward orders are also fairly strong at +10 index points which also supports the outlook."

Silver extends rally above 20, Gold still struggling in range

Silver's rally from 18.13 resumes this week and breaks above 20 handle. In the bigger picture, 18.13 is tentatively seen as a medium term bottom, made after hitting 100% projection of 30.07 to 21.41 from 26.93 at 18.27.

For now further rally is expected as long as 19.54 holds. The key resistance zone lies around 22.50, which is close to 55 week EMA (now at 22.61), and 38.2% retracement of 30.07 to 18.13 at 22.69. Reaction from there will reveal whether rise from 18.13 is a corrective rebound, or the start of an up trend (the preferred case).

Gold is struggling in range for now, but further rally is expected as long as 1754.14 support holds. Break of 1794.68 will resume the rise from 1680.83 low. Key resistance level lies in 38.2% retracement of 2070.06 to 1680.83, which is close to 55 week EMA (now at 1826.89). Sustained break there will solidify the case that whole corrective pattern from 2074.84 has completed with three waves to 1680.83.

Looking ahead

The economic calendar is light today. US will release NFIB business optimism. US will release non-farm productivity and unit labor costs.

EUR/CHF Daily Outlook

Daily Pivots: (S1) 0.9705; (P) 0.9756; (R1) 0.9792; More....

EUR/CHF is staying in consolidation from 0.9697 and intraday bias remains neutral. Firm break of 0.9697 will resume larger down trend to 0.9650 long term projection level. Strong support could be seen there to bring rebound. On the upside, break of 0.9799 minor resistance will turn bias to the upside for stronger rise to 0.9948 resistance. However, firm break of 0.9650 will target 100% projection of 1.1149 to 0.9970 from 1.0513 at 0.9334.

In the bigger picture, long term down trend from 1.2004 (2018 high) is expected to target 100% projection of 1.2004 to 1.0505 to 1.1149 at 0.9650. Firm break there will target 138.2% projection at 0.9033. On the upside, break of 1.0513 resistance is needed to indicate medium term bottoming. Otherwise, outlook will stay bearish in case of strong rebound.

Economic Indicators Update

Silver's rally from 18.13 resumes this week and breaks above 20 handle. In the bigger picture, 18.13 is tentatively seen as a medium term bottom, made after hitting 100% projection of 30.07 to 21.41 from 26.93 at 18.27.

For now further rally is expected as long as 19.54 holds. The key resistance zone lies around 22.50, which is close to 55 week EMA (now at 22.61), and 38.2% retracement of 30.07 to 18.13 at 22.69. Reaction from there will reveal whether rise from 18.13 is a corrective rebound, or the start of an up trend (the preferred case).

Gold is struggling in range for now, but further rally is expected as long as 1754.14 support holds. Break of 1794.68 will resume the rise from 1680.83 low. Key resistance level lies in 38.2% retracement of 2070.06 to 1680.83, which is close to 55 week EMA (now at 1826.89). Sustained break there will solidify the case that whole corrective pattern from 2074.84 has completed with three waves to 1680.83.

Australia NAB Business Confidence rose from 2 to 7 in July. Business Conditions rose from 14 to 20. Trading conditions rose from 19 to 27. Profitability conditions rose from 13 to 17. Employment conditions rose from 11 to 17.

"Businesses are continuing to report that conditions are really strong," said NAB Group Chief Economist Alan Oster. "While some of the real time data we look at is showing signs of softening, there are no signs of that in the survey with demand at a really high level. Importantly, the strength is showing up across the board in terms of industries and across the country."

"Confidence bounced back in July, which was something of a surprise," said Oster. "Inflation and rising interest rates are clouding the outlook, and there are growing concerns about the global economy, but businesses seem to have a fairly positive outlook at the moment. Forward orders are also fairly strong at +10 index points which also supports the outlook."

Full release here.