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Market movers today

• Today's key event will be the ECB meeting: PEPP re-calibration and the inflation outlook will be the themes to focus on as hawks in the ECB's Governing Council have recently become more vocal about pro-inflationary risks.
• In the US the weekly unemployment figures and more Fed speakers will be in focus.
• Riksbank Governor Ingves speaks about monetary policy and current challenges for the Swedish economy (09.00 CET).
• In Norway, mainland GDP growth picked up at the start of the summer as corona cases fell and restrictions were lifted. We expect this continued in July with mainland GDP growing 1.0% m/m.

The 60 second overview

ECB: Today's highlight is the ECB meeting, where PEPP re-calibration and the inflation outlook will be the big focus themes, after hawks in the ECB's Governing Council have recently become more vocal about pro-inflationary risks. In light of upward revisions in the growth and inflation outlook, we expect ECB to reduce the Q4 PEPP purchase pace back to the January/February level of EUR60bn/month, but from a market perspective ECB will attempt to keep this meeting as uneventful as possible in our view. If ECB do not indicate that the purchase pace will revert to the Jan/Feb level of around EUR60bn/m, this will de facto be an extension of PEPP beyond Mar22.

Fed: NY Fed President John Williams said yesterday that he does not think that the conditions for starting tapering have been met yet although the expectation still is that they will be met later this year. To us, this suggests that we should not expect the Fed to make any big announcement in connection with the upcoming meeting later this month, but will wait and see what the upcoming job reports will tell us about the current situation in the US labour market. As most still expect tapering to start this year, the big theme is not so much the timing of tapering but how fast tapering will be, which is the next major debate within the board. Kaplan is quoted for thinking Fed should start tapering in September. These comments are all the first we hear from Fed after the weak payrolls data last Friday and will be a key market input ahead of the blackout period this Saturday and FOMC meeting later in the month.

German election: With less than four weeks to go, the German election campaign is entering its hot phase and Germany is likely headed for its first three party coalition since the 1950s. Lately, the steady rise in popularity of the SPD party has gained markets' attention, opening up the possibility of current Finance Minster Olaf Scholz taking over the chancellorship under either a centrist 'traffic-light' or leftish 'Red-red-green' coalition that could loosen the fiscal purse strings. See more in German Politics Monitor - The tables are turning left, 9. September.

Equities: Defensives mostly lead the market with utilities as the outstanding sector. Energy, materials and tech trailed. This summarized to S&P -0.1%, Dow -0.2%, Nasdaq -0.6% and Russell 2000 -1.1%. Asian markets are mostly lower as well, especially in Hong Kong as Tencent and Netease dropping on new regulation fear. US futures point to another muted session.

FI: On a daily change, the move in fixed income markets seemed rather limited yesterday with European rates 0.5bp lower on the day, however, some intra-day volatility was recorded. A gradual decline in yields from the start of the day amid a weakness in the equity markets was later replaced by a sell-off, leaving yields broadly unchanged on the day. Curves generally flattened. Focus are naturally still on the ECB meeting day and the FOMC comments and the upcoming taper discussion. Notably also, the inflation market continue to stay elevated, with the 2y2y and 5y5y inflation swaps within 8bp around 1.7%.

FX: JPY, NZD, and USD gained vis-à-vis CAD and Scandies yesterday on a relatively quiet day for FX markets. EUR/USD is slowly falling back again towards the 1.18 level. EUR/SEK rose to 10.20 and EUR/NOK continued to hover around 10.30 level.

Credit: Credit markets almost did not move yesterday where iTraxx Xover widened ½bp (to 229.4bp) and Main was unchanged at 45bp. HY bonds widened around ½bp and IG was unchanged.

Nordic macro

In Norway, mainland GDP growth picked up at the start of the summer as corona cases fell and restrictions were lifted. We expect this continued in July with mainland GDP growing 1.0% m/m. If proven right, this will be marginally lower than expected by Norges Bank in the June MPR (+1.3%). Keep in mind that May/June was stronger than expected, hence the activity level should be precisely as expected by NB in June.

General trend

• US equity FUTS extend declines.
• Nikkei has remained lower [Topix Securities, Air Transportation and Information & Communication indices decline; Utilities rise amid the focus on the LDP elections].
• Hang Seng has extended decline [TECH index drops over 2% amid continued regulatory concerns; Ping An Insurance also declines]; Property developers’ bonds remain in focus [Evergrande, Central China Real Estate].
• Shanghai Composite ended morning trading fractionally higher [IT and Financial indices lag; Property index rises].
• S&P ASX 200 has extended declines [Resources and Financial indices weigh].
• Taiwan Semi may release Aug sales later today.
• China may release Aug banking statistics later today.

Headlines/Economic data

Australia/New Zealand

• ASX 200 opened 0.0%.
• (NZ) New Zealand Aug ANZ Truckometer Heavy M/M: -18.1% v -1.0% prior.
• (NZ) New Zealand Q2 Manufacturing Activity Q/Q: 3.9% v 2.7% prior; Volume Y/Y: -0.1% v +0.6% prior.
• OBL.AU Updates on Brisbane Floods class action: Court finds Seqwater is not liable to class action, will consider appeal.
• (AU) Reserve Bank of Australia (RBA) Offers to buy A$1.60B in Govt bonds v A$2.0B prior.
• (AU) Australia total weekly payroll jobs change from July 31 to Aug 14th: -0.7% v -2.0% prior; Wages -1.0% v -2.7% prior.

Japan

• Nikkei 225 opened -0.7%.
• (JP) Japan Auto Lobby Chair Toyoda: Coronavirus pandemic could further squeeze production for carmakers in Oct.
• (JP) Japan Vaccine Min Kono said to be announcing run for LDP Leadership on Friday (Sept 10th).
• (JP) Japan Econ Min Nishimura: Confirms seeking to extend state of emergency restrictions in Tokyo and certain other areas through Sept 30th.
• (JP) LDP leadership contender Takaichi: Will seek to achieve the 2% inflation target (yesterday after the close).
• (JP) Japan Investors Net Buying of Foreign Bonds: +¥1.04T v -¥545.5B prior; Foreign Net Buying of Japan Stocks: ¥421.6B v ¥25.3B prior.
• (JP) Japan Aug M2 Money Supply Y/Y: 4.7% v 4.1%e; M3 Money Supply Y/Y: 4.2% v 4.1%e.
• (JP) Japan govt said to consider easing virus restrictions around Nov period - press.
• (JP) Japan Health Official Omi: Calls on Govt to consider third coronavirus booster shots.
• (JP) Japan MoF sells ¥2.5T v ¥2.5T indicated in 0.005% 5-year JGBs; avg yield -0.1030% v -0.1200% prior, bid to cover 4.42x v 3.76x prior.

Korea

• Kospi opened -0.5%.
• 005380.KR Halted Asan Plant due to chip shortages, To resume ops on Sept 13th (Monday).
• (KR) North Korea confirms held military parade to mark anniversary of country's founding, unclear if it displayed new weapons or Leader Kim made a speech - Yonhap.
• (KR) Bank of Korea (BOK): Raising policy interest rates will help trim household debt; Will gradually adjust monetary policy amid inflationary pressures - Quarterly Monetary Policy Report.
• (KR) Bank of Korea (BOK) to expand special lending program to small businesses impacted by pandemic to KRW6.0T to March 2022.
• (KR) South Korea sells 50-year bonds: avg yield 1.990% v 1.960% prior.

China/Hong Kong

• Hang Seng opened -0.9%; Shanghai Composite opened -0.2%.
• (CN) CHINA AUG CPI M/M: 0.1% V 0.5%E; Y/Y: 0.8% V 1.0%E; PPI Y/Y: 9.5% v 9.0%e.
• (CN) Smaller cities in China including eastern city of Jiangyin’s housing bureau issued notice to ban developers from resorting to price war and selling properties below costs - China press.
• (CN) China Vice Premier Hu Chunhua: China is seeking foreign investments in more areas; China Govt to continue opening up at a wider range and deeper level - Xinhua.
• (CN) China Government regulators summon gaming firms including Tencent and Netease; Meeting will include including China cyberspace regulator.
• (Cn)China NDRC Official Liu Xiaonan: An updated negative list will be published by year-end, which will include cuts to the number of items and will provide greater clarity on restrictions.
• (CN) China Tinyan Capital Quantitative Hedge Fund halts fundraising after China CSRC Chairman says quant trading can cause problems.
• (CN) China PBOC sets Yuan reference rate: 6.4615 v 6.4674 prior.
• (CN) China PBOC Open Market Operation (OMO): Injects CNY10B in 7-day reverse repos v CNY10B in 7-day reverse repos prior; Net CNY0B v Net drain CNY0B prior.

North America

• (US) Weekly API Crude Oil Inventories: -2.9M v -4.0M prior.
• LULU Reports Q2 $1.65 v $1.21e, Rev $1.45B v $1.33Be; raises FY guidance.
• (US) Fed's Kaplan (non-voter; hawkish): Sees 2021 GDP 6.0% (prior 6.5%), will be revising Q3 GDP downward due to COVID; expect slower job growth moving forward; is no major change to outlook would support starting taper in Oct.
• (US) US Treasury rejects debt prioritization on its borrowing limits.
• TSN To increase beef prices; Rejects conclusions drawn by Whitehouse.

Europe

• (UK) Aug RICS House Price Balance: 73% v 75%e.

Levels as of 01:20 ET

• Nikkei 225, -0.8%, ASX 200 -1.9% , Hang Seng -1.8%; Shanghai Composite +0.1%; Kospi -1.3%.
• Equity S&P500 Futures: -0.4%; Nasdaq100 -0.3%, Dax -0.4%; FTSE100 -0.7%.
• EUR 1.1825-1.1811 ; JPY 110.28-110.09 ; AUD 0.7370-0.7347 ;NZD 0.7108-0.7083.
• Gold -0.2% at $1,789/oz; Crude Oil flat at $69.28/brl; Copper +0.2% at $4.243/lb.

Daily Pivots: (S1) 1.1796; (P) 1.1824; (R1) 1.1845; More...

Intraday bias in EUR/USD remains neutral for the moment. On the downside, break of 1.1792 support will confirm rejection by 1.1907 resistance. Intraday bias will be turned back to the downside for retesting 1.1663 low first. On the upside, sustained break of 1.1907 should indicate that fall from 1.2265, as well as the consolidation pattern from 1.2348, have completed. Near term outlook will be turned bullish for 1.2265/2348 resistance zone.

In the bigger picture, rise from 1.0635 is seen as the third leg of the pattern from 1.0339 (2017 low). Further rally remains in favors long as 1.1602 support holds, to cluster resistance at 1.2555 next, (38.2% retracement of 1.6039 to 1.0339 at 1.2516). However sustained break of 1.1602 will argue that the rise from 1.0635 is over, and turn medium term outlook bearish again. Deeper fall would be seen to 61.8% retracement of 1.0635 to 1.2348 at 1.1289 and below.

Commodity currencies are trading generally lower in Asia today, with pull back in Japanese stocks in the background. Canadian Dollar is also soft after BoC's rate decision overnight. Dollar, Yen and Swiss Franc are trading mildly firmer, extending this week's rebound. Euro is following closely, but momentum is starting to diminish, as focus turns to ECB today.

Technically, Euro will be a major focus today and we'll pay attention to some minor support levels, including 1.1792 support in EUR/USD. 0.8561 support in EUR/GBP, and 1.0843 support in EUR/CHF. These levels need to be violated together to indicate a broad based selloff in Euro. Otherwise, even if EUR/USD would dip deeper, Euro would just be considered in mixed trading.

In Asia, at the time of writing, Nikkei is down -0.68%. Hong Kong HSI is down -1.83%. China Shanghai SSE is up 0.12%. Singapore Strait Times is up 0.19%. Japan 10-year JGB yield is down -0.0028 at 0.043. Overnight, DOW dropped -0.20%. S&P 500 dropped -0.13%. NASDAQ dropped -0.57%. 10-year yield dropped -0.036 to 1.344.

Fed Williams: It could be appropriate to start tapering this year

New York Fed President John Williams said, "assuming the economy continues to improve as I anticipate, it could be appropriate to start reducing the pace of asset purchases this year." He added, "I will be carefully assessing the incoming data on the labor market and what it means for the economic outlook, as well as assessing risks such as the effects of the delta variant."

"I think it's clear that we have made substantial further progress on achieving our inflation goal," Williams said. "There has also been very good progress toward maximum employment, but I will want to see more improvement before I am ready to declare the test of substantial further progress being met."

Fed Beige Book: Economic growth downshifted slightly

In the Beige Book economic report, Fed said that "economic growth downshifted slightly to a moderate pace in early July through August". The deceleration in activity was "largely attributable to a pullback in dining out, travel, and tourism in most Districts, reflecting safety concerns due to the rise of the Delta variant, and, in a few cases, international travel restrictions." Other sectors were "constrained by supply disruptions and labor shortages, as opposed to softening demand"

All Districts continued to report "rising employment overall". All Districts noted "extensive labor shortages that were constraining employment". A number of Districts reported an "acceleration in wages", with several noted "particularly brisk wage gains among lower-wage workers". Inflation was "steady at a elevated pace". Several Districts indicated that businesses anticipate "significant hikes in their selling prices in the months ahead".

ECB to adjust PEPP and publishes new forecasts

ECB meeting will be a focus today and attention will mainly be on the PEPP purchase plan in Q4. The pace of purchases was significantly higher in Q2 and Q3. But with improvement in economic activities, as well as financing conditions, it's time for the central bank to re-calibrate the program. Chief Economist Philip Lane sounded cautious as he indicated there could be a "local adjustment" of the program but not a "pure taper situation". The plan for the emergency purchase program beyond the end date of March 2022 is probably still a bit "far away" for the council members.

New economic projections will be published and there were already some indications on upgrade in growth forecasts for this year. But that could also be offset by a slight downgrade for next year. So the overall impact could be muted. The key is indeed on how ECB views the inflation path. CPI was at a 10-year high of % in August and the projections would show how it will peak and then slow, to reflect how transitory inflation would be.

Here are some previews:

• ECB Preview – Time to Lower Asset Purchases?
• ECB Meeting: Tapering on the Menu, Sort of
• ECB Preview: Will the ECB Taper Bond Purchases?
• ECB Preview: Recalibrating, Not Tapering – But Hawks Will Squawk

Elsewhere

New Zealand manufacturing sales rose 3.9% in Q2. UK RICS housing price balance dropped to 73% in August. Japan M2 rose 4.7% yoy in August. China CPI slowed to 0.8% yoy in August but PPI accelerated to 9.5% yoy.

Looking ahead, Germany will release trade balance while US will release jobless claims.

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.1796; (P) 1.1824; (R1) 1.1845; More...

Intraday bias in EUR/USD remains neutral for the moment. On the downside, break of 1.1792 support will confirm rejection by 1.1907 resistance. Intraday bias will be turned back to the downside for retesting 1.1663 low first. On the upside, sustained break of 1.1907 should indicate that fall from 1.2265, as well as the consolidation pattern from 1.2348, have completed. Near term outlook will be turned bullish for 1.2265/2348 resistance zone.

In the bigger picture, rise from 1.0635 is seen as the third leg of the pattern from 1.0339 (2017 low). Further rally remains in favors long as 1.1602 support holds, to cluster resistance at 1.2555 next, (38.2% retracement of 1.6039 to 1.0339 at 1.2516). However sustained break of 1.1602 will argue that the rise from 1.0635 is over, and turn medium term outlook bearish again. Deeper fall would be seen to 61.8% retracement of 1.0635 to 1.2348 at 1.1289 and below.

Economic Indicators Update

ECB meeting will be a focus today and attention will mainly be on the PEPP purchase plan in Q4. The pace of purchases was significantly higher in Q2 and Q3. But with improvement in economic activities, as well as financing conditions, it's time for the central bank to re-calibrate the program. Chief Economist Philip Lane sounded cautious as he indicated there could be a "local adjustment" of the program but not a "pure taper situation". The plan for the emergency purchase program beyond the end date of March 2022 is probably still a bit "far away" for the council members.

New economic projections will be published and there were already some indications on upgrade in growth forecasts for this year. But that could also be offset by a slight downgrade for next year. So the overall impact could be muted. The key is indeed on how ECB views the inflation path. CPI was at a 10-year high of % in August and the projections would show how it will peak and then slow, to reflect how transitory inflation would be.

Here are some previews:

• ECB Preview – Time to Lower Asset Purchases?
• ECB Meeting: Tapering on the Menu, Sort of
• ECB Preview: Will the ECB Taper Bond Purchases?
• ECB Preview: Recalibrating, Not Tapering – But Hawks Will Squawk

In the Beige Book economic report, Fed said that "economic growth downshifted slightly to a moderate pace in early July through August". The deceleration in activity was "largely attributable to a pullback in dining out, travel, and tourism in most Districts, reflecting safety concerns due to the rise of the Delta variant, and, in a few cases, international travel restrictions." Other sectors were "constrained by supply disruptions and labor shortages, as opposed to softening demand"

All Districts continued to report "rising employment overall". All Districts noted "extensive labor shortages that were constraining employment". A number of Districts reported an "acceleration in wages", with several noted "particularly brisk wage gains among lower-wage workers". Inflation was "steady at a elevated pace". Several Districts indicated that businesses anticipate "significant hikes in their selling prices in the months ahead".

Full Beige Book here.

New York Fed President John Williams said, "assuming the economy continues to improve as I anticipate, it could be appropriate to start reducing the pace of asset purchases this year." He added, "I will be carefully assessing the incoming data on the labor market and what it means for the economic outlook, as well as assessing risks such as the effects of the delta variant."

"I think it's clear that we have made substantial further progress on achieving our inflation goal," Williams said. "There has also been very good progress toward maximum employment, but I will want to see more improvement before I am ready to declare the test of substantial further progress being met."

Short-term Elliott wave view in USDCAD suggests that the cycle from 01 Jun 2021 low is unfolding as a double correction. The structure remains incomplete favoring more upside extension. Up from that low, the pair has ended the first leg in wave ((W)) at 1.29492 high. Then wave ((X)) pullback ended at 1.24903 low and the pair continued higher.

Up from wave ((X)), wave ((Y)) remains in progress in lesser degree 7 swing structures (W), (X), and (Y). Pair is currently rallying in 5 waves impulse which should end wave A of (W). Up from wave ((X)) low at 1.249, wave (i) of ((i)) ended at 1.2543. Pullback in wave (ii) of ((i)) ended at 1.2499 low. Wave (iii) of ((i)) ended at 1.2707 high. Then wave (iv) of ((i)) drop finished at 1.2646 and rally ended at 1.2763.

Near-term, as far as the rally remains below wave ((i)) high at 1.2763, expect USDCAD to extend lower as (a), (b) and (c) correction and complete wave ((ii)). Wave (a) of ((ii)) already ended at 1.2648 and currently we are developing wave (b) of ((ii)) in 3 swings higher. After wave (b) is completed, we expect one more swing lower to complete wave (c) of ((ii)). Afterwards, the rally should continue within the wave A of (W) of ((Y)). Short term, only a break of wave ((i)) high will confirm the wave ((ii)) is done. Near term, as far as pivot at 1.249 low remains intact, expect pullback to find support in 3, 7, or 11 swing for more upside.

USDCAD 30 Minutes Elliott Wave Chart

STOCKS

Dow and Dax trade sharply lower. Failure to rise from 34750 and 15500 respectively can indicate medium term bearishness for both. Watch price action near mentioned supports in the next few sessions. Nifty and Sensex are consolidating between 17250-17500 and 58000-59000 respectively. A break on either side is needed to form the next view. Nikkei has come down slightly but while above 30,000 the view is bullish to see a test of 30600\700 on the upside. Shanghai is heading towards 3700 levels.

Dow (35031.07, -68.93, -0.20%) has continued to fall and if it does not bounce back immediately from 35000, it can fall further towards 34750 in the near term before attempting to rise from there.

DAX (15610.28, 232.81, -1.47%) fell sharply breaking below 15800, contrary to our expectation.15600/500 seems likely to hold but if the index fails to see a bounce immediately, it can fall below 15500 indicating medium term bearishness.

Nifty(17353.50, -8.60, 0.050%) is holding between the range of 17250-17500 mentioned previously.A strong break on either side will determine the next move.A strong break above 17500 can take it to 17800 in the coming sessions while a break below 17000 can take the index to 17000-16800.

Sensex(58250.26, -29.22, -0.050%) has been consolidating between 58000-59000.A strong break on either side is needed to make the next view.

Nikkei(30,041.33, -139.88, -0.46%) has come down today but is trading above 30000.While above 30000 the view is bullish to see a test of 30600\700.If Nikkei fails to sustain above 30000 then a pullback towards 29000 and even 28500 is possible in the coming days.

Shanghai(3674.71, -47, -0.013%) has risen today and is heading towards 3700.A test of 3700-3800 is possible in the coming days.

COMMODITIES

Commodities have fallen sharply on sharp rise in Dollar Index. Crude prices can fall in the near term while below resistances near 74 (Brent) and 70 (WTI). Gold has fallen sharply below 1800 and can test 1780/65 before bouncing back from there. Silver has held below 25 and can trade within 23.50-25 for the near term. Copper may test 4.20-4.00 before bouncing back in the medium term.

Brent (71.683) and WTI (68.59) have fallen and looks bearish for the near term for a possible fall towards 67.50 and 65 respectively while immediate respective resistances at 74 and 70 hold.

Gold (1799.16) fell sharply from 1833 instead of rising above 1840 proving 1840 to be an immediate and decent resistance. While below 1800 now, we may have to allow for a further fall towards 1780/65 before a bounce is seen again.

Silver (24.33) has held below resistance at 25, negating an immediate possibility of a rise to 26. A range of 23.50-25 may hold for the near to medium term.

Copper (4.2805) too fell sharply holding below 4.40. A test of 4.20 is possible in the next few sessions before a bounce is seen. Failure to bounce from 4.20 can drag it lower towards 4.00.

FOREX

Dollar Index has risen sharply dragging down Euro below 1.1850. Euro is bearish towards 1.18.Aussie and Pound looks bearish in the near term. EURJPY is stuck in a sideways range but may soon bounce on the upside. USDCNY can rise towards 6.47/48 in the near term. USDINR can test 73.80-74 before falling off from there. Overall currencies are weak against the US Dollar.

Dollar Index (92.678) is rising and may test 93.0-93.20 on the upside before falling off from there.

Euro (1.1821) continues to fall further and can dip to 1.18 in the near term. Immediate view is bearish.

EURJPY (130.31) is stable below 130.75 and can trade between 130-130.75/131 region in the near term. After the current sideways correction, an eventual rise towards 132 is possible.

Dollar-Yen (110.22) fell from 110.50 and could test 110-109.50 in the medium term before bouncing back from there.

Aussie (0.7369) fell sharply and holds below 0.75-0.7480 and we may expect a dip to 0.7350 or even to 0.73 in the near to medium term.

Pound (1.3777) rose sharply from 1.3726 and while above 1.37, the Pound can trade between 1.39-1.37 region for a few sessions. A bounce from 1.37 is likely for the near term.

USDCNY (6.4612) has dipped a bit but while above 6.45 it can trade between 6.47-6.45 region for a few sessions. A break above 6.47 can take the pair higher to 6.48/49 in the medium term.

USDINR (73.6075) rose sharply breaking above 73.40/60 and has scope to rise towards 73.80-74.00 in the near term before a corrective fall is seen from there. Watch at decent resistance near 73.80-74.0.

INTEREST RATES

The US Treasury yields have dipped at the far-end. Supports are just below current levels while above which our view of seeing a near-term rise will remain intact before a sustained reversal is seen. The German yields remain stable ahead of the ECB meeting today. We see room for rise in the near-term before the broader downtrend resumes. We will have to wait and see what the ECB has in plate for the yields. The 10Yr and 5Yr GoI have resistances ahead which will have to be broken in order to move up strongly. While the resistances hold, a fresh fall is possible in the coming days.

The US 2Yr (0.22%) and the 5Yr (0.81%) Treasury yields remain stable while the 10Yr (1.33%) and the 30Yr (1.95%) have dipped slightly. 1.3% (10Yr) and 1.9% (30Yr) are important immediate supports while above which our view of seeing a rise to 1.4%-1.45% (10Yr) and 2%-2.1% (30Yr) will remain intact. Only a break below 1.3% (10Yr) and 1.9% (30Yr) will bring the yields under pressure for a deeper fall.

The German 2Yr (-0.70), 5Yr (-0.64%), 10Yr (-0.33%) and 30Yr (0.16%) yields remain stable ahead of the ECB meeting today. For now we retain our view of seeing a test of -0.30%/-0.25% (10Yr) and 0.20% (30Yr) and then see a reversal to resume the broader downtrend. We will have to wait and watch the outcome of the ECB meeting today.

The Indian 10Yr GoI (6.1878%) tested 6.2% and has come-off to close lower. Inability to break 6.2% can drag the 10Yr down to 6.15%-6.14% in the near-term without seeing a rise to 6.22% mentioned yesterday. On the 5Yr GoI (5.6135%), the resistance at 5.64% is holding well. It can come under pressure if it breaks below 5.6% for a fall to 5.55%-5.5%. We will have to wait and watch.

Key Highlights

• Gold price started a downside correction from the $1,834 region.
• It broke a major bullish trend line with support near $1,822 on the 4-hours chart.
• EUR/USD is facing resistance near 1.1850 and 1.1865.
• GBP/USD extended its decline below 1.3800, but it stayed above 1.3700.

Gold Price Technical Analysis

Earlier this month, gold extended its increase above $1,820 against the US Dollar. The price even cleared $1,825, but it failed to gain momentum above $1,832.

The 4-hours chart of XAU/USD indicates that the price traded as high as $1,833 before there was a downside correction. The price traded below the $1,820 support zone.

There was also a break below a major bullish trend line with support near $1,822 on the same chart. The pair extended its decline below $1,800, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours).

There was also a break below the 23.6% Fib retracement level of the upward move from the $1,678 swing low to $1,833 high. An immediate support is near the $1,775 level.

The 38.2% Fib retracement level of the upward move from the $1,678 swing low to $1,833 high is also near the $1,775 zone. Any more downsides may possibly lead the price towards the $1,756 level.

On the upside, the price is facing resistance near $1,798 and $1,800. The next major resistance sits near $1,810, above which the price could rise towards $1,830. Any more gains could lead the price towards the $1,850 level.

Looking at EUR/USD, the pair extended its decline below 1.1850, which is now acting as a resistance. Besides, GBP/USD traded below the 1.3800 support zone.

Economic Releases to Watch Today

• US Initial Jobless Claims - Forecast 335K, versus 340K previous.
• ECB Interest Rate Decision – Forecast 0%, versus 0% previous.