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On Friday, the price for gold jumped, as it passed the 1,800.00 level and other round price levels. The surge ended when the price made an attempt to pass the resistance of the 1,820.00 mark. After shortly trading above the 1,820.00 level, the rate retreated to trade below it.

A potential surge above the 1,820.00 level could reach for the August high level zone in the 1,830.00/1,835.00 zone. Above this zone, the 1,850.00 mark could provide resistance.

Meanwhile, a decline of the price would most likely look for support in the previous high zone below 1,810.00. Afterwards, the 55, 100 and 200-hour simple moving averages might provide support.

After making attempts to pass the August high levels near 110.20, the USD/JPY currency exchange rate retreated on Friday. On Monday, the rate traded below the resistance of three hourly simple moving average and the weekly simple pivot point at 109.86.

In the case that the 55 and 100-hourly simple moving averages decline, the USD could lose value against the Japanese Yen. A move downwards would most likely look for support in the support zone at 109.42/109.50.

However, a recovery of the rate would have to pass the resistance of the weekly simple pivot point at 109.86, the 200-hour simple moving average at 109.85. Afterwards, the 100-hour SMA at 109.91 and the 55-hour SMA at 109.98 could provide resistance.

Gold set a nice foothold around the 20-day simple moving average (SMA) and sped up to close above a short-term resistance trendline and the 200-day SMA on Friday. The neutral market structure, however, is still intact and only a rally above the 1,835 ceiling would raise confidence in the ongoing upward move.

Encouragingly, the RSI continues to trend upwards above its 50 neutral level and the MACD has finally entered the positive territory, boosting optimism the recent bullish appetite in the market could last in the coming sessions.

Should the bulls snap the 1,835 bar, the door would open for the 1,870 restrictive region. Beyond the latter, the price may head for the key 1,900 – 1,916 resistance zone.Alternatively, a downside reversal may find support near the broken trendline and the 20- and 50-day SMAs currently within the 1,792 - 1,783 zone. If the sell-off extends below 1,770, the bears could gear down to 1,750. Breaching the latter too, the spotlight will shift immediately to the 1,717 low from August 10.

Meanwhile in the long-term picture, the downtrend from the 2,079 peak remains valid as long as the price continues to fluctuate below 1,959.

In brief, gold’s short-term bias is tilted to the upside, but its market structure remains neutral. A decisive step above 1,835 would print new higher highs in the chart and therefore raise bullish forces.

On Monday morning, the GBP/USD currency exchange rate was testing the resistance of the August high level and the 1.3780 mark. In the meantime, the most close by technical support levels were located near the 1.3735 level.

If the pair passes the resistance of the August high levels and the 1.3780 level, the 1.3800 could provide resistance. Above the 1.3800 mark, the weekly R1 simple pivot point at 1.3826 could keep the rate down.

A potential decline of the Pound against the US Dollar would most likely look for support in the 55 and 100-hour simple moving averages near 1.3735. Below these two levels, the currency exchange rate might find additional support in the 1.3720 level, where the weekly simple pivot point is located at.

On Monday morning, the EUR/USD currency exchange rate pierced the August high level near the 1.1800 mark. However, by the middle of the day's European trading the event was not followed up by a surge.

In the case of a surge, the rate could reach for the resistance of the weekly R1 simple pivot point at 1.1837 and the weekly R2 simple pivot point at 1.1875. However, take into account that the 1.1850 mark could provide resistance.

On the other hand, a potential decline could look for support in the last week's high levels near 1.1775 and the 55-hour simple moving average. If the rate passes the support levels near 1.1775, the EUR/USD could almost immediately find more support at 1.1765. At the 1.1765 level the weekly simple pivot point and the 100-hour simple moving averages could provide additional support.

Oil markets on hurricane watch

Oil markets are on hurricane watch this morning as Hurricane Ida smashes into the US Gulf of Mexico states, taking 95% of the region’s oil production and refining offline. On Friday, prices continued their mighty rally in anticipation of the hurricane, with Brent crude rising by 1.55% to USD 72.55 and WTI climbing by 1.40% to USD 68.65 a barrel. Both contracts spiked higher in early Monday trading as the hurricane made landfall but have retraced all of those gains to be almost unchanged at USD 72.80 and USD 68.55 a barrel, respectively.

OPEC+ also meets this week on September the 1st to discuss its production targets. Kuwait suggested that targets could be revised lower if needed providing some early support. With oil having rallied over 10.0% last week, leaving both contracts roughly in the middle of their two-month ranges (frisky though they have been), the pressure of probably off for the grouping to change their scheduled production increases. OPEC+ has shown in the past that they are very resistant to the tail-chasing noise of the prompt futures, and the curves themselves remain in backwardation.

Hurricane Ida will dictate oil’s near-term direction. If Ida weakens and its path of destruction is lower than expected, oil’s rally will temporarily lose momentum here. Similarly, if Ida’s impact is worse than expected, and we get ambiguous signals from OPEC+ officials, oil’s rally can continue, especially as risk appetite in general post-Jackson Hole, is firm.

I won’t even try to put any technical levels around oil today, there is far too much noise in the markets and the price action over the last two weeks is schizophrenic, to say the least. No one can complain about a lack of volatility, though. I will note the Brent crude bottomed at support at USD 64.60 a barrel last week, and the 200-DMA is approaching that point at 64.30. Similarly, WTI bottomed at a series of daily lows between USD 61.50 and USD 62.00 a barrel, with the 200-DMA not far away at USD 60.65. So, I would say with confidence that the lines in the sand for the greater oil price rally are around USD 64.50 and USD 61.50 a barrel. Intraday is a case of being nimble and having steely nerves and deep pockets.

Gold powers higher on Powell

Gold’s recovery rally from the early August long capitulation continued Friday after a suitably dovish Powell saw buyers flock back to precious metals as the US dollar plummeted. Gold finished the session 1.40% higher at USD 1817.50 and, most importantly, closed above the 100 and 200-DMAs. In Asia, gold trading has been moribund, with some long-covering pushing gold slightly lower to USD 1816.30 an ounce.

The Friday rally of over USD 25 an ounce pushed the yellow metal up through the 100-and 200-DMAs, today at USD 1810.00 and USD 1812.59 an ounce, respectively. They form gold’s first layer of support, followed by USD 1800.00 and USD 1785.00 an ounce, Friday’s lows. Gold has intra-day resistance at USD 1823.00, followed by a series of daily highs layered between USD 1830.00 and USD 1835.00 an ounce. A close above USD 1835.00 signals further gains to USD 1860.00 and onto USD 1900.00 an ounce in the days ahead.

However, as I have discussed above, there are plenty of potential potholes on a seemingly clear road higher this week. Month-end rebalancing flows, China PMIs, and the US Non-Farm Payrolls on Friday all have the potential to create short-term whipsaw price action. In the latter case, it could potentially turn the buy everything sells US dollar trade on its head if the data prints at 1.0 million-plus jobs this Friday.

The US dollar retreats on dovish Powell

The US dollar rally continued to fade on Friday, the dollar index having topped out above 93.50 resistance earlier last week. With markets taking a potential taper-tantrum of the board after the Powell Jackson Hole address, the dollar index fell by 0.38% to 92.68 on Friday, edging lower to 92.64 in Asia today. The 92.50 level is looming as a key pivot level now, with a daily close below signalling further potential unwinding, potentially targeting 91.50.

The return of risk appetite has seen the euro and sterling make impressive gains, rising 0.35% and 0.45% to 1.1795 and 1.3760, respectively. EUR/USD has crept above 1.1800 to 1.1805 this morning, although I would not say it is out of the woods until it reclaims 1.1900. Similarly, GBP/USD needs to close above its 200 and 50-DMAs at 1.3800 and 1.3818.

AUD/USD and NZD/USD have quickly recovered from their central bank/Covid-19 blues as international investor risk appetite returned last week, riding on the no-taper-tantrum tailwind. AUD/USD leapt 1.05% to 0.7315, and NZD/USD rose by 0.90% to 0.7010 on Friday, where they remain approximately today. Having bottomed at 0.7100 and 0.6800 last week, those two levels are the lines in the sand from a longer-term bullish perspective.

USD/CNY remains trapped in a broader 6.4500 to 6.5000 range with the PBOC content to make the daily fixing in line with moves in the underlying basket. That has left USD/ASIA to fend for itself and the return of investor risk appetite last week led to some stellar gains by regional currencies. The Malaysian ringgit staged a massive rally despite its woeful virus situation, as a new Prime Minister, hinting at much-craved political stability, and soaring oil prices saw USD/MYR plummet from 4.2400 to 4.1660 over the past week. Having rallied so far so fast, the MYR may struggle to overcome the 100-DMA at 4.1600 in the near term, particularly if oil prices top out.

The Singapore dollar, Thai baht, Philippine peso and Indian rupee also enjoyed stellar weeks, unwinding much of the recent week’s sell-offs. USD/ASIA needs to negotiate the China PMIs for the rally to continue this week. With Singapore hitting its 80% vaccination target, I expect it to outperform ASEAN FX heading into Q4. On a darker note, USD/IDR has remained pegged around 14.370.00 after the Indonesia government and Bank of Indonesia announced a “burden-sharing” arrangement extension. That is, BI will directly buy newly issued government bonds and monetise its debt. Indonesia and the Philippines got away with this in 2020, but the jury is out if Indonesia will in 2021. Indeed, USD/IDR suggests they will not. If Friday’s Non-Farm’s is strong, leading to a stronger US dollar, the Indonesian rupiah could grab the ASEAN wooden spoon from the Malaysian ringgit and Thai baht.

With month-end flows upon us, and China PMI data and US Non-Farm Payrolls ahead this week, I would caution about becoming too attached to the dovish Powell-sell-US-dollar wagon train. When something is too easy or too good to be true, it often is. Although US dollar momentum has shifted to the downside, there is plenty of potential for ugly whipsaw price action in the week ahead.

Asian markets edge higher to start week

The FOMO-gnomes of Wall Street needed no other encouragement after Jerome Powell’s Jackson Hole speech said what they wanted to hear, and didn’t say what they didn’t want to hear, rate hikes on the horizon. To be fair, Mr Powell could probably have said: “Hi, I’m Jerome Powell” and finished there, and Wall Street would have bought everything.

The major indices finished the week on a high note, with the S&P 500 rising 0.88%, the Nasdaq jumping by 1.20%, and the Down Jones climbing by 0.69%. In Asia, futures on all three are marginally higher by around 0.05%.

Asian markets have started the day positively as well, although my circumspectly than Wall Street. Nevertheless, the Nikkei 225 has climbed 0.40%, with the Kospi rising by 0.30%. China markets are mixed, with the Shanghai Composite rising 0.35% while the CSI 300 has fallen by 0.20%, with the Hang Seng edging 0.10% higher. Asian markets are still retaining Covid-19 nerves, and more importantly, China clampdown nerves, with each day delivering something new on that front.

ASEAN markets are being led higher by Singapore after the government announced the city-state had reached its 80% vaccination target over the weekend, spurring reopening hopes. The Straits Times has rallied by 0.90%, and investors’ return of risk appetite generally is boosting regional markets. Kuala Lumpur is 0.35% higher, with Bangkok jumping 1.10% and Taipei by 0.55%. In Australia, record results by the miner Fortescue have offset delta nerves in NSW and Victoria. The All Ordinaries has risen by 0.30%, with the ASX 200 0.20% higher. Falling numbers of Covid-19 cases in New Zealand today sees the NZX 50 rallying by 0.85%.

The biggest threat to the Asian rally this week will be poor PMI data from China. But the return of risk appetite internationally post-Jackson-Hole should be enough to keep the party going in Europe and the United States today. I expect European equities to open higher. UK markets are closed.

Notes/Observations

• Various Euro area inflation data remained above ECB target.
• EU Confidence indicators are starting to trend down.
• UK markets closed for a holiday.

Asia

• Japan PM candidate Kishida noted he would launch a large new economic stimulus package worth "several tens of trillion yen" if elected.
• Japan July Retail Sales beat consensus (M/M: 1.1% v 0.4%e; Y/Y: 2.4% v 2.1%e).
• China State Council announced plan targeting 55M urban jobs by 2025, capping unemployment rate at 5.5%; sought stronger rights for workers and increase training.
• US said to be aware of reports of North Korea restarting a nuclear reactor.

Coronavirus

• New variant first detected in South Africa said to be more mutated compared to original virus than any other known variant; Posed concerns it could be more infectious and evade vaccines.
• EU said to be considering recommending halting nonessential travel from the US as the average US infection rate was now above that of the EU. Current data showing that US daily new case average was over 150%over the last month, with hospitalizations surpassing 100,000 for the first time since January and Covid-related deaths on the rise.

Europe

• Germany Election Poll has Social Democrats with 24% compared to Merkel's CDU's 21%.

Energy

• Hurricane Ida hit Louisiana as a category 4 strength hurricane; More than 95% of Gulf crude and natural gas platforms are offline due to hurricane.
• Kuwait Oil Min al-Fares noted that OPEC+ could reconsider output increase.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 +0.10% at 472.76, FTSE +0.23% at 7,148.01, DAX +0.23% at 15,887.65, CAC-40 +0.13% at 6,690.32, IBEX-35 -0.15% at 8,909.00, FTSE MIB +0.10% at 26,032.50, SMI +0.02% at 12,440.87, S&P 500 Futures +0.05%].
• Market Focal Points/Key Themes: European indices open modestly higher and failed to gain direction later in the session; UK markets closed for holiday; better performing sectors include materials and industrials; underperforming sectors include financials and health care; oil and gas subsector under pressure in the wake of Hurricane Ida; Rovi trading lower over investigation into two deaths after injection of Moderna’s covid vaccine in Japan; reportedly Sainsbury’s looking to sell financing unit; earnings expected during the upcoming US session includes Zoom.

Equities

• Consumer discretionary: Greenyard Foods [GREEN.BE] +2.5% (earnings).
• Healthcare: Sanofi [SAN.FR] -1% (trial results), Bayer [BAYN.DE] -1% (trial results), Bone Therapeutics [BOTHE.BE] -36% (trial results).

Speakers

• ECB's Villeroy (France) reiterated Council stance that would be temporary spikes in inflation. ECB to discuss the impact of more favorable conditions. Not urgent to decide on Pandemic Bond Buying Fund (PEPP) by Sept meeting; reiterated that program remained in effect until at least Mar 2022. ECB had more time to decide on QE compared to the Fed as US to recover more quickly than Euro zone.
• Thailand Finance Ministry: Pandemic slowed growth in July period but overall, economic stability remains good.
• Japan PM Suga said to have ordered LDP Sec Gen Nikai to compile new economic stimulus measures.
• Japan LDP official Nikai: Ruling party facing difficulty in reviving economy due to dire fiscal situation.
• OPEC+ said to likely rollover output its planned 400K bpd production increase at the Sept 1st meeting.

Currencies/Fixed Income

• USD remained on soft footing after Fed Chair Powell’s Jackson Hole speech past week noted that the tapering timeline was on table, but not interest rate lift-off. Dealers noted that Tapering would not be as fast as anticipated. Fed chief was clear to detach tapering from rate liftoff. Greenback also weighed upon that the Covid-19 Delta variant would likely prompt some pullback on US consumer spending.
• EUR/USD hovering around the 1.18 area. Dealers noted that inflation and growth outlook appears to be rising but confidence indicators were starting to trend down.

Economic data

• (NL) Netherlands Aug Producer Confidence Index: 9.6 v 12.3 prior.
• (DE) Germany Aug CPI North Rhine Westphalia M/M:0.1 % v 0.8% prior; Y/Y: 4.2% v 4.1% prior.
• (ES) Spain Aug Preliminary CPI M/M: +0.4% v -0.8 % prior; Y/Y: 3.3% v 3.0%e (highest annual pace since Oct 2012).
• (ES) Spain Aug Preliminary CPI EU Harmonized M/M: 0.4% v 0.0%e; Y/Y: 3.3% v 2.9%e.
• (ES) Spain July Adjusted Retail Sales Y/Y: % v 0.6%e; Retail Sales (unadj) Y/Y: % v 1.8% prior.
• (CH) Swiss Aug KOF Leading Indicator: 113.5 v 125.9e.
• (AT) Austria July PPI M/M: 1.7% v 1.0% prior; Y/Y: 8.6% v 6.9% prior.
• (SE) Sweden Jun Non-Manual Workers’ Wages Y/Y: 3.4% v 3.3% prior.
• (DE) Germany Aug CPI Hesse M/M: 0.0% v 0.8% prior; Y/Y: 3,7% v 3.4% prior.
• (DE) Germany Aug CPI Bavaria M/M: 0.1% v 0.9% prior; Y/Y: 3.9% v 3.8% prior.
• (CH) Swiss weekly Total Sight Deposits (CHF): 715.2B v 715.0B prior; Domestic Sight Deposits: 640.1B v 639.8B prior.
• (PT) Portugal Aug Consumer Confidence: -13.8 v -14.1 prior; Economic Climate Indicator: 1.8 v 1.8 prior.
• (EU) Euro Zone Aug Economic Confidence: 117.5 v 118.0e; Industrial Confidence: 13.7 v 13.4e; Services Confidence: 16.8 v 19.0e; Consumer Confidence (final): -5.3 v -5.3 advance.
• (DE) Germany Aug CPI Saxony M/M: 0.1% v 1.0% prior; Y/Y: 4.0% v 3.7% prior.
• (BE) Belgium Q2 Final GDP Q/Q: 1.7% v 1.4% prelim; Y/Y: 14.9% v 14.5% prelim.
• (IS) Iceland Aug CPI M/M: 0.5% v 0.2% prior; Y/Y: 4.3% v 4.3% prior.

Fixed income Issuance

• (DK) Denmark sold total DKK3.38B in 3-month, 6-month, 9-month and 12-month Bills.

Looking Ahead

• (BE) Belgium Aug CPI M/M: No est v 0.9% prior; Y/Y: No est v 2.3% prior.
• (DE) Germany Aug CPI Brandenburg M/M: % v 1.0% prior; Y/Y: % v 4.3% prior.
• (DE) Germany Aug CPI Baden Wuerttemberg M/M: No est v 0.8% prior; Y/Y: No est v 3.4% prior.
• (MX) Mexico July YTD Budget Balance (MXN): No est v -231.2B prior.
• 05:25 (EU) Daily ECB Liquidity Stats.
• 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).
• 06:00 (PT) Portugal July Retail Sales M/M: No est v -1.5% prior; Y/Y: No est v 7.8% prior.
• 06:00 (IL) Israel to sell bonds.
• 06:45 (US) Daily Libor Fixing.
• 07:00 (BR) Brazil Aug FGV Inflation IGPM M/M: 0.8%e v 0.8% prior; Y/Y: 31.3%e v 33.8% prior.
• 07:25 (BR) Brazil Central Bank Weekly Economists Survey.
• 07:30 (IS) Iceland to sell 3-month, 6-month Bills.
• 08:00 (DE) Germany Aug Preliminary CPI M/M: 0.1%e v 0.9% prior; Y/Y: 3.9%e v 3.8% prior.
• 08:00 (DE) Germany Aug Preliminary CPI EU Harmonized M/M: 0.1%e v 0.5% prior; Y/Y: 3.4%e v 3.1% prior.
• 08:00 (ZA) South Africa July Budget Balance (ZAR): -133.0Be v +63.1B prior.
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:00 (IN) India announces details of upcoming bond sale (held on Fridays).
• 08:00 (ES) Spain Debt Agency (Tesoro) size announcement on upcoming issuance.
• 08:30 (CA) Canada Q2 Current Account Balance: No est v $1.2B prior.
• 09:00 (FR) France Debt Agency (AFT) to sell €4.8-6.0B in 3-month, 6-month and 12-month bills.
• 09:45 (EU) ECB weekly QE bond buying update.
• 10:00 (US) July Pending Home Sales M/M: +0.4%e v -1.9% prior; Y/Y: -8.5%e v -3.3% prior.
• 10:30 (US) Aug Dallas Fed Manufacturing Activity Index: 22.8e v 27.3 prior.
• 11:00 (CO) Colombia July Exports: No est v $3.0B prior.
• 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.
• 16:00 (US) Weekly Crop Progress Report.
• 18:45 (NZ) New Zealand July Building Permits M/M: No est v 3.8% prior.
• 19:00 (KR) South Korea July Industrial Production M/M: 0.0%e v +2.2% prior; Y/Y: 7.3%e v 11.9% prior.
• 19:01 (UK) Aug Lloyds Business Barometer: No est v 30 prior.
• 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 101.6 prior.
• 19:30 (JP) Japan July Jobless Rate: 2.9%e v 2.9% prior; Job-To-Applicant Ratio: 1.12e v 1.13 prior.
• 19:50 (JP) Japan July Preliminary Industrial Production M/M: -2.5%e v +6.5% prior; Y/Y: 11.2%e v 23.0% prior.
• 21:00 (NZ) New Zealand Aug Business Confidence: No est v -3.8 prior; Activity Outlook: No est v 26.3 prior.
• 21:00 (CN) China Aug Manufacturing PMI (govt official): 50.1e v 50.4 prior; Non-manufacturing PMI: 52.0e v 53.3 prior; Composite PMI: No est v 52.4 prior.
• 21:30 (AU) Australia Q2 Current Account Balance: A$21.0Be v A$18.3B prior.
• 21:30 (AU) Australia July Building Approvals M/M: -5.0%e v -6.7% prior.
• 21:30 (AU) Australia July Private Sector Credit M/M: 0.5%e v 0.9% prior; Y/Y: 3.5%e v 3.1% prior.
• 22:00 (SG) Singapore July M2 Money Supply Y/Y: No est v 6.1% prior; M1 Money Supply Y/Y: No est v 17.2% prior.
• 23:00 (TH) Thailand Central Bank to sell THB 60B in Bills.
• 23:30 (HK) Hong Kong to sell 3-month, 6-month and 12-month Bills.
• 22:35 (JP) Japan to sell 2-year JGB bonds.

What a difference a week makes; back from holidays and the faux pre-taper tantrum, sell-offs across various asset classes have been unceremoniously reversed in their entirety. I deliberately avoided looking at or thinking about markets over the past week, preferring sun and five books.

So, I guess it is with amoeba in mind that I ponder the buy-everything rally that swept markets on Friday. Much is being laid at the door of Jerome Powell’s Jackson Hole speech, where he did what everyone thought and signalled taperings were on the agenda, but interest rate hikes were not. Why this is a surprise to any thinking individual, I know not. He was not going to say we’ll start tapering this year and immediately start hiking rates; we have an FOMC dot plot for that, folks. Amoeba.

Anyway, having not upset the narrative the street wanted to hear, FOMO on everything swung into action with the recent taper nerves US dollar buying being unwound, risk sentiment currencies rallying powerfully. Those two dark towers of momentum-driven tail-chasing speculative anarchy, oil and precious metals, recorded outsized gains. However, I note that both asset classes had already retraced most of the previous week’s losses anyway, as had the US dollar. Mr Powell just added the fresh fruit and cream to the top of the pavlova.

Equity markets in the United States, despite much handwringing from the FOMO amoeba at sideways days, a harbinger of doom to us all, never really retreated at all over the past few taper-nerves weeks. They’re all at record highs, thank you; no helter-delta here. In fact, glancing at the S&P 500 chart for this year this morning, if you had closed your eyes and clicked buy-everything on every two per-cent-ish dips, you’d have done very well, thank you. We still live in a zero per cent world, floating on an ocean of unlimited central bank money that is determined to NPV the wealth of our children to keep the lights on today, back-stopping even the dumbest business or investment ideas. A tapering won’t change that. By the way, the buy-the-two-per-cent-dip S&P 500 strategy is not investment advice, merely an observation. However, like most of the world on any topic you can imagine, I am always 100% correct in hindsight.

Notably, US bond yields have held onto most of their recent gains, sending just a sliver of a warning signal out to the buy-everything amoeba that interstellar travel is not without its perils. Like financial markets, those space-faring amoebae promise much, in this case, unlimited free energy. A sure thing? We love that. But, when not handled with care, very ugly explosions can result in mass destruction. Gosh, there I go talking about cryptos and high-yield debt again.

All eyes on US Nonfarm Payrolls

We have a Non-Farm Payrolls due at the end of the week, and a 1.0 million-plus print could see tapering tantrums back on the front foot. 800,000 likely keeps the buy-everything trading bubbling on low heat like a good sauce. A low-ball print under 500,000 jobs, while technically bad news for the recovery, will probably see taper nerves anaesthetised; bad for the US dollar, great for every other asset class you can shake a stick at.

Despite the seemingly one-way trading seen last week, I will be taking any price action today and tomorrow with a grain of salt. That is because we are approaching month-end with the usual “rebalancing” flows seen across markets. Although the week’s highlight is Friday’s Non-Farm Payrolls, it also comes before the US Labour Day holiday next Monday. I long ago learnt to disregard the price action in the hours after the release. Trading that leads to the dark side. But with a US holiday next Monday, we may not get a clear picture of the market’s reaction until well into next week. I can see plenty of whipsaws in the days ahead.

Asia will see its beginning of month dump of PMI data this week, as will the rest of the world. China’s official and Caixin Manufacturing and Non-Manufacturing PMI reads will be the only ones to escape the pre-non-farm noise. Markets at this stage are most nervous about the data showing increasing weakness as delta disruptions mount against a seemingly never-ending background of government interventions in various sectors. Thus, weaker China PMI data could cap exuberance in Asian markets, either via currencies or equities, ahead of Friday’s main event.

The data calendar is quiet in Asia today, with better Japan Retail Sales having no noticeable impact. Currency markets, in particular, will be muted with London away for the August Bank Holiday today.

Finally, being a Monday, and with amoeba on my mind, it’s time to take a brief look at bitcoin. Crypto’s have consolidated in my absence but remain near recent highs. Back in late July, in the spirit of tradeable versus investable, I did the unthinkable and got bullish on bitcoin after it broke out of a giant triangle around 34,000.00 dollars of US taxpayer back fiat currency. The target at the time was USD 51,000.00, and that came very close last week. I must also grudgingly admit that cryptos have defied the US dollar strength of past weeks. The charts suggest the USD 51,000.00 target is still in play as long as the 200-day moving average (DMA) at USD 46.100.00 remains intact. A low US Non-Farm should give them another boost, if only because the US dollar will plummet. The charts suggest USD 60,000.00 is achievable by FOMO-meba crowd, but I will reassess once USD 51,000.00 trades. Longer-time readers should not get their hopes up that I will remain bullish forever; I’ll leave that for the single-cell organisms.