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Daily Pivots: (S1) 1.1762; (P) 1.1782; (R1) 1.1795; More...

Intraday bias in EUR/USD is turned neutral with the current retreat. On the upside, above 1.1804 will resume the rebound from 1.1705 to 1.1907 near term structural resistance. On the downside, however, break of 1.1705 will resume larger fall to 1.1602/1703 key support zone again. We'd look for strong support from there to rebound, but sustained break will carry larger bearish implication.

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). Reaction from 1.2555 should reveal underlying long term momentum in the pair. However sustained break of 1.1602 will argue that the rise from 1.0635 is over, and turn medium term outlook bearish again.

Souring risk sentiment continues to support Swiss Franc and Yen today, while Dollar is also trying to catch up. Commodity currencies are still the weakest ones. In particular, New Zealand Dollar tumbles on talks that RBNZ could refrain from delivering the highly anticipated rate hike tomorrow, as the country returned to pandemic lockdown. Fresh selling is also seen in Euro and Sterling, we markets enter into US session.

Technically, NZD/JPY is now eyeing 75.25 support with today's steep fall. Break there will resume the corrective decline from 80.17, to 38.2% retracement of 59.49 to 80.17 at 72.27. Theoretically, such development should also come with break of 0.6879 in NZD/USD, to resume the fall from 0.7463.

In Europe, at the time of writing, FTSE is up 0.22%. DAX is down -0.09%. CAC is down -0.45%. Germany 10-year yield is down -0.013 at -0.478. Earlier in Asia, Nikkei dropped -0.36%. Hong Kong HSI dropped -1.66%. China Shanghai SSE dropped -2.00%. Singapore Strait Times dropped -0.86%. Japan 10-year JGB yield dropped -0.0071 to 0.009.

US retail sales dropped -1.1% mom in Jul, ex-auto sales dropped -0.4% mom

US retail sales dropped -1.1% mom in July to USD 61.7B, worse than expectation of -0.2% mom. Ex-auto sales dropped -0.4% mom, below expectation of 0.1% mom. Ex-gasoline sales dropped -1.4% mom. Ex-auto, ex-gasoline sales dropped -0.7% mom. Comparing to July 2020, sales were up 15.8% yoy. Total sales for May through July period were up 20.6% from the same period a year ago.

From Canada, housing starts dropped to 272k in July, below expectation of 275k. Foreign securities purchases dropped to CAD 19.63B in June.

Eurozone GDP grew 2.0% qoq in Q2, EU up 1.9% qoq

According to a flash estimate by the Eurostat, Eurozone GDP grew 2.0% qoq in Q2, and 1.9% qoq in the EU. Comparing with the same quarter of the previous year, GDP rose 13.6% yoy in Eurozone, and 13.2% yoy in the EU. Employment grew 0.5% qoq in Eurozone and 0.6% qoq in EU.

UK unemployment rate dropped to 4.7% in Jun, employment rate rose to 75.1

UK unemployment rate dropped slightly to 4.7% in the three months to June, down from 4.8%, better than expectation of 4.8%. That's still 0.8% higher than before the pandemic, but -0.2% lower than the previous quarter. Employment rates was estimated at 75.1%, up 0.3% by the quarter, but still at -1.5% lower than before the pandemic.

ONS said: "The quarterly increase in employment was mainly driven by an increase in the number of full-time workers, which reached its highest level since before the start of the pandemic. While the number of people working part-time has decreased during the pandemic, in April to June 2021 there was the first quarterly increase in people working part-time since February to April 2020".

Average earnings including bonus rose 8.8% 3moy, versus expectation of 8.7%. Average earnings excluding bonus rose 7.4% 3moy, matched expectations. In July, claimant count dropped -7.8k.

RBA minutes: Central scenario still for the economy to growth strongly again next year

In the minutes of August 3 meeting, RBA said recent outbreaks of the Delta variant of had "interrupted the recovery". But the economy entered lockdowns with "more momentum than previously expected", with fiscal and monetary support already cushion the economic effects. It added, "experience to date had been that, once virus outbreaks were contained, the economy bounced back quickly." The "central scenario" was still for the economy to "growth strongly again next year".

Committee members considered the case to delay tapering of asset purchases to AUD 4B a week scheduled for September. But they noted that additional bond purchases would only have a "marginal effect" at present", but "maximum effect" during the resumption of strong growth in 2022. Also fiscal policy is recognized as a "more appropriate instrument" in response to a "temporary, localized reduction in incomes". Thus, the Board reaffirmed the previously announced schedule for tapering.

RBA also reiterated that the condition for raising interest rate is not expected to be met before 2024. "Meeting this condition will require the labour market to be tight enough to generate wages growth that is materially higher than it is currently," it said.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.1762; (P) 1.1782; (R1) 1.1795; More...

Intraday bias in EUR/USD is turned neutral with the current retreat. On the upside, above 1.1804 will resume the rebound from 1.1705 to 1.1907 near term structural resistance. On the downside, however, break of 1.1705 will resume larger fall to 1.1602/1703 key support zone again. We'd look for strong support from there to rebound, but sustained break will carry larger bearish implication.

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). Reaction from 1.2555 should reveal underlying long term momentum in the pair. However sustained break of 1.1602 will argue that the rise from 1.0635 is over, and turn medium term outlook bearish again.

Economic Indicators Update

US retail sales dropped -1.1% mom in July to USD 61.7B, worse than expectation of -0.2% mom. Ex-auto sales dropped -0.4% mom, below expectation of 0.1% mom. Ex-gasoline sales dropped -1.4% mom. Ex-auto, ex-gasoline sales dropped -0.7% mom. Comparing to July 2020, sales were up 15.8% yoy. Total sales for May through July period were up 20.6% from the same period a year ago.

Full release here.

EURUSD is coming slightly down, now approaching the trendline support which may open door for 1.17 if line is broken.

As per Elliott Wave analysis, EURUSD is sliding down into wave 5 which has touched March low but there is still room for another and finally sell-off towards 1.1600-1.1650 area to complete wave 5 of C). Only break above black wave 4 can confirm a change in trend.

EUR/USD 4h Elliott Wave chart

Technical analysis

The EMA(50) and the EMA (100) crossed, which is advantageous for opening an order

The EMA(100) is above the EMA(50), which is beneficial for bears

The RSI is below 50

The MACD line is below 0, showing a neutral direction.

What the possible outcomes are

The eurozone annualized GDP missed the expectation figures, so EURUSD turned for a decline before today's U.S. Retail Sales release.

In our most likely scenario, the pair may experience a downward correction towards the first support level of 1.17587.

If the price passes the first support level, we can expect a continued downtrend towards the second support level of 1.17511.

Conversely, it's possible to see the pair rise towards the first resistance level of 1.17790.

If the pair surpasses the first resistance level, we should expect a continued surge towards the second resistance level of 1.18062.

Key levels

Support 1.17587 1.17511

Resistance 1.17790 1.18062

Notes/Observations

• UK wage growth reaches record levels in July as reopening economy triggered an unprecedented scramble for staff.
• Continued concerns over rising COVID-19 cases in parts of the world.
• New Zealand finds one case of Coronavirus and locks down the country; analyst scale back calls for potential RBNZ rate hike at its scheduled meeting on Wed, Aug 18th (tomorrow).

Asia

• RBA July Minutes noted that the Delta variant of the virus had interrupted the recovery, prepared to act in response to further bad news, reiterated forward guidance that did not expect rate hike conditions to be met until 2024.
• China Sec Journal noted that analysts believed that China PBOC is likely to cut RRR during Q4.
• China Military announced start of air and sea exercise near Taiwan, in response to external interference and provocations.

Coronavirus

• Total global cases 208.7M (+0.3% d/d); total deaths: 4.38M (+0.2% d/d).
• Pfizer [PFE] noted that US would advise coronavirus vaccine boosters to be taken 8 months after vaccination, could offer boosters to non-immune compromised individuals in mid Sept.
• Biden administration said to be close to announcing a Covid-19 booster shot for all Americans 8 months after their 2nd dose. Would commence in mid-to-late Sept pending FDA approval.
• Five US states (Florida, Louisiana, Hawaii, Oregon and Mississippi) reached new peaks in their seven-day average of new cases per day as of Sunday.

Americas

• Fed’s Rosengren (non-voter) stated on CNBC that he believed a substantial further progress standard on inflation had been met. Would prefer to start tapering this fall, potentially in Oct or Nov, and no later than Dec; Reiterated prefer to end tapering program by mid-2022.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 -0.06% at 473.16, FTSE +0.12% at 7,162.43, DAX -0.23% at 15,889.75, CAC-40 -0.38% at 6,812.79, IBEX-35 -0.68% at 8,866.00, FTSE MIB -0.69% at 26,267.50, SMI +0.19% at 12,440.21, S&P 500 Futures -0.43%].
• Market Focal Points/Key Themes: European indices open down across the board and remained under pressure as the session wore on; general risk off move attributed to rise in covid cases through Asia; less negative sectors include heath care and telecom; sectors leading to the downside include financials and consumer discretionary; energy sector under pressure after crude prices erase earlier gains; Woodside to acquire BHP’s petroleum assets; TP Group rejects offer from Science Group; earnings expected in the upcoming US session include Home Depot, Walmart and Agilent Technologies.

Equities

• Consumer discretionary: Just Eat Takeaway.com [TKWY.NL] +3% (earnings), Pandora [PNDORA.DK] -1% (earnings).
• Financials: Plus500 [PLUS.UK] +6% (earnings).
• Industrials: DFDS [DFDS.DK] +7% (earnings).
• Telecom: BT Group [BT.A.UK] -2% (new Chairman).
• Materials: BHP Group [BHP.UK] +7% (earnings; acquisition).

Speakers

• UK Chancellor of the Exchequer (Fin Min) Sunak noted that the latest data had been promising but could still face some bumps in the road.
• New Zealand PM Ardern stated the country to enter into a three day lockdown and raised alert level 4 (highest level). The lockdown in Auckland and Coromandel area to last for 7 days. She did not know if coronavirus case was of the Delta variant but assumed it was. Stressed that going hard and early on lockdown had worked before.

Currencies/Fixed income

• Coronavirus concerns prompted some safe-haven flows in the session. Bond yields were lower at the start of the EU session but since climbed off lowest levels. Dealers eyeing the upcoming Powell’s speech on Tuesday for further clues on tapering.
• EUR/USD having difficulties moving above the 1.18 area.
• GBP/USD tested a 3-week low after moving below the 1.38 level despite healthy UK jobs data. Dealers noted that a decline in risk appetite was weighing upon GBP. Also concern the UK labor market could start cooling as government support was withdrawn.
• Safe-haven flows helped the JPY currency hit a 2-week high.
• NZD currency (Kiwi) tumbled during the Asian and EU session after the country discovered its first community case of COVID-19 in six months and announced a 3-day national lockdown. Various analysts scaled back calls for potential RBNZ rate hike at its scheduled meeting on Wed, Aug 18th (tomorrow).

Economic data

• (FI) Finland Jun GDP Indicator Y/Y: 9.7% v 8.9% prior.
• (UK) July Jobless Claims Change: -7.8K v -136.1K prior; Claimant Count Rate: 5.7% v 5.7% prior.
• (UK) Jun Average Weekly Earnings 3M/Y: 8.8% v 8.6%e; Weekly Earnings (ex-bonus) 3M/Y: 7.4% v 7.4%e.
• (UK) Jun ILO Unemployment Rate: 4.7% v 4.8%e (matched lowest since summer 2020); Employment Change 3M/3M: +95K v +100Ke.
• (RO) Romania Q2 Advance GDP Q/Q: 1.8% v 2.0%e; Y/Y: 13.0% v 14.5%e.
• (HU) Hungary Q2 Preliminary GDP Q/Q: 2.7% v 1.2%e; Y/Y: 17.9% v 15.9%e.
• (NL) Netherlands Q2 Preliminary GDP Q/Q: 3.1% v 1.5%e; Y/Y: +9.7% v -2.6% prior.
• (NL) Netherlands Jun Trade Balance: €6.5B v €4.7B prior.
• (NL) Netherlands Jun Consumer Spending Y/Y: 6.4% v 11.0% prior.
• (CY) Cyprus Q2 Preliminary GDP Q/Q: 0.2% v 2.0% prior; Y/Y: +12.8% v -1.6% prior.
• (EU) Euro Zone Q2 Preliminary GDP (2nd reading) Q/Q: 2.0% v 2.0%e; Y/Y: 13.6% v 13.7%e.
• (EU) Euro Zone Q2 Preliminary Employment Q/Q: +0.5% v -0.2% prior; Y/Y: +1.8%v -1.8% prior.

Fixed income issuance

• (ES) Spain Debt Agency (Tesoro) sold total €1.71B vs. €1.0-2.0B indicated range in 3-month and 9-month Bills.
• (UK) DMO sold £2.0B in 0.875% Jan 2046 Gilts; Avg Yield: 0.940% v 1.359% prior; bid-to-cover: 2.38x v 2.40x prior; Tail: 0.2bps v 0.2bps prior.

Looking ahead

• (NG) Nigeria July CPI Y/Y: 17.5%e v 17.8% prior.
• 05:25 (EU) Daily ECB Liquidity Stats.
• 05:15 (CH) Switzerland to sell 3-month Bills; Avg Yield: % v -0.780% prior.
• 05:30 (DE) Germany to sell €6.0B in new 0.00% Sept 2023 Schatz.
• 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.
• 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).
• 05:30 (ZA) South Africa to sell combined ZAR3.9B in 2031, 2037 and 2044 bonds.
• 06:00 (FI) Finland to sell €1.0-2.0B in 6-month and 9-month bills.
• 06:00 (TR) Turkey to sell 2026 and 2030 bonds.
• 06:30 (EU) ESM to sell €B in 6-month Bills.
• 06:45 (US) Daily Libor Fixing.
• 07:00 (BR) Brazil Aug FGV Inflation IGP-10 M/M: 1.3%e v 0.2% prior.
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).
• 08:15 (CA) Canada July Annualized Housing Starts: 280.0Ke v 282.1K prior.
• 08:30 (US) July Advance Retail Sales M/M: -0.2%e v +0.6% prior; Retail Sales (ex-auto) M/M: 0.2%e v 1.3% prior; Retail Sales (ex-auto/gas): 0.0%e v 1.1% prior; Retail Sales (Control Group): -0.2%e v +1.1% prior.
• 08:30 (CA) Canada Jun Int'l Securities Transactions (CAD): No est v 20.8B prior.
• 08:55 (US) Weekly Redbook LFL Sales data.
• 09:00 (EU) Weekly ECB Forex Reserves.
• 09:15 (US) July Industrial Production M/M: 0.5%e v 0.4% prior; Capacity Utilization: 75.7%e v 75.4% prior; Manufacturing Production: +0.6%e v -0.1% prior.
• 09:45 (UK) BOE to buy £1.147B in APF Gilt purchase operation (20+ years).
• 10:00 (US) Jun Business Inventories: 0.8%e v 0.5% prior.
• 10:00 (US) Aug NAHB Housing Market Index: 80e v 80 prior.
• 10:00 (MX) Mexico Weekly International Reserve data.
• 12:00 (CO) Colombia Q2 GDP Q/Q: -1.0%e v +2.9% prior; Y/Y: 18.5%e v 1.1% prior.
• 12:00 (CO) Colombia Jun Economic Activity Index (Monthly GDP) Y/Y: 13.9%e v 13.6% prior.
• 13:30 (US) Fed Chief Powell hosts Town Hall discussion with educators.
• 15:45 (US) Fed’s Kashkari.
• 16:30 (US) Weekly API Oil Inventories.
• 18:45 (NZ) New Zealand Q2 PPI Input Q/Q: No est v 2.1% prior; PPI Output Q/Q: No est v 1.2% prior.
• 19:50 (JP) Japan July Trade Balance: ¥196.4Be v ¥384.0B prior (revised from ¥383.2B); Adjusted Trade Balance: ¥125.1Be v -¥90.2B prior; Exports Y/Y: 39.4%e v 48.6% prior; Imports Y/Y: 35.3%e v 32.7% prior.
• 19:50 (JP) Japan Jun Core Machine Orders M/M: -2.8%e v +7.8% prior; Y/Y: 15.6%e v 12.2% prior.
• 20:30 (AU) Australia July Leading Index M/M: No est v -0.07% prior.
• 21:10 (JP) BOJ Outright Bond Purchase Operation for maturities in 1~3 Years.
• 21:30 (AU) Australia Q2 Wage Price Index Q/Q: 0.6%e v 0.6% prior; Y/Y: 1.9%e v 1.5% prior.
• 21:30 (KR) Bank of Korea (BOK) to sell KRW2.0T in 2-Year Bonds.
• 22:00 (NZ) New Zealand Central Bank (RBNZ) Interest Rate Decision: Expected to raise Official Cash Rate (OCR) by 25bps to 0.50%.
• 23:00 (CN) China to sell 1-year and 10-year Upsize Bonds.
• 23:00 (TH) Thailand to sell THB4.0B in 2071 Bonds.

As concerns about the pandemic consequences of the Covid19 delta variant on the financial market continue, demand levels on many stocks have fallen, and prices are moving in the corrective direction, resulting in declining key indices such as the Dow Jones and S & P500. However, these indices are currently fluctuating near historic highs and are likely to decrease in the short term.

In the mid-term, the reaction to the daily and four-hour timeframe moving averages should be observed. Tonight, US Federal Reserve Chairman, Jerome Powell, will deliver a speech, which could also affect stock price trends.

Unemployment and monthly average earnings have risen sharply in the UK today. The unemployment rate improves from 4.8% to 4.7%, and the average monthly average earnings index plus bonus has increased more than expected by 8.8%. However, the demand for the British pound against the US dollar has continued to decline, and now the price had reacted to the high level of the bearish channel and is moving in a downtrend.

Fundamentally, positive news of the UK unemployment rate may lead to an uptrend. Still, technically the first possibility in the short term will be to continue the downtrend trend to the lower end of the bearish channel. Therefore, the price reaction to the support of 1.3790 will be significant.

Today, the US Retail Sales and US Core Retail Sales will also report, which is expected to be significantly lower than the previous period. The actual reporting numbers can affect the price trend.

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.1793
Prev Close: 1.1775
% chg. over the last day: -0.15%

Yesterday, the US Treasury Department held a Treasury bonds auction, which led to the absorption of liquidity from the banking system, which, in its turn, led to temporary support of the US dollar. As a result, the EUR/USD quotes slightly declined as the euro has an inverse correlation to the dollar index.

Trading recommendations

Support levels: 1.1754, 1.1706, 1.1609
Resistance levels: 1.1799, 1.1817, 1.1854, 1.1894, 1.1934, 1.1969

From a technical point of view, the general trend on the EUR/USD currency pair is bearish. Now the price is trading near the moving average, which means the price is balanced. The MACD indicator has become inactive. Under such market conditions, it is better to look for the sell deals from the resistance levels after sellers show initiative. Buy trades can be considered only from the support levels within the local upward movement.

Alternative scenario: if the price breaks through the 1.1854 resistance level and fixes above, the mid-term uptrend will likely resume.

News feed for 2021.08.17:

• Eurozone GDP (q/q) at 12:00 (GMT+3);
• US Retail Sales (m/m) at 15:30 (GMT+3);
• US Industrial Production (m/m) at 16:15 (GMT+3);
• US Fed Chair Powell’s Speech at 20:30 (GMT+3).

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.3862
Prev Close: 1.3835
% chg. over the last day: -0.19%

The British pound decreased slightly due to the temporary strengthening of the dollar index. A lot of macroeconomic statistics will be released in the UK today, so volatility on currency pairs with GBP will be higher during the European session.

Trading recommendations

Support levels: 1.3802, 1.3772, 1.3714, 1.3676 ,1.3641, 1.3614, 1.3525
Resistance levels: 1.3886, 1.3935, 1.4002, 1.4075, 1.4101

The trend of the GBP/USD currency pair is bullish on the hourly time frame. The price rebounded from the support level, where buyers demonstrated the reaction. The MACD indicator has become negative again, which indicates that the sellers' pressure is high. Under such market conditions, traders are better to look for the buy trades from the zone where the buyers show initiative. Sell positions can be considered from the resistance levels and only on intraday time frames.

Alternative scenario: if the price breaks through the 1.3714 support level and consolidates below, the bearish scenario is likely to resume.

News feed for 2021.08.17:

• UK Average Earnings Index (m/m) at 09:00 (GMT+3);
• UK Claimant Count Change (m/m) at 09:00 (GMT+3);
• UK Unemployment Rate (m/m) at 09:00 (GMT+3).

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 109.61
Prev Close: 109.26
% chg. over the last day: -0.32%

Yesterday, the Japanese yen strengthened slightly against the dollar on the back of a positive Q2 GDP report. Industry Activity Index has increased by 2.3% in the last month. As a result, the USD/JPY currency pair has reached a priority change level.

Trading recommendations

Support levels: 109.19, 108.65
Resistance levels: 109.43, 110.04, 110.34, 110.66, 110.95, 111.48

The main trend on the USD/JPY currency pair is bullish. But the price is trading below the moving average line and has reached the priority change level. The MACD indicator is negative, but there are signs of sellers' weakness. Under such market conditions, it is better to look for buy positions from the priority change level after the buyers show initiative. Sell positions should be considered only on the lower time frames from the zone where the sellers show initiative.

Alternative scenario: if the price falls below 109.19, the uptrend is likely to be broken.

News feed for 2021.08.17:

• Japan Tertiary Industry Activity Index (m/m) at 07:30 (GMT+3).

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.2514
Prev Close: 1.2574
% chg. over the last day: +0.48%

The Canadian dollar is highly dependent on the performance of the dollar index and oil price performance. Yesterday, at the end of the day, oil slightly decreased, and the dollar index went up, which was the reason for the USD/CAD quotes growth.

Trading recommendations

Support levels: 1.2554, 1.2518, 1.2471, 1.2425, 1.2370, 1.2312
Resistance levels: 1.2602, 1.2671, 1.2787, 1.2951

In terms of technical analysis, the trend on the USD/CAD currency pair is bearish. But the local trend is bullish. Now the price has strongly deviated from the moving average. Under such market conditions, it is best for traders to look for the sell positions from the resistance levels after the seller's initiative. Buy positions should be considered intraday from the support levels within the local upward movement.

Alternative scenario: if the price breaks through the 1.2671 resistance level and fixes above, the uptrend is likely to be resumed.

A sense of caution washed over Asian markets on Tuesday as unease over the spread of the Delta variant and concerns around the strength of China’s recovery drained risk sentiment. The dollar has edged higher while gold prices have firmed as Treasury yields drifted lower. A just- announced new lockdown in New Zealand has slammed the kiwi after a single case of Covid-19 was found in Auckland. This comes ahead of the RBNZ who were expected to raise interest rates at its meeting tomorrow.

European stocks have opened slightly lower this morning amid the Delta fears and geopolitical tensions in Afghanistan. Despite closing at record highs overnight, US stocks could come under pressure today if the risk-off mood accelerates the flight to safety. All in all, the next few hours promise to be eventful for financial markets as investors juggle key economic data from major economies, the continued rise of the Delta variant and a speech by Federal Reserve Chairman Jerome Powell.

US Retail Sales and Powell in focus

The dollar continues to nurse the deep wounds inflicted by last Friday’s dismal consumer sentiment report. It has kicked off Tuesday on a firm note, appreciating against all G10 currencies this morning ahead of the retail sales data and Jerome Powell’s speech.

US retail sales for July are expected to drop -0.3% month-over-month compared to the 0.6% gain witnessed in June. Given how consumer spending accounts for a handsome chunk of the US economy, the data is significant and could influence Fed taper expectations. In regards to Powell’s speech, any fresh insight offered on the Fed’s future course of action or hints about tapering could result in dollar volatility. Nevertheless, investors will continue to look towards the Jackson Hole symposium in late August for clues to the central bank's next move.

Currency spotlight – GBP/USD

The British Pound has woken up on the wrong side of the bed this morning despite the better- than-expected UK jobs data.

According to the Office of National Statistics (ONS), the unemployment rate in the UK fell to 4.7% in June beating market expectations of 4.8%. The number of people in work rose by 95,000 in the three months to June, stronger than the 75,000 market forecast. Average wages also beat expectations, rising 7.4% compared with the 6.6% in the previous month while wages including bonuses hit 8.8%, above the 8.6% estimate and higher than the upward revised figure of 7.4% in May.

Despite this strong report, the GBPUSD is under pressure on the daily charts with prices approaching the 200-day Simple Moving Average. As the broader risk-off mood encourages investors to seek safety in destinations like the dollar, this could drag GBPUSD lower. A daily close below 1.3750 could signal a decline towards 1.3640 and lower.

Commodity spotlight – Gold

Gold staged a stunning rebound last week as the combination of dollar weakness and Delta variant fears injected gold bugs with a renewed sense of confidence. The precious metal has entered the week with a spring in its step amid the risk-off mood with prices trading back above $1792 as of writing. A strong daily close above this point could open the doors towards $1800 and $1830. Alternatively, should $1792 prove to be reliable resistance, a decline back towards $1760 could be on the cards.

Commodity stocks dragged down the FTSE 100 index after weak economic data from China.

The rise above June’s peak at 7215 was a sign of commitment from the long side. However, a pullback is necessary to keep the rally sustainable.

The drop below 7175 suggests that buyers took profit when the RSI showed an overbought situation. As the RSI swings back into neutrality, between 7095 and 7120 lies the demand zone which coincides with the 20-day moving average.

A break above 7205 may resume the uptrend.