The data published by Automatic Data Processing (ADP) showed on Wednesday that private sector employment in the US rose by 239,000 in October. This reading came in better than the market expectation of 193,000. September print of 208,000 got revised down to 192,000.
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The US Dollar Index showed no immediate reaction to this data and was last seen losing 0.22% on the day at 111.30.
Next week, the Bank of England will have its monetary policy committee meeting. Analysts at Rabobank look for a 75 basis points rate hike to 3.00% from 2.25%. They explain that it would still be the largest rate hike of this cycle. They expect to see rates peaking at 4.75%.
“After the mini-Budget disaster of late-September, we shifted our call for the November MPC from +50 to +100 bps. We have dialled back our forecast to +75 bps, as most of the political and financial market upheaval has subsided. This is also the consensus among economists.”
“The central bank needs to show markets that it is cognizant that confidence in the UK’s institutional framework has been damaged, but there is no need for crisis management anymore. Still, a 75 bps hike would still be Britain’s largest of this cycle. We think it will also be a one-off, allowing the central bank to move back to a more gradual pace of 50 bps and then 25 bps rate increases this winter.”
“While inflation should remain around 10% in upcoming months, the outlook for growth has weakened markedly. Even as the August Monetary Policy Report was already sombre, forecasting a fifteen-month recession, we expect more of this gloominess rather than less.”
The economy is now expected to contract by 0.4% in 2023 and inflation is seen at 8% and 7% in 2022 and 2023, respectively.
This headline doesn't seem to be having a noticeable impact on risk mood. As of writing, Germany's DAX 30 Index was down 0.83% on a daily basis at 12,171.81 points.
EUR/USD gyrates around the 0.9800 region ahead of the release of US Nonfarm Payrolls on Friday.
The resumption of the buying interest is expected to meet a solid hurdle at recent peaks around the parity zone. Ideally, EUR/USD should leave behind this key resistance zone in the near term to allow for the continuation of the rebound.
In the longer run, the pair’s bearish view should remain unaltered while below the 200-day SMA at 1.0616.
EUR/JPY seems to have met decent resistance around daily highs near 142.30 at the end of the week.
The continuation of the bounce off last week’s lows remains on the table in the very near term. That said, the cross could therefore extend the bullish attempt to the weekly top at 144.04 (September 20), which is deemed as the last defense for a move to the 2022 peak at 145.63 (September 12).
In the meantime, while above the key 200-day SMA at 135.84, the constructive outlook for the cross should remain unchanged.
Gold price slides to fresh two-and-half-year lows dampened by a risk-off mood and flows towards the US dollar, which rose to new two-decade highs. Overall, US dollar strength and higher US Treasury bond yields are two reasons for the fall in the precious metals complex, mainly the yellow metal. At the time of writing, XAU/USD is trading at $1643.50 a troy ounce.
US equities dropped as Wall Street closed with hefty losses between 1.62% and 1.80% on Friday. The US 10-year benchmark note rate retraced from yielding 3.829% and is set to end the week below the 3.70% threshold. On the same note, the US 10-year Treasury Inflation-Protected Securities (TIPS) bond yield weighed on the non-yielding metal, set to finish at 1.33%.
DXY leaves behind Tuesday’s strong advance and sparked a corrective downside soon after hitting new 3-day peaks in the mid-106.00s on Tuesday.
Tuesday’s bounce did not clear any up barrier of note and thus leaves the index vulnerable to further weakness in the very near term at least. On this, the dollar faces the tangible chance to slip back to the multi-week lows in the 105.00 region (August 2) in the short term. This initial area of contention remains propped up by the proximity of the 55-day SMA, today at 104.84.
Furthermore, the broader bullish view in the dollar remains in place while above the 200-day SMA at 99.62.
Enrico Tanuwidjaja, Economist at UOB Group, comments on the latest inflation figures in Indonesia.
“July’s headline inflation jumped to 4.9% y/y, breaching Bank Indonesia (BI)’s 4% target upper bound for the second month in a row and currently at 7-year high, while core inflation rose to 2.9% y/y, a 28-month high, from June’s 2.6%.”
“Inflation in July continued to be driven by upward pressures from food services and restaurants and transport, in addition to housing, water, electricity and household fuel.”
“We revised our 2022 inflation forecast now to average 4% viz. 3.3% previously and for BI to hike rates now in Sep instead of in Jul.”
The market’s cautious sentiment could be witnessed via the S&P 500 Futures and the US 10-year Treasury yields as both of them struggle around 4,175 and 2.91% even if the Wall Street benchmarks rose the most in a week on Thursday.
Elsewhere, the Australia and New Zealand Banking Group (ANZ) highlights the difference between the currency BOE rate and the one per Taylor rule to suggest more work for the “Old Lady”. Further, a Tory critic, who is a UK Member of Parliament (MP), suggested rejoining the bloc and chatters over a no-confidence vote for UK Prime Minister (PM) Boris Johnson also weighed on the GBP/USD prices.
Looking forward, expectations of likely softer US data may keep GBP/USD buyers hopeful. That said, the headline US NFP is expected to ease to 325K versus 428K prior whereas the ISM Services PMI may retreat from 57.1 to 56.4. Other than the data, US President Joe Biden’s speech will also be important. However, a Platinum Jubilee Bank Holiday can restrict the pair’s moves on Friday.
Russian President Vladimir Putin said on Monday that the expansion of NATO is a problem and it is in the interests of the USA, reported Reuters. Russia has no problems with Finland and Sweden, he continued, but Russia will react to the expansion of military infrastructure in these countries. Putin added that Russia needs to pay additional attention to NATO plans to increase its global influence.
Finland and Sweden both announced their commitment to applying for NATO membership over the weekend and most NATO nations have come out in support.
The index leaves behind the pullback seen at the end of last week and advances above the 103.00 area on Monday.
Price action in DXY remains supportive of the resumption of the uptrend with the initial target at the 2022 highs just below the 104.00 yardstick (April 28). Above this level comes 105.63 (December 11 2002 high).
The current bullish stance in the index remains supported by the 8-month line near 96.80, while the longer-term outlook for the dollar is seen constructive while above the 200-day SMA at 95.56
There were 180,000 initial claims in the US economy in the week ending on 23 April, in line with consensus estimates and a slight decline from last week's 185,000 reading which was revised up from 184,000, according to data released by the US Department of Labour on Thursday. That meant that the four-week average of initial claims rose to 179,750 from 177,500 a week prior.
Continued claims in the week ending on 16 April saw a slight fall to 1.408M from 1.409M a week prior, a little above the expected drop to 1.403M. The insured unemployment rate thus came in at 1.0% in the week ending on 16 April, unchanged from a week earlier.
FX markets did not react to the latest broadly as expected jobless claims report but rather reacted to weak US growth numbers, with the US dollar weakening slightly.
The GBP/USD pair extended last week's retracement slide from the 1.3300 mark, or the 200-period EMA on the 4-hour chart and witnessed some follow-through selling on Monday. This marked the fourth successive day of a negative move and dragged spot prices to over a one-week low, around the 1.3110 region during the mid-European session.
The US dollar continued drawing support from rising bets for a 50 bps Fed rate hike move at the May meeting. Conversely, the sterling was weighed down by dovish remarks from the Bank of England Governor Andrew Bailey, saying that we are starting to see evidence of a growth slowdown. This, in turn, exerted downward pressure on the GBP/USD pair.
Looking at the broader picture, the pair on Friday confirmed a break through an ascending trend channel, which constituted the formation of a bearish flag pattern. Sustained weakness below the 1.3100 round-figure mark will further validate the bearish bias and set the stage for a further near-term depreciating move for the GBP/USD pair.
The next relevant support is pegged near the 1.3070 region, below which the downward trajectory could further get extended towards the 1.3035 intermediate support. The GBP/USD pair could eventually drop back to challenge the key 1.3000 psychological mark, or the lowest level since November 2020 touched earlier this month.
On the flip side, attempted recovery moves might now confront stiff resistance near the 1.3150-1.3160 region. Any subsequent move up is more likely to attract fresh selling and remain capped near the 1.3180-1.3185 zone. This is closely followed by the 1.3200 mark, which if cleared decisively might prompt some short-covering around the GBP/USD pair.
The USDJPY has seen more up and down price action today continuing the price action seen on Friday. The pair did move below the low from Friday's trade, but found support near the low from January 14 at 113.474. It dipped briefly below the level to a low of 113.464, but quickly rebounded.
The subsequent move back higher saw the pair move into a topside swing area between 113.954 and 114.028
Sellers leaned against that area and pushed the price back down toward another swing area between 113.596 and 113.629. The price has been able to stay above that area. A break below is needed to solicit more selling with the lows near 113.47 as the next major target (obviously). Conversely, stay above the lower swing area (green numbered circles) and a rotation back toward the red numbered circles, would be the next target.
The USD and the JPY can both be safe haven currencies. That dynamic can neutralize the price action for this pair during volatile bearish price action in the US stock market. That is what we are seeing in the up and down price action over the last two days. Until it gets out of this bearish bias, we can expect more of the same going forward.
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As the analysis of yesterday, precious metal Gold bounced up quite well from 1766 to 1788 ($22), closing yesterday's session with a bullish candle around 1782. With good momentum. Yesterday's good performance and with many hits to the 1785-1788 resistance area, in my opinion, Gold today will break out of the upper resistance zone to continue going up.
- On the H4 time frame, the nearest support zone of precious metal Gold is around 1775 and if precious metal Gold corrects here, we might consider buying with a safe target around 1785- 1790.
- In yesterday's trading session, precious metal Gold had a strong decrease day, at the beginning of the session the price dropped from 1764 to 1684 and closed the day with a bearish candle around 1730. strong and the strong support area of 1750-1760 has been broken, so the downward pressure will weigh on this precious metal in the next trading sessions.
- Yesterday we were quite successful in the short strategy and in my personal opinion today we continue to maintain this view. On the daily chart time frame, the nearest resistance to establish a short position according to me is around 1735-1740. The safe target is the short term support around 1720-1725
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1️⃣ The main news last weekend
- US unemployment rate recorded 5.4% in July
- US Treasury Secretary Yellen Will Fight Reform Plans To Weaken Cryptocurrencies
- Biden government considers stopping funding and other measures to stimulate vaccination
- US$1 trillion infrastructure plan passed by Senate
- Saudi Aramco: Committed to increase crude oil production to 13 million barrels per day
2️⃣ Notable events and data today
- China's July CPI annual rate, the expected value is 0.8%, and the previous value is 1.1%.
- China's annual M2 money supply ratio in July, expected value is 8.7% and previous value is 8.6%.
- Bostic, Chairman of the FOMC and Atlanta Fed voting committees, delivered a speech in 2021.
- 2021 The FOMC Voting Committee and Fed Chairman Richmond Barr delivered speeches.
- Closed Market Reminder: The Japan-Tokyo Stock Exchange will be closed for one day due to a mountain holiday.
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- In the last trading week, precious metal Gold was mostly sideways and only when the US non-farm news was published on Friday night did the price drop very sharply from 1804 to 1758 ($46) to close. weekly session with a strong bearish candle. The downward force shows no sign of stopping when in the early morning of this session, the price dropped further from 1764 to 1684 ($80). With a return to the hard support around 1678-1684, the precious metal has shown signs of recovery but in my opinion this recovery is likely to fall further at least to the price zone where the metal this morning Gold precious touches.
- On the daily chart time frame, according to my subjective opinion, precious metal Gold is likely to recover to its maximum in the early hours of this morning to around 1735-1740 and then from here it is likely to continue to decline again. again. The safe profit-taking target for this sell-off in my opinion will be around 1705.
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- In yesterday's trading session, after falling to 1805 precious metals Gold bounced up around 1819, closing the day session with a bearish candle with not much downward force. With the end of the daily candle with the bearish force starting to wane plus the price still standing above the 1810 price zone, in my personal opinion in today's session we can start waiting to buy in. around this price. The expected target will be around the price of 1825.
For Live Gold Signals You Can Visit Our Website.
In the last week's trading session, precious metal Gold had bounces from 1792 to 1832, closing the week's session with a rising green candle, but in general compared to the previous 2 weeks, the momentum The increase is not too strong and there is selling pressure when it hits the resistance level of 1832 and in my opinion, this precious metal will have another drop before rebounding.
Moving to the shorter-term H4 time frame, we can see that this precious metal is currently hitting the short-term support around the 1812 price level and possibly recovering to the 1820-1823 level. This is also the price range I expect Gold to recover to establish a sell-down position in today's session. The expected target of this sale is around 1805-1808.
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