Articles

• China’s benchmark lending rates remained unchanged in August – recap
• Federal Reserve speakers Tuesday include Bostic (on payments) and Barr (on cybersecurity)
• AUD – weekly survey shows inflation expectations are at a 30-month low
• RBA minutes: Possible cash rate will stay steady for an extended period
• PBOC sets USD/ CNY central rate at 7.1325 (vs. estimate at 7.1317)
• People’s Bank of China leaves Loan Prime Rates (LPRs) unchanged
• Inflation data due from Canada on Tuesday – preview
• JP Morgan says last week was reinforcement of bullish stance
• New Zealand data, July trade balance -963m (prior +585m)
• China has stopped publishing daily data on foreign fund flows into its stock market
• ECB’s Rehn cites negative growth risk as reinforcing the case for a rate cut in September
• Its PBoC rate setting day, analysts unanimously expect an on hold decision
• Goldman Sachs says the ‘pain trade’ for US equities is higher
• MUFG says Fed communications this week could send JPY higher still
• Poll: Federal Reserve to cut Fed Funds by 25bp in September, November and December
• Forexlive Americas FX news wrap: Dollar decline extends further
• The close: The impressive buying in US equities continues. Nasdaq leads the way
• Trade ideas thread – Tuesday, 20 August, insightful charts, technical analysis, ideas

Yen
crosses were once again movers, and once again on fresh news nor data
out of Japan. USD/JPY traded earlier to just above 146.85 before
plunging a big figure and now having bounced all the way backup and more. As I post its just shy of 147.00.

We
had the People’s Bank of China Loan Prime Rate (LPR) setting today.
Both the 1- and 5-year remained unchanged at 3.35% and 3.85%
respectively. This was widely expected after both were cut last
month. The USD/CNY was set at 7.1325 vs. 7.1415 the previous day, and
7.1317 Reuters estimates.

We
had minutes from the Reserve Bank of Australia August meeting. The
Bank made mainly hawkish points, and conveyed it has mulled a rate
hike, and with no talk at all of any imminent rate cut.

AUD/USD
and subsequently drifted towards its low of the session, so far at
least, in a small range only though. Other major FX maintained small
ranges against the US dollar also.

This article was written by Eamonn Sheridan at www.forexlive.com.

USD/JPY traded to early highs around 146.85 before dumping to 145.85 lows.

There hasn’t been fresh news nor data from Japan, yen crosses don’t need any of that to persist in volatility.

USD/JPY is back on approach to its earlier highs as I update.

The background to all this the Bank of Japan eyeing further rate increases while the Federal Reserve eyes cuts. Tming is the question, especially for the BOJ. I have heard Bank of Japan Governor Ueda is to give testimony in the Diet on Friday. I assumed (yeah, I know, don’t do that) he’d be at Jackson Hole.

This article was written by Eamonn Sheridan at www.forexlive.com.

The ANZ-Roy Morgan Australian Consumer Confidence Index survey includes a question on inflation expectations:

For this week they dropped to a a 30-month low of 4.7%

• down from 5.1% last week
• while the 4 week moving average is down 0.1 to 5.0%

ANZ analysis:

• Notably, inflation expectations fell to 4.7 per cent, their lowest level since January 2022, before inflation picked up materially in Australia.
• It’s been a bumpy path down for inflation expectations since the peak of 6.8 per cent in November 2022, and that bumpiness has been evident in other measures like the NAB business survey’s price measures. The NAB measures are now consistent with inflation sitting around 2.5 per cent. We’ll be watching to see if inflation expectations continue to moderate over the coming weeks.

As for the headline consumer confidence this week, comes in at 83.0

• prior 83.9

This article was written by Eamonn Sheridan at www.forexlive.com.

US Stocks Surge – Nasdaq Gains 1.4%

US stocks surged on the first trading day of the week as investors continued to support the prospect of a soft landing for the US economy and priced in potential rate cuts from the Federal Reserve. The Nasdaq led the charge, closing up 1.39%, followed by the S&P 500, which gained 0.97%, and the Dow, which added 0.58% on the day. US Treasury yields edged lower, with the 2-year yield dropping 0.4 basis points to 4.062% and the 10-year yield falling 1.9 basis points to 3.873%. The dollar took another hit, losing 0.56% on the index to reach levels not seen in seven months. Meanwhile, oil prices tumbled again as demand concerns persisted, with Brent down 2.4% and WTI falling 1.9%, closing the day at $77.79 and $74.42 respectively. Gold prices, after hitting another all-time high, drifted slightly lower in late trading to finish the New York session at $2,501 an ounce.

Dollar Plummets Across the Board

Dollar bears were in full force yesterday, as the greenback suffered further losses against major currencies and metals. Gold had led the way on Friday, breaking through recent resistance levels to reach fresh record highs, setting the stage for more dollar selling as the trading sessions unfolded yesterday. The USD/JPY pair led the decline during the Asian session, crashing nearly 2% at one point, with the market struggling to find bids on the way down. Although it recovered later in the session, it was a sign of what was to come. The dollar broke through key support levels against the Euro, Kiwi, and CAD over the course of the day and continued to weaken against other major pairs. Traders are now looking ahead to the end of the week and the update from Fed Chair Jerome Powell at Jackson Hole, though some believe this move may be slightly overdone, particularly if he remains cautious about the extent of the upcoming rate cuts.

Markets Set for Another Buoyant Day

Markets are poised to open the second day of the trading week in a buoyant mood following another strong performance on Wall Street. The macroeconomic calendar becomes more active today with several key data points scheduled across different regions. The Asian session will feature the latest rate update from China, with the key 1-year and 5-year Loan Prime Rate updates due midway through the session. Traders will be on alert after last month’s surprise cut. The Reserve Bank of Australia will publish its latest Monetary Policy Meeting Minutes shortly after the Chinese rate decision, which could prompt some moves in the Aussie dollar. The European session is relatively quiet, although SNB Chairman Thomas Jordan is due to speak during the day. However, the highlight of the day is likely to come early in the New York session with the release of the latest CPI data from Canada.

The post General Market Analysis – 20/08/24 first appeared on IC Markets | Official Blog.

Yen volatility is set to continue again today.

USD/JPY has dropped 40 points or so in past minutes. There are no fresh catalysts.

This article was written by Eamonn Sheridan at www.forexlive.com.

Exports 6.15bn

• Prior 6.04bn

Imports 7.11bn

• prior 5.45bn

NZD/USD little changed on the data:

This article was written by Eamonn Sheridan at www.forexlive.com.

• Fed’s Kashkari: It is appropriate to have debate on whether to cut rates in September
• Fed’s Waller doesn’t comment on economy or monetary policy
• Gold climbs back above $2500. What’s next and what to watch for
• Oil falls for fourth time in five trading days. What’s next

Markets:

• Gold down $4 to $2503
• US 10-year yields down 2 bps to 3.87%
• WTI crude oil down $2.13 to $74.52
• S&P 500 up 1.0%
• AUD leads, USD lags

It was one of the quietest days of the year in terms of news flow (maybe the quietest) but that didn’t slow the market moves as the recent round of dollar selling extended. The euro took full advantage as it rose to the highest levels since November and remains on track to close at the highs of the day.

The mode in most markets is to continue the process of erasing the early-August rout and US stocks are nearly there. Cable has followed that lead as it ran another 40 pips today and has essentially returned to mid-July levels.

AUD/USD still has some work to do to get back the declines but took a big step in that direction today with a 1% rally to 0.6730. That’s come despite continued downbeat news on China and an ongoing rout in iron ore prices.

Similarly, CAD didn’t get any help from oil but managed to score a decent gain for the second day and is now near the bottom end of the April-July range.

USD/JPY remained volatile but the Asia-led selling of the pair stalled early in Europe and that was followed by a modest recovery, even with US Treasury yields lower. The pair was helped out by a buoyant risk mood, led by the Nasdaq once again.

This article was written by Adam Button at www.forexlive.com.

It was another impressive day for US equities. Futures were flat early today but a steady trickle of bids was the story throughout the day followed by a flash of buying late.

• S&P 500 +1.0%
• Nasdaq Comp +1.4%
• DJIA +0.6%
• Russell 2000 +0.9%
• Toronto TSX Comp +0.2%

These are the eighth consecutive gains in the S&P 500 and Nasdaq in one of the best runs since early in the pandemic.

At this point, you could argue that the rebound has run its course with the S&P 500 only 60 points from an all-time high. At the same time, you could argue that the strong rejection of lower levels is bullish, especially with the Fed primed to cut and the economy holding up.

This article was written by Adam Button at www.forexlive.com.

Good morning, afternoon and evening all. Any charts, technical analysis, trade ideas, thoughts, views, ForexLive traders would like to share and discuss with fellow ForexLive traders, please do so:

This article was written by Eamonn Sheridan at www.forexlive.com.

Bank of America expects the upcoming Jackson Hole symposium to be a pivotal moment for US rates, with Fed Chair Powell likely signaling a future rate cut while maintaining flexibility. The risks, however, lean toward a more hawkish tone, potentially strengthening the USD.

Key Points:

• Jackson Hole Focus:

  • The symposium is expected to be a key event for determining the direction of US rates.
  • Fed Chair Powell is likely to indicate that the next move will be a rate cut, but will also emphasize flexibility depending on future economic data.

• Powell’s Expected Stance:

  • Powell is expected to avoid committing to specific actions, instead keeping all options on the table (“not ruling anything in or out”).
  • This cautious approach allows the Fed to respond dynamically to evolving economic conditions.

• Potential Market Impact:

  • The impact on the USD might be limited if Powell maintains a balanced approach.
  • However, the risks are skewed toward more hawkish communication, which could lead to higher US rates and a stronger USD.
  • Any indication that large rate cuts are off the table could also contribute to a risk-off sentiment, further boosting the USD.

Conclusion:

BofA sees the potential for a more hawkish tone from Fed Chair Powell at the Jackson Hole symposium, with a focus on retaining flexibility in future rate decisions. This could lead to higher US rates and a stronger USD, especially if Powell avoids signaling an imminent rate cut or downplays the likelihood of large cuts.

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This article was written by Adam Button at www.forexlive.com.

We may soon be talking about the highest levels in the euro since July 2023.

I wrote about the euro trade on Friday and why it’s been a quiet winner.

“I find it hard to chase anything in Europe but there are a nice series
of higher lows and it would be easy enough to squeeze the shorts, at
least up to 1.12.”

I thought it might take more time to materialize but the US dollar sellers have been relentless today as the bond market shows it’s not (at all) ready to give up on the low-rate trade. That likely presents some upside risks at Jackson Hole but parts of the market are certainly betting that the symposium will be a victory parade on inflation, with the dovish implications that come with that.

The euro side of the trade isn’t great but that leaves room for improvement. HICP numbers are due tomorrow but it’s mostly an uneventful week.

At this time of year though, momentum can do some damage so look for a test of the December highs.

This article was written by Adam Button at www.forexlive.com.

Oil squeezed higher last Monday on indications of extremely crowded positions on the short side. That surely left shorts feeling the pain in what was the fourth straight day of gains.

But it’s come undone quickly as oil bears continue to point to soft Chinese demand as a catalyst for falling prices. WTI is down $2.12 to $74.49 today as it’s pulled towards the bottom of the range.

There are indications that US production growth will disappoint this year and 2025 isn’t looking any better (especially at $75 WTI) but the market is focused on OPEC+. The group has done virtually all it can to buffer prices and that’s left at least 3 million barrels per day in reserve that are scheduled to begin returning late this year.

OPEC has said that can be delayed but we’re quickly approaching a dynamic where that oil needs to be permanently curtailed to give the bulls a fighting chance at victory.

The Middle East story is certainly taking up some of the bandwidth and is likely part of the rally and then drop in oil. It doesn’t look like Iran or Israel want a war, so that’s a drag but at this point I expect that’s priced in.

I think the next question is what will happen if we go back to $73. That might prompt some verbal intervention from OPEC but that’s about the best that could happen. We get US weekly supply numbers on Tues/Wed but those have hardly been catalysts lately.

The fear is that the drop in oil prices signals a sustained global growth slowdown and I don’t think that reverses until interest rates are materially cut or China truly turns on the stimulus taps.

This article was written by Adam Button at www.forexlive.com.