Next 24 hours: Yellen helps to boost sentiment
Today’s report: Yen leads the charge as currencies recover against Buck
We’re seeing a reversal of flow as the week gets going. Most notably, the US Dollar has sold off hard across the board. It’s possible, a lot of this has to do with the sharp turnaround in the Yen.
Chart talk: Technical & fundamental highlights
EURUSD – technical overviewThe Euro remains well supported on dips following a run to the topside through 1.1000. Any additional setbacks should be well supported ahead of 1.0500 in favor of a bullish continuation. Ultimately, only a monthly close back below 1.0500 would give reason for concern. Next key resistance comes in the form of the 2023 high at 1.1276.
- R2 1.0946 – 30 August high – Strong
- R1 1.0809 - 4 September high – Medium
- S1 1.0686 - 7 September low – Medium
- S2 1.0635 – 31 May low – Strong
EURUSD – fundamental overviewThe Euro managed to steady into the end of last week on the back of some interest from technical traders and a better than expected French industrial production print. Key standouts on Monday’s calendar come from a BOE Pill speech, and US consumer inflation expectations.
EURUSD - Technical charts in detail
GBPUSD – technical overviewSigns have emerged of the market wanting to put in a longer-term base after collapsing to a record low in September 2022. The November 2022 monthly close back above 1.2000 strengthens this prospect. Any setbacks should now be well supported ahead of 1.2500. Next key resistance comes in at 1.3143.
- R2 1.2747 – 30 August high – Strong
- R1 1.2643 – 4 September high – Medium
- S1 1.2446 – 7 September low – Medium
- S2 1.2400 – Figure – Medium
GBPUSD – fundamental overviewLast week's dovish BOE comments and soft UK housing data were behind a lot of the Pound selling. Implied peak rates in the UK have dropped almost 90 basis points from a high of 6.5% in early July. Key standouts on Monday’s calendar come from a BOE Pill speech, and US consumer inflation expectations.
USDJPY – technical overviewAt this stage, it looks like the market is wanting to resume the bigger picture uptrend and head back towards a retest of that multi-year high from October 2022 up at 151.95. Look for any weakness to continue to be well supported on dips.
- R2 148.00 – Figure – Medium
- R1 147.88– 8 September/2023 high – Medium
- S1 146.02 – 4 September low – Medium
- S2 144.44 – 1 September low – Strong
USDJPY – fundamental overviewThe Yen opens up the new week on the front foot after BOJ Governor Ueda was out on the weekend saying the BOJ may possibly have enough information and economic data by the end of the year to judge if wages will continue to rise, which would in turn allow the Bank to assess a key condition towards the decision of persisting with ultra-loose monetary policy. Key standouts on Monday’s calendar come from a BOE Pill speech, and US consumer inflation expectations.
AUDUSD – technical overviewThere are signs of the potential formation of a longer-term base with the market trading down into a meaningful longer-term support zone. Only a monthly close below 0.6400 would give reason for rethink. Back above 0.6523 will take the immediate pressure off the downside and strengthen case for a bottom.
- R1 0.6617– 10 August high – Strong
- R2 0.6523 – 30 August high – Medium
- S1 0.6357 – 6 September/2023 low – Strong
- S2 0.6300 – Figure – Medium
AUDUSD – fundamental overviewThe expectation for additional stimulus out of China and some broad based US Dollar selling as the week gets going has inspired a healthy amount of demand for the Australian Dollar. Key standouts on Monday’s calendar come from a BOE Pill speech, and US consumer inflation expectations.
USDCAD – technical overviewAbove 1.3000 signals an end to a period of longer-term bearish consolidation and suggests the market is in the process of carving out a more significant longer-term base. Next key resistance now comes in up into the 1.4000 area. Setbacks should be very well supported down into the 1.3000 area.
- R2 1.3700 – Figure – Strong
- R1 1.3695 – 7 September high – Medium
- S1 1.3575 – 4 September low – Medium
- S2 1.3489 – 1 September low – Strong
USDCAD – fundamental overviewThe Canadian Dollar is performing well in the aftermath of Friday's strong Canada jobs report and surprise wage gain. Key standouts on Monday’s calendar come from a BOE Pill speech, and US consumer inflation expectations.
NZDUSD – technical overviewOverall pressure remains on the downside with the market once again stalling out on a run up into the 0.6500 area. Ultimately, a break back above 0.6015 would be required to take the immediate pressure off the downside. A monthly close below 0.6000 would intensify bearish price action.
- R2 0.6133 – 4 August high – Strong
- R1 0.6015 – 1 September high – Medium
- S1 0.5859 – 5 September/2023 low – Medium
- S2 0.5841 – 10 November 2022 low – Medium
NZDUSD – fundamental overviewThe expectation for additional stimulus out of China and some broad based US Dollar selling as the week gets going has inspired a healthy amount of demand for the New Zealand Dollar. Key standouts on Monday’s calendar come from a BOE Pill speech, and US consumer inflation expectations.
US SPX 500 – technical overviewLonger-term technical studies are in the process of unwinding from extended readings off record highs. Look for rallies to be well capped in favor of lower tops and lower lows. A monthly close back above 4600 will be required to take the immediate pressure off the downside. Next key support comes in at 4328.
- R2 4541 – 4 August high – Medium
- R1 4533 – 31 August high – Medium
- S1 4328 – 26 June low – Medium
- S2 4300 – Round Number – Strong
US SPX 500 – fundamental overviewWe've finally reached a point in the cycle where the Fed recognizes unanchored inflation expectations pose a greater downside risk than over-tightening. This is significant, as it means less investor friendly monetary policy, even in the face of a less certain growth outlook. Overall, we expect inflation to continue to be a problem in 2023 that results in downside pressure into rallies despite market expectations that would argue otherwise.
GOLD (SPOT) – technical overviewThe 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs. Setbacks should now be well supported above 1600 on a monthly close basis ahead of the next major upside extension. Next major resistance comes in at 2100, above which opens the next extension towards 2500.
- R2 1988 – 20 July high – Strong
- R1 1950 – 30 August high – Medium
- S1 1885 – 21 August low – Medium
- S2 1871 – 10 March high – Strong
GOLD (SPOT) – fundamental overviewThe yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about inflation risk and a less upbeat global growth outlook. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.
Peformance chart: 30 Day Performance vs. US dollar (%)
- What Happens When the Tide Goes Out on the Dollar?, J. Authers, Bloomberg (September 7, 2023)
- Following the Money Behind Premier League Betting Sponsors, J. Sandy, FT (September 8, 2023)