A case of mild profit taking in summer thin trade

GBPUSD – technical overview

Signs have emerged of the market wanting to put in a longer-term base after collapsing to a record low in September 2022. The door is now open for the next major upside extension towards the 2018 high at 1.4377. Any setbacks should be well supported ahead of 1.2500.

• R2 1.3300 – Figure – Medium
• R1 1.3231 – 23 August/2024 high – Medium
• S1 1.3076 – 22 August low – Medium
• S2 1.3011 – 21 August low – Medium

GBPUSD – fundamental overview

Absence of UK data on a quiet Monday left the Pound in mild pullback mode on profit taking from short-term accounts. But with the BOE only expected to cut 44 basis points between now and year end, versus the 100 basis points expected from the Fed, yield differentials should continue to support the UK currency. Key standouts on Tuesday’s calendar come from German GDP, UK CBI distributive trades, Canada wholesale sales, US Case Shiller, the house price index, consumer confidence, and Richmond Fed manufacturing.

USDJPY – technical overview

The market has entered a period of correction after extending the uptrend to a multi-year high through 160.00. Critical support comes in around 140.00, with only a monthly close below the barrier to compromise the bullish outlook. A higher low is ideally sought out above 140.00 in favor of a bullish continuation.

• R2 147.00 – Figure – Medium
• R1 146.53 – 22 August high – Medium
• S1 143.44 – 26 August low – Medium
• S2 141.69 – 5 August low – Strong

USDJPY – fundamental overview

The Japan services PPI gauge for July was released earlier today, showing a modest slowdown in the annual pace of services producer price growth. Key standouts on Tuesday’s calendar come from German GDP, UK CBI distributive trades, Canada wholesale sales, US Case Shiller, the house price index, consumer confidence, and Richmond Fed manufacturing.

AUDUSD – technical overview

There 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 0.6200 would give reason for rethink. Back above 0.6900 will take the big picture pressure off the downside and strengthen case for a bottom.

• R1 0.6840– 2 January/2024 high – Strong
• R2 0.6799 – 11 July high– Strong
• S1 0.6697 – 22 August low– Medium
• S2 0.6637 – 19 August low – Strong

AUDUSD – fundamental overview

China industrial profits rose at the fastest pace in five months, which has perhaps been helping to give an otherwise quiet Australian Dollar on boost. Key standouts on Tuesday’s calendar come from German GDP, UK CBI distributive trades, Canada wholesale sales, US Case Shiller, the house price index, consumer confidence, and Richmond Fed manufacturing.

USDCAD – technical overview

A sustained hold above 1.3000 over the past several months 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, with a break to open a retest of the 2020 high just ahead of 1.4700. Setbacks should be very well supported down into the 1.3000 area.

• R2 1.3642 – 20 August high –Strong
• R1 1.3600 – Figure – Medium
• S1 1.3463 – 26 August low – Medium
• S2 1.3420 – 8 March low – Strong

USDCAD – fundamental overview

Monday's bout of outperformance in the Canadian Dollar was all about a spike in the price of oil. Key standouts on Tuesday’s calendar come from German GDP, UK CBI distributive trades, Canada wholesale sales, US Case Shiller, the house price index, consumer confidence, and Richmond Fed manufacturing.

NZDUSD – technical overview

Overall pressure remains on the downside with the market continuing to stall out on runs up into the 0.6500 area. At the same time, there are some signs of the market wanting to put in a longer-term base. Ultimately, a break back above 0.6500 would be required to take the medium-term pressure off the downside and encourage this prospect. A monthly close below 0.5800 will intensify bearish price action.

• R2 0.6286 – 4 January/2024 high – Strong
• R1 0.6237 – 23 August high – Medium
• S1 0.6128 – 22 August low – Medium
• S2 0.6084 – 14 August high – Medium

NZDUSD – fundamental overview

The RBNZ issued a Financial Stability Report Special Topic paper today, indicating the outlook for the New Zealand commercial property market remained weak due to high interest rates, remote work, and a continued rise in online shopping. Key standouts on Tuesday’s calendar come from German GDP, UK CBI distributive trades, Canada wholesale sales, US Case Shiller, the house price index, consumer confidence, and Richmond Fed manufacturing.

US SPX 500 – technical overview

The longer term uptrend remains intact and dips continue to be exceptionally well supported. Critical support comes in at 5093, with only a break back below this level to compromise the structure and open the door for a more significant corrective decline. Until then, the focus remains on a retest and break back above the record high.

• R2 5679 – 16 July/Record high – Strong
• R1 5656 – 26 August high – Medium
• S1 5516 – 16 August low – Medium
• S2 5398 – 25 July low – Strong

US SPX 500 – fundamental overview

The US equities market remains exceptionally well supported in 2024 on the back of an ongoing expectation for more rate cuts than less going forward. Investors are feeling better about a soft landing in the US economy and this has also been accompanied by an accommodative adjustment of Fed policy. It will however be important to keep an eye on inflation, bigger picture economic data and geopolitical risk in the months ahead.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs and this next major upside extension into the 2500-3000 area. Setbacks should now be well supported above 2200 on a monthly close basis.

• R2 2600 – Psychological– Strong
• R1 2532 – 20 August/Record high – Medium
• S1 2350 – 4 July low – Strong
• S2 2287– 7 June low – Strong

GOLD (SPOT) – fundamental overview

The yellow metal has pushed record highs in 2024 with solid demand from medium and longer-term accounts. These players are more concerned about inflation, geopolitical risk and a less upbeat global growth outlook. All of this should keep the commodity well supported over the coming months.