Fed funds futures pricing even more cuts

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 1.3266 – 27 August/2024 high – Strong
• R1 1.3200 – 30 August high – Medium
• S1 1.3088 – 3 September low – Medium
• S2 1.3011 – 21 August low – Medium

GBPUSD – fundamental overview

The Pound has recovered over the past 24 hours on broad based US Dollar selling and upward revisions to UK PMI reads. Key standouts on today’s calendar come from German factory orders, Eurozone, German and UK construction PMIs, Eurozone retail sales, US ADP employment, US initial jobless claims, Canada PMIs, and US PMIs.

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 147.21 – 2 September high – Medium
• R1 145.56 – 4 September high – Medium
• S1 143.18 – 5 September low – Medium
• S2 141.69 – 5 August low – Strong

USDJPY – fundamental overview

The Yen has been supported on Dollar selling from an abysmal US JOLTs showing. We've also seen added demand for the Yen on comments from BOJ Takata who said "the Japanese economy was recovering moderately and the central bank must adjust monetary conditions by 'another gear' if we can confirm firms will continue to increase capital expenditure, wages, and prices." Key standouts on today’s calendar come from German factory orders, Eurozone, German and UK construction PMIs, Eurozone retail sales, US ADP employment, US initial jobless claims, Canada PMIs, and US PMIs.

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 0.6824– 29 August high – Strong
• R2 0.6762 – 21 August high– Medium
• S1 0.6685 – 4 September low– Medium
• S2 0.6637 – 19 August low – Strong

AUDUSD – fundamental overview

The Australian Dollar is back to trading with a bid tone, helped along by the more hawkish leaning comments from RBA Bullock. The central banker has said the level of demand for goods and services is higher than the supply which simply means that inflation is still entrenched. The takeaway here is that there is no expectation rates will be lowered in the near term. Key standouts on today’s calendar come from German factory orders, Eurozone, German and UK construction PMIs, Eurozone retail sales, US ADP employment, US initial jobless claims, Canada PMIs, and US PMIs.

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 1.3587 –11 July low – Medium
• S1 1.3440 – 28 August low – Medium
• S2 1.3420 – 8 March low – Strong

USDCAD – fundamental overview

The Canadian Dollar was relieved the Bank of Canada didn't go ahead with a larger 50 basis point rate cut and has rallied in the aftermath. Nevertheless, the central bank has signaled more rate cuts ahead while retaining a concern over the outlook for the economy. This should keep the Canadian Dollar from wanting to run much higher from here. Key standouts on today’s calendar come from German factory orders, Eurozone, German and UK construction PMIs, Eurozone retail sales, US ADP employment, US initial jobless claims, Canada PMIs, and US PMIs.

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 0.6370 – Monthly high/December 2023 – Strong
• R1 0.6299 – 29 August/2024 high – Medium
• S1 0.6169 – 4 September low – Medium
• S2 0.6128 – 22 August high –Strong

NZDUSD – fundamental overview

The New Zealand Dollar has been riding higher on the coattails of its Aussie cousin, while also benefiting from broad based US Dollar selling in the aftermath of some distressing US JOLTs job openings data. Key standouts on today’s calendar come from German factory orders, Eurozone, German and UK construction PMIs, Eurozone retail sales, US ADP employment, US initial jobless claims, Canada PMIs, and US PMIs.

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 5660 – 3 September high – Medium
• S1 5496 – 4 September 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.