Reflecting on the week that was

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 1.3358 – Monthly low/January 2023 – Medium
• R1 1.3315 – 19 September/2024 high – Medium
• S1 1.3115 – 13 September low – Medium
• S2 1.3002 – 11 September low – Strong

GBPUSD – fundamental overview

The Pound remains well in demand after this week's central bank event risk which featured a more dovish Fed and less dovish BOE. After the Fed cut by 50-basis points on Wednesday, the BOE was out Thursday leaving rates unchanged and expressing concern over inflation and cutting too much and too fast. No surprise to see the Pound extending yearly and multi-month highs in the aftermath. Key standouts on Friday’s calendar come from German producer prices, UK retail sales, Canada retail sales, Canada producer prices, Eurozone consumer confidence, and an ECB Lagarde speech.

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 144.24 – 5 September high – Strong
• R1 143.95 – 19 September high – Medium
• S1 140.28 – 13 September low – Medium
• S2 139.58 – 16 September/2024 low – Strong

USDJPY – fundamental overview

Yield differentials have taken a backseat for a moment, with the Yen selling off on profit taking from short-term account post this week's Fed and BOJ event risk. The market has now priced in the extent of Fed dovishness, while at the same time, has digested a shift in BOJ policy and the possibility for additional rate hikes in Q4. On the data front, Japan inflation data came out pretty much in line with expectation. Key standouts on Friday’s calendar come from German producer prices, UK retail sales, Canada retail sales, Canada producer prices, Eurozone consumer confidence, and an ECB Lagarde speech.

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 0.6872 – 28 December high – Strong
• R2 0.6840 – 2 January/2024 high – Strong
• S1 0.6671 – 12 September low– Medium
• S2 0.6622 – 11 September low – Strong

AUDUSD – fundamental overview

The Australian Dollar was already bid post the 50-basis point Fed rate cut before finding additional demand on a better than expected Thursday Aussie employment report. However, it's worth noting the data wasn't as strong as the headline read reflected given a downward revision to the July figures. Key standouts on Friday’s calendar come from German producer prices, UK retail sales, Canada retail sales, Canada producer prices, Eurozone consumer confidence, and an ECB Lagarde speech.

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 1.3685 – 19 August high –Strong
• R1 1.3648 –19 September high – Medium
• S1 1.3533 – 19 September low – Medium
• S2 1.3500 – Round Number – Medium

USDCAD – fundamental overview

Odds for a larger 50-basis point rate cut from the Bank of Canada have ramped up after the central bank said downside risks to inflation meant increased consideration to the prospect of CPI dipping below 2%. At the same time, broad US Dollar selling and a nice rebound in the price of oil allowed the Canadian Dollar to run higher on Thursday. Key standouts on Friday’s calendar come from German producer prices, UK retail sales, Canada retail sales, Canada producer prices, Eurozone consumer confidence, and an ECB Lagarde speech.

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 0.6299 – 29 August/2024 high – Strong
• R1 0.6269 – 19 September – Medium
• S1 0.6106 – 11 September low – Medium
• S2 0.6084 – 14 August high –Medium

NZDUSD – fundamental overview

There were no major surprises from Kiwi growth data which came in slightly better than expected on Thursday. This has left the currency trading higher on the data, broad based Dollar selling and stock market demand post the Fed's 50-basis point rate cut. Key standouts on Friday’s calendar come from German producer prices, UK retail sales, Canada retail sales, Canada producer prices, Eurozone consumer confidence, and an ECB Lagarde speech.

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 continued push to fresh record highs.

• R2 5750 – Psychological– Strong
• R1 5744 – 19 September/Record high – Medium
• S1 5596 – 13 September low – Medium
• S2 5540 – 12 September low – Medium

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 2300 on a monthly close basis.

• R2 2650 – Psychological– Strong
• R1 2601 – 18 September/Record high – Medium
• S1 2472 – 4 September low – Medium
• S2 2432– 15 August low – Medium

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.