Tension running high into weekly close

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 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 1.2996 – 27 July high – Strong
• R1 1.2818 – 10 August high – Medium
• S1 1.2616 – 14 August low – Medium
• S2 1.2591 – 29 June low – Strong

GBPUSD – fundamental overview

This weeks solid round of UK data and higher inflation indicators have been behind this run of outperformance in the Pound. Long Gilt yields have topped the October highs and implied UK peak rates have surged back above 6%. Key standouts on Friday’s calendar come from Japan inflation, UK retail sales, Eurozone inflation, and Canada producer prices.

USDJPY – technical overview

At 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 147.00 – Figure – Medium
• R1 146.56– 17 August/2023 high – Medium
• S1 145.10 – 15 August low – Medium
• S2 144.65 – 14 August low – Medium

USDJPY – fundamental overview

An awful JGB auction result sent Japan yields higher, while broad based risk off flow also may have factored into Thursday's round of Yen demand. The Yen was already looking due for a recovery after getting slammed to yearly lows in recent sessions. Market participants have also been a little more worried about a possible intervention. Key standouts on Friday’s calendar come from Japan inflation, UK retail sales, Eurozone inflation, and Canada producer prices.

AUDUSD – technical overview

There are signs of the potential formation of a longer-term base following the late 2022 surge back above 0.6500. Next key resistance comes in at 0.7284. Setbacks should continue to be well supported ahead of 0.6300. Only a monthly close below 0.6400 would give reason for rethink.

• R1 0.6617– 10 August high – Strong
• R2 0.6522 – 15 August high – Medium
• S1 0.6364 – 17 August/2023 low – Strong
• S2 0.6300 – Figure – Medium

AUDUSD – fundamental overview

The Australian Dollar has extended its run of fresh 2023 lows on the back of ongoing fears over the outlook for China, a more dovish leaning RBA Minutes earlier this week, more hawkish leaning FOMC Minutes, and discouraging Aussie employment report. Key standouts on Friday’s calendar come from Japan inflation, UK retail sales, Eurozone inflation, and Canada producer prices.

USDCAD – technical overview

Above 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 1.3600 – Figure – Medium
• R1 1.3553 – 17 August high – Medium
• S1 1.3373 – 10 August low – Medium
• S2 1.3319 – 4 August low – Medium

USDCAD – fundamental overview

A worsening global macro condition, and softer Canada economic data have factored into this week's run of Canadian Dollar weakness. At the same time, Thursday's recovery in the price of oil has mitigated some of the weakness. Key standouts on Friday’s calendar come from Japan inflation, UK retail sales, Eurozone inflation, and Canada producer prices.

NZDUSD – technical overview

Overall 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 0.6577 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 0.6025 – 11 August high – Medium
• S1 0.5903 – 17 August/2023 low – Medium
• S2 0.5900 – Figure – Medium

NZDUSD – fundamental overview

The New Zealand Dollar has slumped to a fresh yearly low this week, though setbacks could have been even more intense if not for a more hawkish leaning central bank decision in which the RBNZ left rates on hold but would not rule out the possibility for additional rate hikes. Still, the outlook for the currency has been quite sour in the face of broad based risk off flow and yield differentials swinging back to the US Dollar. RBNZ Orr was also on the wires saying the New Zealand economy needed a mild recession to tame inflation. Key standouts on Friday’s calendar come from Japan inflation, UK retail sales, Eurozone inflation, and Canada producer prices.

US SPX 500 – technical overview

Longer-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 4460 – 30 June high – Medium
• S1 4328 – 26 June low – Medium
• S2 4300 – Round Number – Strong

US SPX 500 – fundamental overview

We'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. 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 overview

The 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 1947 – 4 August high – Medium
• S1 1885 – 17 August low – Medium
• S2 1871 – 10 March high – Strong

GOLD (SPOT) – fundamental overview

The 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.