2023-08-18 03:15

USD/JPY, EUR/JPY FORECAST: Japanese Yen Pairs Catch Their Breath Ahead of Potential Bullish Continuation. FED Minutes Leaned on the Hawkish Side Despite Concerns Around Over-tightening. IG Client Sentiment Shows Retail Traders Extremely Bearish on Both USD/JPY and EUR/JPY. The Yen has held firm this morning against the Euro and the Greenback as USD/JPY reaches overbought territory. A possible retracement lies ahead but will it be another shallow pullback before bulls seize control once more? It appears so with no change from the BoJ and a hawkish tone from the Fed Minutes release USD/JPY looks to be in for an interesting end to the week. FED MINUTES AND CHINA’S WOES SOUR SENTIMENT The Federal Reserve minutes release yesterday provided mixed messaging but leaned on the hawkish side. The minutes revealed that Fed policymakers still see the need for higher rates but share concerns about over-tightening with no recession forecast for 2023. The Fed also acknowledged tighter credit conditions and concerns around the commercial real estate market with declining values in the sector affecting Banks. The situation around China continues to dampen sentiment as the Yuan slipped towards its 2007 lows. This prompted a response from Chinese Authorities as they look to instill a sense of calm with a stronger than expected reference rate for the Yuan and the largest injection of cash into the financial system since February. As uncertainty continues, we heard the US treasury issue a warning as well about the potential impacts of the situation in China. A continuation of this theme would likely result in further US Dollar strength as safe haven flows continue which could push USD/JPY toward the coveted 150.00 psychological level once more. JAPANESE DATA AND THE DAY AHEAD In the Asian session we did have some positive data for the Yen as imports and exports both came in above forecasts, but machinery orders and the balance of trade figure came in lower than expected. On the data front today it is a relatively quiet one with some medium impact US data expected in the form of jobless claims and the Philadelphia Manufacturing Index. Neither of these events are expected to have a significant impact on the US Dollar. TECHNICAL OUTLOOK AND FINAL THOUGHTS USDJPY is on a tear at the minute and as discussed in my piece on Tuesday has run into resistance at the 146.50 handle. Price has since stalled and dropped back toward the 146.00 handle with support now at the 145.00 before a retest of the descending trendline becomes a possibility. The RSI (14) has also reached overbought territory which is a positive sign for a potential pullback. The question however is, will it be a deep pullback or more of a consolidation phase before the next leg to the upside? As I have mentioned over the past couple of weeks, FX intervention from Japanese authorities remains a possibility. The issue is there is no warning or sign as to when this may occur with Japanese authorities saying one thing but doing the complete opposite of late. Barring intervention, I honestly don’t see any other reason to expect a significant push to the downside with any push lower likely to provide bulls with another opportunity to join the trend. USD/JPY Daily Chart – August 17, 2023 Source: TradingView EURJPY EURJPY hasn’t changed much since my Tuesday outlook remaining around the 159.00 handle. So far attempts to break higher toward the key psychological 160.00 mark. Looking beyond the 160.00 handle and there isn’t much in terms of significant resistance holding the pair back from testing multi-year highs around the 170.00. Similar to USDJPY however, I do expect the Japanese authorities to intervene should we see an aggressive move above the 160.00 handle. EUR/JPY Daily Chart – August 17, 2023 https://www.dailyfx.com/news/forex-usd-jpy-eur-jpy-update-a-temporary-pause-before-bullish-continuation-20230817.html

2023-08-18 03:13

GBP/USD: Retail trader data shows 48.97% of traders are net-long with the ratio of traders short to long at 1.04 to 1. In fact, traders have remained net-short since Aug 01 when GBP/USD traded near 1.28, price has moved 0.33% lower since then. The number of traders net-long is 6.31% lower than yesterday and 4.39% lower from last week, while the number of traders net-short is 8.71% higher than yesterday and 17.63% higher from last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBP/USD prices may continue to rise. Our data shows traders are now net-short GBP/USD for the first time since Aug 01, 2023 when GBP/USD traded near 1.28. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger GBP/USD-bullish contrarian trading bias. https://www.dailyfx.com/analysis/GBPUSD-IG-Client-Sentiment-202308171523.html

2023-08-18 03:12

EUR/USD PRICE FORECAST: EUR/USD Fails at the 1.0900 Handle for a Third Successive Day. The 100-Day MA Remains Key for a Shift in Momentum to Occur. Lack of Data Ahead Leaves EURUSD at the Mercy of Overall Sentiment and the Dollar Index (DXY). EUR/USD put in impressive gains early in the US session before a return of Dollar strength saw the pair surrender the 1.0900 handle once more to trade at 1.0872 at the time of writing. US DATA US data this afternoon showed that initial jobless claims declined by only 11k and came in at 239k following a revised print of 250k last week. The Philly Manufacturing Business Outlook smashed estimates following on from yesterday's positive retail sales data but failed to arrest the Dollar’s slide. Massive improvements in general activity, new orders and shipments were all positive for the first time since May 2022. Expectation for the next 6 months however were a bit underwhelming as most of the future indexes declined. A rare positive in the fight against inflation came as firms expect lower increases in prices compared to the previous quarter. As the US session wore on it seems any positive change to sentiment faded away as the Dollar roared back while risk assets faltered. EURUSD remains slightly positive for the day but the constant shift in sentiment continues to provide a modicum of support to the US dollar each time the Euro appears ready for a rebound. The DXY for its part remains below the long-term descending trendline which is key as we head toward the weekend with the Jackson Hole Symposium kicking off next week as well. Could the Fed spring a surprise at Jackson Hole which did not disappoint last year and could get markets out of its August malaise. Dollar Index (DXY) Daily Chart – August 17, 2023 Source: TradingView RISK EVENTS AHEAD From a risk event perspective there isn’t a lot on the horizon for the US over the next week or so in the lead up to the Jackson Hole Symposium. Some mid-tier data early next week is the highlight with focus shifting to the Euro Area instead. Tomorrow brings the Euro Area inflation final number which may stoke volatility should there be a significant change from the preliminary number. However, should the print come in as expected EURUSD could be driven by overall sentiment heading into next week. TECHNICAL OUTLOOK AND FINAL THOUGHTS Looking at EURUSD from a technical perspective and the attempted bounce today failed to take out the previous four hour swing high as the pair continues to print lower highs and lower lows. Looking at the daily timeframe and we can see on the chart below we have had 3 consecutive days of an attempted recovery being met by selling pressure with the 100-day MA likely to serve as a key area of resistance with a break higher facing another challenge in the form of the 50—day MA resting at the 1.0974 handle. Looking at the RSI (14) and we are approaching oversold territory with another leg to the downside likely to be met by some form of buying pressure. Immediate downside support rests at the 1.0840 handle before the 200-day MA becomes an area of focus around the 1.0787 handle. EUR/USD Daily Chart – August 17, 2023 https://www.dailyfx.com/news/forex-eur-usd-price-forecast-selling-pressure-remains-below-the-100-day-ma-20230817.html

2023-08-18 03:10

CRUDE OIL, WTI, RETAIL TRADER POSITIONING, TECHNICAL ANALYSIS – IGCS COMMODITIES UPDATE Crude oil price 7-week winning streak coming to an end? Retail traders are starting to turn bullish on the commodity This is a sign that further losses might be ins tore for oil Despite Thursday’s push higher, WTI crude oil prices are on course to drop -3.5 percent this week so far. Not only would that be the worst week since early May, but it would also bring a 7-week winning streak to an end. In response, retail traders have started to become more bullish. This can be seen by taking a look at IG Client Sentiment (IGCS), which often functions as a contrarian indicator. With that in mind, is crude oil at risk of extending recent losses? Crude Oil Sentiment Outlook - Bearish According to IGCS, about 47% of retail traders are net-long. Since a slight majority are biased to the downside, this still favors a bullish contrarian trading bias down the road. However, downside exposure has decreased by 9.04% and 18.62% compared to yesterday and last week, respectively. With that in mind, recent changes in positioning hint that the price trend may soon reverse lower despite overall exposure. On the daily chart below, WTI crude oil has confirmed a breakout under the near-term rising trendline from June. That is offering a near-term bearish technical bias. But, prices paused just above key support which is the midpoint of the Fibonacci retracement level at 78.66. If this price holds, a turn higher would place the focus back on the 81.44 – 83.48 inflection zone. Keep in mind that recent losses followed a Bearish Engulfing candlestick pattern, underscoring a near-term downward bias. Still, further losses would place the focus on the 50- and 100-day Moving Averages. A bullish Golden Cross formed between them not long ago, underscoring a broader upside technical bias. As such, it would take further losses to reinforce a stronger bearish conviction. Crude Oil Daily Chart https://www.dailyfx.com/analysis/crude-oil-price-forecast-7-week-win-streak-at-risk-as-retail-traders-shift-exposure-20230817.html

2023-08-18 03:08

Gold, XAU/USD, US Dollar, DXY Index, China, Yuan, Treasury Yields, GVZ - Talking Points The gold price struggles continue with the US Dollar regaining the ascendency Treasury yields are on the march higher with the source of selling pressure on watch Volatility is inching higher off a low base. If it spikes, will that send XAU/USD lower? The gold price is under the pump again going into Friday's trading session with the US Dollar continuing to be underpinned by rising Treasury yields. The DXY (USD) index traded at its highest level since early June overnight while spot gold traded at its lowest level since March after touching US$ 1885 oz. The surge in Treasury yields saw the benchmark 10-year bond trade at 4.328% in the North American session. That was just a fraction below the 4.335% seen in October last year, which was the highest return on that note since 2007. Potentially driving the Dollar higher could be the deterioration in the Chinese Yuan. The recent data on Treasury holdings revealed that China were again sellers of the bonds through June. They have sold every month this year, except for March, a month that saw the Yuan rally significantly. The domestic situation is presenting some challenges for authorities there, after Country Garden and Sino Ocean, two very large property developers, defaulted on several offshore and onshore bonds this month. There are concerns that the situation in the property market might have further ramifications after Zhongrong International Trust Co., a major player in China’s trust sector, missed several obligations to its clients over the past week. Then on Thursday, Evergrande, another large Chinese property company, filed for Chapter 15 protection in the US. Chapter 15 is similar to filing for Chapter 11, but for companies that have offshore interests as well as a US business. Financial markets have historically exhibited nervousness if the concept of contagion becomes apparent. Gold is sometimes seen as somewhat of a ‘haven’ in such circumstances but that has not been the case in this latest episode of markets schism. Treasuries are also seen as a risk-free asset and are sometimes sought after in times of upheaval. Both of these assets have been moving lower in price and it might be the dynamic coming out of China that could be driving the price action. With Treasury yields climbing, which sees the capital value slide lower, it could see investors avoid the non-yield bearing yellow metal. The GVZ index is a measure of implied volatility for gold that is calculated in a similar way to the VIX index’s interpretation of volatility for the S&P 500. This forward-looking gold volatility index has been languishing of late, but it has been ticking higher this week. This might indicate building uncertainty within the market and a significant move in price might be in the offing. If the situation in China continues to unravel, authorities there might need more USD to sell to support the Yuan. This could see more interest for the Dollar in other markets, including XAU/USD. To learn more about how to trade gold, click on the banner below. SPOT GOLD AGAINST US 10-YEAR TREASURY YIELD, DXY (USD) INDEX AND GVZ INDEX https://www.dailyfx.com/news/gold-price-slides-as-the-us-dollar-and-treasury-yields-rise-where-to-for-xau-usd-20230818.html

2023-08-18 03:07

Market sentiments continue to reel in from the hawkish takeaway in the recent FOMC minutes, with the reckoning for rates to be kept high for longer pushing US Treasury yields to retest their recent highs. The US two-year yields continue to hover just below the 5% mark, while the 10-year yields briefly touches its October 2022 peak overnight. Any successful upmove in the 10-year yields above its October 2022 peak will point to a new 15-year high, which could further challenge the traction for holding equities. Positive earning results surfaced from Walmart with an uplift to its annual guidance, which points to some resilience in US consumers ahead. Cisco Systems delivered as well, outperforming top and bottom-line expectations along with a boost in its margins. But with the US earnings season largely behind us, market participants may struggle to find the next set of bullish catalysts, while the property crisis and economic slowdown in China forces a lean back into the risk-averse camp. The economic calendar today may be relatively quiet, which could drive a more subdued session to end the week. Perhaps one to watch may be the SPDR S&P Regional Banking ETF. Having validated an inverse head-and-shoulder formation in July last month, recent weakness has brought the index back to retest its neckline at the 44.75 level, which will require strong defending from buyers ahead. Failure to hold above the level may pave the way to retest the 40.00 level next, while immediate resistance for now will stand at its recent tops at the 49.40 level. Source: IG charts Asia Open Asian stocks look set for a downbeat open, with Nikkei -0.58%, ASX -0.05% and KOSPI -0.47% at the time of writing. Fresh updates in Japan’s inflation rate saw a pull-ahead in its headline figure (3.3% versus 2.5% forecast), while the core aspect eased to 3.1% from previous 3.3%. The data may likely reinforce the gradual pace of policy normalisation from the Bank of Japan (BoJ), with patience still the story into the next meeting in September. The Nasdaq Golden Dragon China Index ended flat at 0.3% overnight, as Chinese equities attempt to stabilise after the recent sell-off but much await. Woes in the property sector continue to pose a challenge to a quicker economic recovery, as China Evergrande’s filing of Chapter 15 bankruptcy protection and falling home prices suggest that downbeat sentiments in property developers may drag on for longer. More intervention efforts are potentially in the pipeline but it may still have to take a trend of positive economic surprises to provide the more sustained traction. For the Nikkei 225 index, it has headed below the 32,000 level of support this week, where a 23.6% Fibonacci retracement stands from its year-to-date high. The formation of lower highs and lower lows put a near-term downward bias in place for now, while a bearish crossover is formed on its weekly moving average convergence/divergence (MACD). Greater conviction for buyers may have to come from a reclaim of its 32,000 level, while on further downside, the 30,800 level may be on watch next. Source: IG charts On the watchlist: GBP/EUR attempting for a retest of its year-to-date high Still sticky pricing pressures presented in the recent UK inflation data have validated views for the Bank of England (BoE) to push rates higher through the rest of the year, with a 25 basis-point (bp) hike fully baked in for the September meeting. The GBP/EUR is up for the fifth straight day, finding some support off the Ichimoku cloud support on its daily chart, along with its 100-day MA, to retest its year-to-date high at the 1.174 level. Having traded in a ranging pattern since June this year, the 1.174 level will mark a key resistance to overcome, as it marks the upper bound of the consolidation zone. Any successful break above this level may reflect buyers in greater control, which may potentially place the next level of resistance at the 1.192 level in sight next. https://www.dailyfx.com/news/higher-treasury-yields-china-s-woes-kept-the-pressure-on-risk-sentiments-s-p-regional-banking-etf-nikkei-225-gbp-eur-20230818.html