Olivia

GBP/AUD sellers threw the pair into overdrive after hitting a wall of resistance near 1.70261 on the one-hour chart, which put it on the back foot. The pound sterling has fallen back below Thursday's lows against the Australian dollar as bearish sentiment has intensified, with bears testing the 1.69757 barrier. There is a chance that if they manage to break through this level, the price may continue to fall towards 1.69620. There is a possibility that the market can be sent even lower if this hurdle can be decisively broken, with more sellers aiming at 1.69224 and 1.699469. Alternatively, if buyers see the price in the range of 1.69757 as sufficiently attractive to step into the market, then this level may act as a support, holding the pair in the vicinity of the 50-EMA. It is also possible that buyers will find another opportunity to challenge the 1.70261, aligned with the 200-EMA.  According to the short-term momentum oscillators, selling pressure is picking up, with the RSI pulling out of the neutral zone and stepping into the selling area. In addition, shrinking MACD bars are also a sign that buying pressure is waning. While, momentum has not yet confirmed the bearish… Read More »GBP/AUD on a negative note after hitting a key resistance [Video]

Another euro zone's inflation report is noticeably above analysts' expectations. Eurozone data published on Friday afternoon showed producer price growth of 4% for July and 37.9% year-on-year. At the same time, analysts had expected a 2.5% m/m increase and a slowdown in the annual inflation rate to 35.8%. The fresh data set a new historical record, shattering the hopes we saw for the peak growth rate two months ago. Producer prices are a step ahead of consumer inflation, so it is unlikely that the pressure on final consumer prices will diminish in the coming months. Preliminary CPI estimates published for August confirm that the inflation spiral continues to unravel. Prices are, on average, 9.1% higher than in the same month a year earlier, almost half of which is due to a jump in energy prices. But there are two additional worrying factors. The first is the acceleration in core inflation to 4.3% y/y, indicating a breadth of inflationary pressures. The second is the drop in the unemployment rate to 6.6% (a historic low since at least 1994), which makes the price spiral even more dangerous. The combination of low unemployment, rising prices and a falling euro are sure companions of… Read More »ECB is far from beating inflation, euro remains vulnerable

An action-packed week lies ahead, featuring central bank meetings in the Eurozone, Canada, and Australia, an output decision from the OPEC cartel, and the selection of the next UK prime minister. The ECB will likely steal the show, as policymakers seem prepared to roll out the big guns to defend the sinking euro. 

EUR/USD dropped closer to a nearly two-decade low on Thursday amid resurgent USD demand. Hawkish Fed expectations, surging US bond yields, recession fears continue to underpin the buck. Traders now move on the sidelines as the focus remains glued to the US jobs data (NFP) on Friday. The EUR/USD pair came under renewed selling pressure on Thursday and dived to the 0.9900 neighbourhood, back closer to its lowest level since December 2002 touched last week. The US dollar caught aggressive bids and reached a fresh two-decade high, which, in turn, exerted heavy downward pressure on the major. The recent hawkish comments by several Fed officials lifted market bets for another supersized 75 bps rate hike at the upcoming FOMC meeting on September 20-21. This, along with upbeat US economic data, continued to underpin the greenback. The US Initial Jobless Claims unexpectedly fell to 232K during the week ended August 26. Furthermore, the US Manufacturing PMI was revised higher to 51.5 for August from the flash estimate of 51.3 and the ISM Manufacturing Index remained stable at 52.8. The data reinforced expectations for a more aggressive policy tightening by the Fed and pushed the US Treasury bond yields higher. In fact,… Read More »EUR/USD Outlook: 0.9900 is the last line of defense for bulls, US NFP in focus

EUR/USD – 1.0027 Despite euro's decline from last Friday's 1.0089 high to 0.9914 Monday, subsequent erratic rise to 1.0078 in New York yesterday due to active buying in euro on market's hawkish EBC outlook suggests choppy swings above Aug's 20-year 0.9901 trough may continue and above 1.0089 may head to 1.0123, 1.0146/47. On the downside, only a daily close below 1.0000 would yield re-test of Wednesday's 0.9972 low, break would extend further weakness towards 0.9947. Data to be released on Thursday Australia AIG manufacturing index, manufacturing PMI, building capex, capital expenditure, Japan Jibun bank manufacturing PMI, China Caixin manufacturing PMI. Germany retail sales, S n P manufacturing PMI, Swiss CPI, retail sales, manufacturing PMI, Italy S n P manufacturing PMI, unemployment rate, GDP, France S n P manufacturing PMI, EU S n P manufacturing PMI, employment change, U.K. S n P manufacturing PMI. U.S. initial jobless claims, continuing jobless claims, labor costs, productivity, S n P manufacturing PMI, construction spending, USM manufacturing PMI, Canada building permits and S n P manufacturing PMI.

Europe It’s been another disappointing day for the FTSE100, with a slide in energy prices weighing on the likes of BP and Shell, with both crude oil and natural gas prices sliding for the second day in succession. Up until the end of last week the FTSE100 had been on course for a positive month, however the last 3 days, and the hawkish tone from Powell’s Jackson Hole speech, has seen the rug pulled out from underneath the positive mood. We’re also seeing declines in the likes of National Grid, SSE and Centrica as concerns about a windfall tax on some of their profits resurfaces. Due to the way that electricity prices are linked to the gas price, some companies are reaping huge profits given their electricity is being generated by renewables, which has a lower cost of generation. This is giving these companies a nice windfall, which governments are starting to cast an envious eye over. With the economic outlook looking increasingly bleak it’s not been a great month for the likes of the UK house builders, which have seen further falls in August, with Persimmon, Taylor Wimpey and Barratt Developments all down over 14%, with Next and JD… Read More »Softer oil and gas prices weigh on the FTSE100

Declining oil prices have hurt the FTSE today, while record eurozone inflation comes in the face of a potential 75bp rate hike from the ECB. FTSE suffering as energy names come under pressure “The FTSE 100 has led the losses in Europe, with a weakening pound doing little to help stifle the downdraft that sparked yet another one-month low for the index. Unfortunately, the prominence of commodity stocks within UK markets has proven its undoing, with energy names Tullow oil, Energean, and BP feeling the pinch as oil looks to be heading for the worst losing run in over two months. On the flip-side, uranium has enjoyed a welcome return to the spotlight, with the growing support behind a nuclear resurgence helping to elevate stocks over the past week.” Eurozone inflation hits yet another record as ECB prepares potential 75bp hike “Inflation pressures continue to dampen market sentiment, with eurozone inflation hitting a record high for the ninth consecutive month. Comments from ECB member Holzmann essentially guaranteed a minimum 50Bp rate hike next week, with 75Bps also being debated. Unfortunately, there looks to be little reason for optimism going forward, with the ECB, Fed, and BoE all faced with the… Read More »Market selloff continues as ECB inflation hits new high

EUR/USD Current Price: 1.0028 Market participants remain concerned about economic growth and aggressive monetary tightening. Germany's inflation kept rising in August, according to preliminary estimates. EUR/USD is holding on to modest gains above 1.0000, but buyers are losing interest. The EUR/USD pair posted a modest daily advance on Tuesday, trading at around 1.0030 heading into the Asian opening. The shared currency overcame persistent dollar demand as investors still increased bets on an ECB 75 bps rate hike in September. Financial markets kick-started the day with a better tone, but the sentiment soured ahead of Wall Street’s opening. Asian and European equities closed in the green, but US indexes edged firmly lower as government bond yields resumed their advances. Generally speaking, market participants are concerned about slowing growth, exacerbated by aggressive monetary policies meant to take down inflation. Federal Reserve chief Jerome Powell acknowledged the burden of higher rates on households and economic progress but made it clear the central bank would continue with the tightening plan. Meanwhile, macroeconomic data was mixed. The August EU Economic Sentiment Indicator contracted to 97.6 from 98.9, worse than expected. Consumer Confidence in the same period remained unchanged at -24.9. German inflation, in the meantime,… Read More »EUR/USD Forecast: Holding above 1.0000, but would it last?

Key highlights EUR/USD failed to recover above the parity level and declined. It broke a key rising channel with support at 0.9940 on the 4-hours chart. EUR/USD technical analysis Looking at the 4-hours chart, the pair settled below the 1.0050 level, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours). Recently, it saw a minor upward move above the 1.0000 resistance zone. However, the bears were active near the 1.0080 level. It failed to clear the 38.2% Fib retracement level of the downward move from the 1.0368 swing high to 0.9902 low. It started a fresh decline below the 1.0000 support. There was a break below a key rising channel with support at 0.9940 on the same chart. The pair is now approaching the 0.9900 support zone. If there is a downside break below the 0.9900 support, the pair could decline towards the 0.9850 support. Any more losses might call for a move towards 0.9720. Conversely, the pair might rise again above 0.9950. On the upside, the pair is facing resistance near the 1.0000 level. The next major resistance is near the 1.0080 level. A clear move above the 1.0080 resistance might send the… Read More »EUR/USD bears target fresh lows, dollar rallies

Jackson Hole revives hawks and bears so equities turn lower. Bitcoin also suffers as risk appetites turn sour. The week ahead is set for more volatility as bond markets reprice and the curve flattens again. The week finally got its finale with a hawkish Jackson Hole on Friday culminating in a bad week of data on nearly all front bar perhaps inflation. Global PMIs turned south as economies look to be heading straight down the recession route. The PMI debacle spread like a virus with Australia spreading to the UK, Europe, and then the US. Europe started to reprice rate hikes as more and more ECB members came out all hawkish and now 75 basis points may be the tonic for the next ECB meeting. Despite this, the Euro was still unloved due to the energy situation in Europe. The price of European electricity and gas prices continued to soar on the back of the ongoing ramifications of the Russian invasion of Ukraine. This has put added pressure on inflation projections from the EU and so caused the hawkish tilt from ECB members. Sovereign bond yield spreads continued to widen in Europe between the core (Germany, France) and the periphery (Italy, Greece). Not yet… Read More »Week Ahead on Wall Street (SPY) (QQQ): Powell pivots again and markets look set for more losses