Euro rises slightly as market sentiments are flip-flopping today. Sterling and Swiss Franc are also trading higher. On the other hand, commodity currencies turn soft with Aussie paring most of recent gains. Dollar and Yen are mixed for now. IN other markets, Silver is trading firmer but Gold is still range bound. WTI crude oil is recovering while cryto-currencies turn south. Stocks are mixed with US futures pointing to a flat open.
Technically, the condition is there for WTI crude oil to stage a sustainable rebound considering bullish convergence condition in 4 hour MACD. Yet, it will have to overcome 4 hour 55 EMA (now at 93.81) first. Then ideally, there should be some up side acceleration through 98.04 resistance. Otherwise, chances are for another dip through 88.20 low before WTI forms a solid bottom.
In Asia, at the time of writing, FTSE is up 0.09%. DAX is down -0.96%. CAC is down -0.34%. Germany 10-year yield is up 0.051 at 0.949. Earlier in Asia, Nikkei dropped -0.88%. Hong Kong HSI dropped -0.21%. China Shanghai SSE rose 0.32%. Singapore Strait Times dropped -0.36%. Japan 10-year JGB yield dropped -0.0111 at 0.167.
BoE Ramsden: It’s more likely than not to raise rates further
BoE Deputy Governor Dave Ramsden said in a Reuters interview, “for me personally, it’s more likely than not that we will have to raise Bank Rate further.
“But I haven’t reached a firm decision on that,” he added. “I’m going to look at the indicators, look at the evidence as we approach each upcoming meeting.”
“I’m certainly not ruling out a situation where when we look at the risk to the economy, having been raising Bank Rate, at some point we then have to start lowering it quite quickly,” he said. “I can imagine situations, yes, where we’ll carry on… with a pace of QT in the background.”
Australia Westpac consumer sentiment dropped to 81.2 in Aug
Australia Westpac Consumer Sentiment Index fell -3% to 81.2 in August. The reading was on par with the lows of the Covid and Global Financial Crisis. Also, there was a cumulative decrease of -22.9% from recent peak made in November 2021.
Economic conditions for the 12 months dropped from 80.3 to 73.9. Economic conditions for the next five years dropped from 91.6 to 90.7. Unemployment expectations index dropped from 109.8 to 103.4. House price expectations index dropped from 104.9 to 97.1.
Regarding RBA’s next meeting on September 6, Westpac expects the central bank to hike by another 50bps to 2.35%, leaving the cash rate in “neutral range”. It expects RBA to then scale back the increase to 25bps per meeting until February 2023.
Australia NAB business confidence rose to 7, conditions rose to 20
Australia NAB Business Confidence rose from 2 to 7 in July. Business Conditions rose from 14 to 20. Trading conditions rose from 19 to 27. Profitability conditions rose from 13 to 17. Employment conditions rose from 11 to 17.
“Businesses are continuing to report that conditions are really strong,” said NAB Group Chief Economist Alan Oster. “While some of the real time data we look at is showing signs of softening, there are no signs of that in the survey with demand at a really high level. Importantly, the strength is showing up across the board in terms of industries and across the country.”
“Confidence bounced back in July, which was something of a surprise,” said Oster. “Inflation and rising interest rates are clouding the outlook, and there are growing concerns about the global economy, but businesses seem to have a fairly positive outlook at the moment. Forward orders are also fairly strong at +10 index points which also supports the outlook.”
EUR/USD Mid-Day Outlook
Daily Pivots: (S1) 1.0161; (P) 1.0192; (R1) 1.0224; More…
EUR/USD recovers mildly today but stays in established range. Intraday bias remains neutral first. On the downside, break of 1.0095 minor support will argue that larger down trend is ready to resume. Intraday bias will be back to the downside for retesting 0.9951 low first. For now, outlook will stay bearish as long as 1.0348 support turned resistance holds, even in case of another rise.
In the bigger picture, down trend from 1.6039 (2008 high) is still in progress. Next target is 100% projection of 1.3993 to 1.0339 from 1.2348 at 0.8694. In any case, outlook will stay bearish as long as 1.0773 resistance holds, in case of strong rebound.
Economic Indicators Update
| GMT | Ccy | Events | Actual | Forecast | Previous | Revised |
|---|---|---|---|---|---|---|
| 23:50 | JPY | Money Supply M2+CD Y/Y Jul | 3.40% | 3.30% | 3.30% | |
| 01:30 | AUD | NAB Business Confidence Jul | 7 | 1 | ||
| 01:30 | AUD | NAB Business Conditions Jul | 20 | 13 | ||
| 06:00 | JPY | Machine Tool Orders Y/Y Jul P | 5.50% | 17.10% | ||
| 10:00 | USD | NFIB Business Optimism Index Jul | 89.9 | 89.5 | 89.5 | |
| 12:30 | USD | Nonfarm Productivity Q2 P | -4.60% | -4.50% | -7.30% | |
| 12:30 | USD | Unit Labor Costs Q2 P | 10.80% | 9.50% | 12.60% |