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Market Headlines Update – 12 Sep

  • Asia FX Treads Lightly Before U.S. Inflation Data, Euro Surges
  • Asian Stocks Turn Risk-On Ahead of U.S. CPI Reading
  • Dow Futures Move Higher After Winning Week
  • Gold Creeps Higher as Dollar Eases Ahead of CPI Data
  • Swiss Re expects rise in demand amid global uncertainty
  • Asia stocks bounce, dollar cautious before inflation test
  • Thailand to consider more measures to support energy prices-deputy PM
  • Yen Traders Eye Further Official Warnings, Border Opening Moves
  • S&P 500 powers ahead, Bitcoin and tech stocks rally, ASX set to jump
  • Steel price remains firmer even as China’s holiday, covid policy probe bulls
  • Asian Stock Market: Extensively bullish on subdued DXY, oil slips to near $85.00
  • BOJ set to end COVID-relief scheme but leave its loose policy unchanged – Reuters
  • US inflation: A big downside miss to core CPI to knock the Fed off course – Scotiabank
  • UK Manufacturing Production rises 0.1% MoM in July vs. 0.6% expected
  • UK GDP expands 0.2% MoM in July vs. 0.5% expected

Week ahead in FX (12, Sep – 16, Sep)

Major News and Economic Events:

U.S. inflation reports (Sept. 13, 12:30 pm GMT) – Dollar traders must be pretty eager to set their sights on Uncle Sam’s latest CPI readings since these could seal the deal for another 0.75% Fed rate hike.

Analysts are expecting to see a slowdown in headline inflation, though, as the August figure likely fell 0.1% after staying flat in July. This would mark its first negative reading since May 2020, which might suggest that U.S. inflation has peaked.

U.K. CPI (Sept. 14, 9:30 pm GMT) – The U.K. economy will also be releasing its inflation figures for August this week, and many are hoping that price pressures steadied at 10.1% year-over-year.

Another uptick in CPI would up the pressure on the BOE to accelerate their interest rate hikes in order to keep stagflation from worsening. The core CPI likely ticked higher from 6.2% to 6.3% for the month.

New Zealand Q2 GDP (Sept. 14, 10:45 pm GMT) – After reporting a 0.2% contraction for the first three months of this year, New Zealand’s economy is expected to rebound with a 1.0% GDP figure for Q2.

Retail sales reports – We’ll get a round of consumer spending data towards the end of the week, with the U.S., China and the U.K. printing their retail sales figures for August.


Forex Market Recap – 29, Aug. – 2, Sep.

News & Economic Updates:

  • The EIA reported on Wednesday that U.S. oil inventories fell by 3.3M bbl in the previous week, below analysts forecast of -400K bbl
  • ECB’s Villeroy de Galhau said that a “significant” rate hike is needed in September and a return to neutral (around 1% – 2%) by the end of the year.
  • Fed’s Mester sees benchmark rate above 4% and no cuts at least through 2023
  • On Wednesday, China’s Shenzhen enters new four-day lockdown over COVID-19 outbreak
  • China August Manufacturing PMI 49.4 (exp 49.2) & Non-manufacturing 52.6 (exp 52.2)
  • China Markit Manufacturing PMI falls into contractionary conditions: 49.5 in August vs. 50.2 forecast
  • On Friday, the U.S. called Iran’s latest response to the nuclear negotiations a non-encouraging and a step backwards
  • U.S. Non-Farm Payrolls came in just above expectations, unemployment rate ticked higher to 3.7% in August as more return to the workforce
  • J.P.Morgan Global manufacturing PMI fell to 50.3 in August (a 26-month low) vs. 51.1 in July; Price growth slowed while employment remained stable.
  • S&P Home Prices Index rose by 18% y/y in June vs. 19.9% in May
  • U.S. consumer confidence index jumped to 103.2 in August vs. 95.3 July
  • Federal Reserve Bank of New York President Williams pushed back on market expectations of a rate cut next year
  • Chicago PMI for August: 52.2 from 52.1 in July
  • ADP payrolls report showed that employment grew by 132K in August vs. +268K in July
  • U.S. jobless claims totaled a seasonally adjusted 232K for the week ended Aug. 27 vs. 250K forecast and 237K previous
  • Federal Reserve Bank of Dallas President Lorie Logan say number one priority is price stability
  • U.S. Challenger job cuts fell 21% m/m in August, but up 30% y/y
  • ISM Manufacturing PMI for August: 52.8 vs. 52.8 in July; New orders Index: +3.3 to 51.3; Prices Index: -7.5 to 52.5; Employment Index: +4.3 to 54.2
  • The U.S. added a net 315K (vs. 526K previous) jobs and unemployment rate ticks higher to 3.7% as more workers join labor force
  • U.S. Factory orders fell by -1.0% to $548B in July
  • The Bank of England said UK credit card debt grew by 13% m/m, the highest rate since 2005. Mortgage interest rates jump to the highest level since 2015
  • U.K. Mortgage Approvals in July increased to 63.7K vs. 63.1K in June, both below the pre-pandemic average of 66.8K
  • U.K. Manufacturing PMI for August: 47.3 vs. 52.1 in July, new orders and business indexes contracting sharply
  • U.K. house prices rose by +0.8% in August vs. +0.2% in July – Nationwide
  • Governing Council member Martins Kazaks said that the ECB needs a ‘resolute’ hike of at least 50 bps
  • ECB Governing Council member Olli Rehn said that that it’s important to continue a consistent and orderly normalization of monetary policy
  • The European Union is ahead of schedule as it nears its goal to fill up to 80% of its gas storage reserves by November.
  • Euro Area Flash CPI: +9.1% y/y in August vs. +8.9% previous
  • Swiss KOF economic barometer dropped from 90.5 to 86.5 in August, below 88.3 consensus
  • Swiss PMI for August: 56.4 vs. 58.0 in July
  • Swiss retail sales in July: +2.6% y/y vs. a downwardly revised +0.7% y/y in June 2022
  • Canada’s current account surplus Q2 2022: $2.7B surplus, below $6.9B forecast
  • Canada GDP for Q2 2022: +3.3% y/y vs. 4.0% BOC expectations & 4.4% market forecasts
  • Canada building permits in July: -6.6% m/m vs. -0.6% m/m in June; lead by a fall of -8.6% in the residential sector
  • Canada’s manufacturing PMI dropped to 52.5 to 48.7 vs. 53.6 expected in August
  • Canadian labor productivity rose by 0.2% q/q in Q2 2022, the first rise in seven quarters
  • Bank of Japan Kuroda re-iterated that high prices are caused by commodities and will be transitory, needs to maintain easy monetary policy
  • Japanese unemployment rate unchanged at 2.6% as expected
  • Japanese consumer confidence improves from 30.2 to 32.5 in August
  • Japan Housing Starts: -5.4% y/y in July vs. -2.2% y/y previous


Today’s Forex Headlines

  • Dollar hits 20-year high as data support aggressive Fed
  • Japan warns against volatility as yen slumps to 24-year low
  • Russia mulls buying $70 billion in yuan and other 'friendly' currencies- Bloomberg
  • China's Yuan Slips, Japanese Yen at 24-Yr Low Ahead of U.S. Nonfarm Payrolls
  • USD/CAD ignores strong oil price, DXY retreat around 1.3150, US NFP eyed
  • EUR/JPY advances towards 140.00 as ECB’s hawkish bets soar
  • Asian Stock Market: Mixed mood prevails amid pre-NFP trading lull
  • PBOC’s Ruan: Will strengthen the flexibility of the yuan exchange rate
  • EUR/USD rebound approaches 1.0000 as ECB/Fed hawks jostle ahead of NFP
  • AUD/USD remains vulnerable below 0.6800 despite hawkish RBA bets, US NFP eyed


XAU/USD – Double Top Formation on Monthly Chart

XAU/USD turned lower from the $2,000 psychological area and is now trading closer to the $1,700 levels. As you can see, $1,700 lines up with the “neckline” of the Double Top pattern on the monthly time frame. A clear break below $1,700 opens XAU/USD to a move down to $1,550 if not the $1,400 resistance level seen in 2014 to 2018. If XAU/USD is still above the $1,700 neckline by the time the markets have priced in the rest of the Fed’s interest rate increases, then we could see XAU bounce back to $1,800 or $2,000. On Monthly chart RSI is moved below 50 level also XAU/USD is resist by 50 days EMA.

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk.

Daily Technical Outlook – XAU/USD

The XAUUSD is now trading near the $1,700 psychological level that lines up with last month’s support zone.

The short-term technical outlook for the XAU/USD pair remains bearish, according to the daily chart. The RSI points lower below its midline, while the MACD prints higher red bars, indicating growing selling interest.

On the downside, the next support level could be found at the weekly low of $1720, followed by the $1700 area, and then the cycle low of $1680, struck on July 21. On the upside, the bulls must regain the $1750 to pave the way toward the 20-day SMA, currently at $1765, en route to the $1800 psychological level.

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk.

Daily Forex Update

NZ new housing consents jump back up from -2.2% to 5% in July

BRC: inflation in UK shops climbs to highest rate on record

Japan’s July industrial output rises 1.0% on month vs. 0.5% decline expected

Japan’s retail sales up by 2.4% vs. 1.5% annual gain in June

NZ ANZ business confidence improves from -56.7 to -47.8

China’s manufacturing PMI rises, but factory activity still in contraction

China’s services sector activity expands at slower pace in August

China’s Shenzhen enters new four-day lockdown over COVID-19 outbreak

Japanese consumer confidence improves from 30.2 to 32.5 in August

Oil prices climb 1% as U.S. fuel inventories fall

Russian stocks hit 3-month high as Gazprom surges on dividend plan; rouble dips

China coal shares soar as investors bet economics will trump emissions concerns

Upcoming Forex Economic Calendar

Eurozone’s flash CPI reports at 9:00 am GMT
FOMC member Mester to give a speech in Ohio at 12:00 pm GMT
U.S. ADP report at 12:15 pm GMT
Canada’s monthly GDP at 12:30 pm GMT
U.S. Chicago PMI at 1:45 pm GMT
EIA crude oil inventories at 2:30 pm GMT


Week Ahead in FX (Aug. 30 – Sept. 2)

Major Economic Events:

Germany’s preliminary CPI (Aug. 30) lined up early in the week, setting the tone for the eurozone’s flash CPI readings (Aug. 31, 02:30 pm IST) due the next day.

Analysts are expecting to see a slowdown from 0.9% to 0.2% for Germany’s inflation reading in August while the region’s flash headline CPI could tick higher from 8.9% to 9.0%. The core version of the report probably climbed from 4.0% to 4.1% in August.

Next up is Switzerland’s CPI (Sept. 1, 12:00 pm IST) that’s slated to show an improvement from a flat reading to a 0.2% uptick for August.

U.S. non-farm payrolls (Sept. 2, 06:00 pm IST) – It’s NFP week! This means that dollar traders will be keeping close tabs on leading jobs indicators in the next few days and likely positioning ahead of the top-tier event.

Number crunchers estimate a 295K increase in hiring for August, slower than the earlier 528K increase.

The jobless rate likely held steady at 3.5% while average hourly earnings probably dipped from 0.5% to 0.4%.

The JOLTS job openings report (Aug. 30, 07:30 pm IST) due early in the week is expected to show slightly fewer positions for the previous month, dipping from 10.70M to 10.43M in July.

However, the ADP non-farm employment change (Aug. 31, 05:45 pm IST) is projected to show a faster pace of hiring at 310K versus the earlier 128K figure. The ISM manufacturing PMI (Sept. 1, 07:30 pm IST) might also have some clues for the official jobs report, as the reading is expected to dip from 52.8 to 52.1.

XAU/USD Technical Outlook – 25 Aug

Gold price is closing in on $1,760, the 38.2% Fibonacci Retracement (Fibo) level of the recovery from yearly lows of $1,681 to the August 10 high of $1,808, amid a three-day recovery from monthly lows of $1,728.

If bulls manage to find a strong foothold above the latter, then a test of the 21 and 50-Daily Moving Averages (DMA) at $1,769 will be inevitable. Further up, the 23.6% Fibo resistance of the same ascent at $1,778 will challenge the bearish commitments.

Bulls, however, remain cautious, as the 14-day Relative Strength Index (RSI) still remains beneath the midline. Investors also remain wary of the 21 and 50 DMAs crossover, as indecision prevails ahead of the Jackson Hole Symposium.

On the flip side, the immediate support is pegged at the daily low of $1,750, below which the 50% Fibo level at $1,744 will be retested. The next critical downside cap is aligned at $1,729, which is the golden ratio – 61.8% Fibo level.

Weekly FX economic events (22-26 AUGUST)

This week may be full of volatility for the currency market. Better watch out for these Manufacturing and services PMIs . If you are thinking of taking trade on any economic event then you need to read this blog.

Major Economic Events:

Manufacturing and services PMIs – Global growth worries can escalate this week as major economies publish their August flash PMI reports.

Australia will get the ball rolling today at 11:00 pm GMT with potentially a weaker manufacturing (from 55.7 to 55.0) but stronger services (from 50.9 to 51.0) PMIs. Japan will follow on Tuesday at 12:30 am GMT with a similar dip in manufacturing (from 52.1 to 51.9) but stronger services (from 50.3 to 50.5) PMIs.

August 23 Eurozone PMIs will likely get more attention, and unlike in Australia and Japan, markets see further deterioration for both manufacturing and services activities

France (7:15 am GMT) could see manufacturing dip from 49.5 to 48.3 and services drop from 53.2 to 52.1. Germany (7:30 am GMT) may report similar declines in manufacturing (49.3 to 47.8) and services (49.7 to 49.3) indices.

Eurozone PMIs (8:00 am GMT) will also be closely looked at after the composite PMI contracted (49.9) in July. Manufacturing (49.8 to 48.6) and services (51.2 to 50.8) may see more slowdowns while the composite PMI dips further into contraction territory.

Meanwhile, the U.S. PMIs (Aug. 23, 1:45 pm GMT), which is expected to report weaker manufacturing (52.2 to 51.1) but improving services (47.3 to 48.0) indices.

NZ quarterly retail sales (Aug. 24, 10:45 pm GMT) – Retail activity in New Zealand dropped by 0.5% in Q1 after a downwardly revised 8.6% growth in Q4. Traders are expecting a 0.4% gain this time, which could still drag annual growth from 2.3% to 1.1%.

Better-than-expected numbers might push inflation even higher and confirm the Reserve Bank of New Zealand (RBNZ)’s estimates of a 4.00% later this year or early next year.

U.S. preliminary GDP (Aug. 25, 12:30 pm GMT) – Upside revisions to consumer spending numbers are expected to pull Uncle Sam’s Q2 GDP from -0.9% to -0.8%. Small improvement but still a technical recession tbh.

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