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Market News and Economic Events Update – 05, Aug

  • EUR/USD has been dragged to near 1.0230 as DXY is picking bids ahead of the US NFP. US job market will increase at a diminishing rate as employment levels have reached their full capacity. The downbeat Retail Sales and German Factory Orders indicate a slowdown in Eurozone ahead.
  • Gold price is trading on the front foot, awaiting a sustained move towards the $1,790-$1,792 supply zone. Strong US corporate earnings and economic data combined with the Chinese tech gains have lifted the overall market mood, despite ongoing China’s military threats against Taiwan.
  • USD/JPY – After this week’s dip to the 130.40 area we’re running into resistance at the 134.80 area and 50-day SMA. The bias remains lower while below the 50-day SMA. A move above 134.80 retargets the 136.30 area.
  • EUR/GBP – Having held above the 0.8340 area for three days in a row we’ve squeezed higher with resistance at the 0.8480 area. While below the 0.8480 area, momentum remains negative for a move towards the 0.8300 area.
  • GBP/USD – Saw a sharp fall to 1.2060 before rebounding back above 1.2200, as we look to determine the next move. The 1.1980 area remains a key support level, which while above keeps the prospect of a move back to 1.2300 on the cards.

Economic Events

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GBP/USD Weekly Forecast:

After the sharp fall in GBP/USD we can see bounce back from lower level and from last couple of trading session GBP/USD is trading with positive sentiment and we are expecting positive movement throughout the week.

The 15-min chart is consolidating around 1.1950 which could see a breakout to the upside and towards 1.1980 in the day ahead in order to take out the price within the 1.2000 rally. This will bring the price towards a test the 50 days EMA placed at 1.2100 for the coming days.

The RSI and the Momentum indicator consolidate near oversold readings as the pair develops below firmly bearish moving averages. A potential bullish target and resistance level is 1.2000, but the pair would need to establish itself above 1.2055, a relevant high, to actually have room for a relevant upward extension.

Week ahead: UK inflation in focus

It’s a data-busy week for pound traders, as the UK Employment data will roll out on Tuesday, followed by the critical inflation release on Wednesday. Monday is a quiet day, with no top-tier macro data from both sides of the Atlantic. However, the BOE policymaker Michael Saunders is expected to speak at the Resolution Foundation in London.

The UK inflation data will hold the key for the BOE’s next rate hike plan. The UK CPI arrived at 9.1% YoY in May, a new 40-year high. Meanwhile, the UK political news and the Fed sentiment will continue to influence the pair’s price direction.

Thursday is the European Central Bank (ECB) interest rate decision, which, if creates market volatility, the pound could be impacted by the EUR/GBP cross-driven price swings. The US weekly Jobless Claims will be reported later on Thursday.

The UK Retail Sales, S&P Global/CIPS Manufacturing and Services PMI will drop in on Friday, followed by the US S&P Global/CIPS Business PMIs. It will be a quiet week in terms of the speeches from the Fed officials as the US central bank enters a ‘blackout period’ ahead of the July 26-27 policy meeting.


Bitcoin Climbs 10% As Investors Gain Confidence

Bitcoin was trading at $22,909.4 by 20:14 (00:14 GMT) on the Index on Tuesday, up 10.22% on the day. It was the largest one-day percentage gain since February 28.

The move upwards pushed Bitcoin's market cap up to $427.2B, or 41.33% of the total cryptocurrency market cap. At its highest, Bitcoin's market cap was $1,275.5B.

Bitcoin had traded in a range of $22,266.1 to $22,909.4 in the previous twenty-four hours.

Over the past seven days, Bitcoin has seen a rise in value, as it gained 12.09%. The volume of Bitcoin traded in the twenty-four hours to time of writing was $40.4B or 41.36% of the total volume of all cryptocurrencies. It has traded in a range of $18,942.2012 to $22,909.4102 in the past 7 days.

At its current price, Bitcoin is still down 66.79% from its all-time high of $68,990.63 set on November 10, 2021.

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Gold Price technical outlook

Gold Price extends bounce off an upward sloping support line from March 2021. That said, the corrective pullback from the yearly low also takes clues from the oversold RSI (14) to direct XAUUSD buyers towards a horizontal area comprising multiple levels marked since early 2021, surrounding $1,721-22.

It’s worth noting, however, that the 78.6/% Fibonacci retracement of March 2021-22 upside, near $1,760, could test the metal’s upside past $1,722, a break of which could quickly propel Gold Price to May’s low near $1,787.

On the contrary, the aforementioned support line from March 2021 joins oversold RSI (14) to restrict short-term XAUUSD declines around $1,709. Also acting as a downside filter is the $1,700 threshold.

In a case where Gold Price remains weak past $1,700, the odds of witnessing a south-run towards early 2021 bottom of $1,676 can’t be ruled out.

Weekly FX economic events (18-22 JULY)

This week may be full of volatility for the currency market. Better watch out for these central bank announcements, CPI data, and flash PMIs. If you are thinking of taking trade on any economic event then you need to read this blog.

Major Economic Events:

U.K. CPI (July 20, 6:00 am GMT) – First up we’ve got another glimpse into U.K. inflation, which has been rising enough to keep their policymakers on edge. Another uptick in price pressures is expected for June, with the headline figure projected to advance from 9.1% to 9.3%. A stronger than expected increase would once again feed into fears of a downturn in consumer spending and ultimately a recession. This could also up the pressure on the BOE to increase borrowing costs in their next meeting.

Canada’s inflation data (July 20, 12:30 pm GMT) – With the BOC recently surprising the markets with a huge interest rate hike last week, traders are keen to find out whether or not the latest round of inflation measures could spur another aggressive tightening move.

Headline CPI likely climbed from 7.7% to 8.3% year-over-year in June while the core reading probably dipped from 6.1% to 5.9%.

BOJ monetary policy statement (July 21) – It will be the BOJ’s turn to announce their policy decision but, unlike most of its peers, the Japanese central bank will likely stand pat. BOJ officials don’t seem to be alarmed by the surge in price pressures just yet, even welcoming the sharp drop in the yen’s value as it also spurs inflation.

ECB monetary policy statement (July 21, 12:15 pm GMT) – The main event for the week will likely be the ECB decision, as the central bank is widely expected to announce its first rate hike in more than a decade. It might not be such a huge deal like the Fed’s though, since the increase is only expected to come in at a measly 0.25%. What euro traders are more keen to find out is whether this tightening move is the first of many or just a one-off thing. Many expect the ECB to outline a roadmap for its rate hikes for the rest of the year, with some even banking on a larger 0.50% hike sometime in September.

Flash PMI readings (July 22) – It’s the third week of the month, so we’ve got the flash PMI reports lined up! The top eurozone economies will get the ball rolling, with France likely printing another set of declines in its manufacturing (51.4 to 51.1) and services (53.9 to 53.1) PMIs. Germany might also report a slower pace of growth in the manufacturing (52.0 to 50.9) and services (52.4 to 51.4) industry. In the U.K., the flash manufacturing PMI likely improved from 52.8 to 53.5 to signal a faster pace of expansion while the flash services PMI probably dipped from 54.3 to 53.6.

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XAU/USD update – Trading near the level of $1700

Gold Price (XAUUSD) stays defensive at around $1,700, consolidating recent losses near the lowest levels in 11 months as risk-aversion fades ahead of the key US data. Also contributing to the corrective pullback could be the reduction in the hawkish Fed bets and easing the inversion gap of the key US Treasury yield curves, namely between 2-year and 10-year bonds. It’s worth noting, however, that the firmer US Producer Price Index (PPI) and downbeat economics from China keep gold sellers hopeful as they await US Retail Sales for June and preliminary readings of the Michigan Consumer Sentiment Index (CSI) for July.

When looking at the price movement of XAU/USD, we can see that the price movement is declining within an Elliot Wave style trend, forming lower lows and lower highs The Relative Strength Index (RSI) (14) has tumbled into the bearish range of 20.00-40.00 on daily chart. On 4 hourly chart Gold is continuously taking resistance of 50 days EMA. The downside sustaining  below $1700 proof that the high demand is temporary. Conservative traders should wait for the breakout of the important psychological level of $1700.

Resistance level -  $1720 followed by $1735

Support Level -  $1700 followed by $1685


RSI - On daily chart trading in oversold zone.

MA - On 4 hourly chart trading below 50 Days EMA

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