Daily Market Outlook, September 3rd, 2021

Daily Market Outlook, September 3rd, 2021 Overnight Headlines US Job Growth Seen Slowing As Delta Curb Services Demand Fed Powell Picks Up Endorsement Of Senior House Democrat Manchin Jolts Democrats By Urging Pause On $3.5Trillion Bill Chinese Services Activity Declines Into Contraction In August Japanese PM Suga To Resign After Struggles To Contain Virus Delta Spooks States, Australia’s National Reopening In Doubt UK PM Johnson To Break Pledge, Raise Taxes For Social Care UK To Scrap Pension Vows To Rebuild Pandemic-Hit Finances UK Gear Up For Battle To Renew Emergency Virus Legislation German SPD Extend Lead Over Merkel’s Sliding Conservatives Changes Due In Shake-Up Of Germany's Blue-Chip DAX Index The Day Ahead The monthly US employment report is always a key release of the month, and is viewed as an important bellwether of economic conditions. However, this month’s report is likely to attract even more attention than usual. In recent comments, Fed policymakers have noted that a further improvement in the US labour market will be a crucial determinant of when it will start to rundown its asset purchase programme making today’s report particularly important. Indeed a number of them have explicitly linked their support for an early tapering to this report. While recent US data has seen some disappointments of late the labour market so far has continued to improve. July saw a monthly rise in employment of 943k, the biggest in 12 months, and over the past two months, the rise has been close to 1.9 million. Employment is still well below pre-pandemic levels but with unfilled vacancies at around 10 million, the issue does not appear to be a lack of demand for workers. Expect the latest report to show another big jobs increase of 810k, albeit risks of a smaller gain have risen following the weaker-than-expected ADP report earlier this week, along with a further fall in the unemployment rate to 5.2%. That should be enough to convince markets that an announcement on tapering is in the near future. Furthermore, the wage data will be watched closely given reports that recruitment difficulties are forcing business to pay more. July services PMI readings for the UK, France, Germany and the Eurozone as a whole, are final readings. Revisions are typically not that meaningful and it is likely that the surveys continue to show that rates of activity remain solid. For the UK, the first estimate fell compared to July with the services headline measure dropping to its lowest since February. Supply constraints were cited again as a key factor with recruitment difficulties in particular noted as an issue despite a big monthly rise in employment. In the US, the services ISM report for August is expected to show a moderation following the surge in July. Supply chain issues, particularly from labour shortages, are likely to have weighed on activity and expect the headline measure to have dipped to 62.1 from 64.1 previously, though still at a level consistent with solid growth across the sector.G10 FX Options Expiries for 10AM New York Cut(Hedging effect can often draw spot toward strikes pre expiry if nearby) USDJPY - 113.00 1.22bn (c). 112.00 510m. 111.50/60 552m. 110.50/70 846m. 110.10/20 868m. 110.00 1.67bn (50/50 C/P). 109.80/90 527m. 109.60/70 762m. 109.50 509m. 108.90/109.00 869m.108.70/80 790m. EURUSD - 1.2020 449m. 1.1980/1.2000 974m. 1.1890/1.1900 774m. 1.1870/80 2.09bn (1.68bn C). 1.1850/60 1.40bn (928m C). 1.1820/30 588m. 1.1800 803m. 1.1770/80 499m. 1.1750/60 854m. 1.1600 744m. GBPUSD - 1.3800/20 1.21bn (1.08bn C). AUDUSD - 0.7480/0.7500 647m. 0.7450/60 513m. 0.7390/0.7400 410m. 0.7370/80 923m. 0.7350 2.02bn (1.2bn P). 0.7330 719m. 0.7280/90 939m. 0.7250/60 510m. NZDUSD - 0.7040/50 464m. AUDNZD - 1.0400 401m. USDCAD - 1.2550 1.66bn (1.62bn P). 1.2500 1.44bn (1.21bn P). USDCHF - 0.9220 630m. EURCHF - 1.0740 400m. EURJPY - 129.70/80 452m.Technical & Trade ViewsEURUSD Bias: Bearish below 1.1850 Bullish above Bounce extends toward resistance around 1.1900 Steady early after closing up 0.3% for a ninth straight higher daily high ECB tapering fears - recent solid EZ bond yield bounce support Charts; Momentum studies, 5, 10 & 21 day moving averages head north 21 day Bollinger bands expand - positive setup onto volatile U.S. payrolls 1.1894, 38.2% of May August fall then the 1.1909 July high first resistance 1.1836 NY low then 1.1802 rising 10 day moving average initial support 1.1850/70 1.771BLN and 1.1875/90 2.157BLN strikes likely containGBPUSD Bias: Bearish below 1.3880 Bullish above. 1.3850 caps, while strikes support into U.S. payrolls Touch firmer after trading in a 1.3835-1.3845 range with decent interest Tight ranges in Asia, as positions adjusted ahead of volatile U.S. payrolls After lockdowns and Brexit, UK employers search for extra staff Charts; 21 day Bollinger bands contract, 5, 10 & 21 DMAs coil- neutral setup August rejection of lower 21 day Bolli and 1.3778 21 DMA break on Thursday Setup targets falling 1.3919 upper 21 day Bollinger band, as in July/August 1.3815/20 GBP 1.001BLN strikes, then Wednesday's 1.3732 low first supports 1.3837, 61.8% of the July-August fall tested- 1.3893 76.4% next resistanceUSDJPY Bias: Bullish above 109 Bearish below USD/JPY unaffected by Suga news, eyes on US payrolls USD/JPY and JPY crosses unaffected by news PM Suga to step down Some chop but USD/JPY in 109.80-110.07 EBS range, yesterday 109.92-110.12 Back between Ichi daily kijun/100-DMA at 109.76/71, 110.09-11 Ichi cloud Ichi cloud still wafer thin, 55-DMA at 110.14 just above cloud Aside from spec moves, Tokyo quiet, fix low-key despite Gotobi Sunday Option expiries bracket, anchor - 109.50-85 total $1.6 bln, 110.00 1.5 bln Also between 110.15-75 strikes total $1.65 bln above US yields steady pre-payrolls, Treasury 10s @1.293%, range 1.289-1.295% Nikkei in rally mode especially after Suga news, +1.7% @29,025 currently JPY crosses bid on reassessment of portfolios by investors, specs On back of shifting central bank expectations EUR/JPY 130.47 to 130.74, GBP/JPY 151.95 to 152.29 AUD/JPY 81.21-51, NZD/JPY 78.04-33, holding at recent highs Japan PMI-services weak, still in contractionAUDUSD Bias: Bearish below 0.7320 Bullish above Vaccine rollouts boost and technical setup supports Touch softer in a tight 0.7395-0.7408 range with reasonable interest Aus PM flags quicker reopening after UK COVID-19 vaccine swap Poll - analysts split on RBA taper at Tuesday's rate decision Government push to open economy may prompt RBA to retain September taper Charts; momentum studies, 5, 10 & 21 DMAs base or rise - positive setup 0.7406, 38.2% May-August fall tested Thursday and today - major resistance Break targets solid 0.7450, 38.2% 2021 Feb-Aug fall, upper 21 day Bolli band Close below 0.7300/07 - 10 & 21 DMAs needed to end topside bias

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/daily-market-outlook-september-3rd-2021"
via IFTTT

Market Update – September 3 – NFP day

Market News Today 

Today’s employment report is eagerly awaited for directional purposes. The markets traded very quietly Thursday, though with a bullish bias. Treasury yields finished marginally lower with the 10-year just under 1.30%.  The mix of data had little impact, though the improvement in claims did underpin an upbeat outlook into the jobs numbers, even as the factory and trade data, along with the already seen weakness in vehicle sales weighed heavily on Q3 GDP projections.

• Action on Wall Street was equally light and range-bound, though at the risk of repeating, the USA500 and the USA100 made still more new highs.
• Data releases in Asia highlighted the impact of virus developments on the services sector in particular – Asian stock markets have moved higher and stocks across China, Japan and Australia are poised for a weekly rise, despite gloomy data.
• The fact that the JPN225 still rallied nearly 2% and the ASX is up 0.5% how reliant markets are on central bank support.
• GER30 and UK100 futures are up 0.076% and 0.014%.
• USD (USDIndex 92.45) extending 12-day decline.
• USOil declined to $68.00 after OPEC+ alliance agrees to return more barrels.
• Gold steadied to 1,810-1,817.

Today – The calendar includes the final PMI readings for the Eurozone and the UK, which are likely to confirm that high vaccination rates limit the impact of the rapidly spreading delta variant. Eurozone retail sales and ISM Services PMI are also dues. The highlight of the day is the NFP number.

Biggest Mover @ (06:30 GMT) GBPAUD (+0.26%) Broke 28-day Support. Faster MAs aligned lower with MACD resuming decline, Stochastic below 20 and RSI at 31.80 all three suggesting decline in the short term. H1 ATR 0.00173, Daily ATR 0.01062.

Click here to access our Economic Calendar

Andria Pichidi

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

from HF Analysis /267853/
via IFTTT

Dollar Down, Near One-Month Low Ahead of U.S. Jobs Report

from Forex News https://www.investing.com/news/forex-news/dollar-down-near-onemonth-low-ahead-of-us-jobs-report-2607014
via IFTTT

Dollar near one-month low as payrolls test looms

from Forex News https://www.investing.com/news/economy/dollar-near-onemonth-low-as-payrolls-test-looms-2606997
via IFTTT

Dollar lost for direction awaiting Fed to set its path: Reuters poll

from Forex News https://www.investing.com/news/forex-news/dollar-lost-for-direction-awaiting-fed-to-set-its-path-reuters-poll-2606979
via IFTTT

USD Remains under pressure

 

 

Click here to access our Economic Calendar

Stuart Cowell

Head Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

from HF Analysis /267671/
via IFTTT

Wall Street bounces on open!

Wall Street opened higher, with futures currently indicating a about a 0.3% gain for the major indices. The pandemic-low print for jobless claims helped sentiment, though overall, investors are likely to keep their powder dry ahead of Friday’s August employment report. September has historically been the weakest month of the year, though much will depend on how expectations for Fed QE tapering play out. The outcome of Friday’s jobs report could go some way in determining those expectations.

The US Dollar ticked slightly higher following the mix of data, which saw the trade deficit narrow more than consensus, and initial and continuing jobless claims fall to pandemic lows. Q2 productivity was revised slightly lower, while unit labor costs were revised higher. USDJPY touched 110.05 highs from 110.00, and EURUSD dipped to 1.1837 from 1.1845. Equity futures continue to indicate a moderately higher Wall Street open, while yields are little changed.

US trade deficit narrowed -4.3% to -$70.1 bln in July after widening 6.8% to -$73.2 bln (was -$75.7 bln) in June which is the all-time wide. Exports jumped 1.3% to $212.8 bln after edging up 0.6% in June and 0.9% in May. July Imports declined -0.2% to $282.9 bln following the 2.2% (was 2.1%) June jump and the 1.4% (was 1.3%) May climb. The “real” goods trade balance shrank to -$100.1 bln from -$105.0 bln (was -$105.2 bln), with exports rising 1.0% from the prior -0.7% and imports dropping -1.4% from the prior 0.9% (was 1.0%) gain.

US initial jobless claims fell -14k to 340k in the week ended August 28, another new post-covid low, after the 5k bounce to 354k (was 353k) previously. The 4-week moving average dropped to 355k from 366.75k (was 366.5k). Claims not seasonally adjusted declined -11k to 287.8k after sliding -10.7k to 298.8k (was 297.8k). Continuing claims tumbled -160k to 2,748k for the August 21 week, also a new post-covid nadir, after the prior 43k increase to 2,908k (was 2,862k).

 

Click here to access our Economic Calendar

Andria Pichidi

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

from HF Analysis /267675/
via IFTTT

ADP and ISM Hiring Miss Point to Weaker NFP Print

Greenback will likely remain under pressure until the release of the NFP. With respect to DXY (USD index) this could mean little chance to make a meaningful rally above 92.50 points. Despite the weak relationship between ADP and NFP in recent months, the bearish ADP surprise, based on the FX reaction on Wednesday, apparently forced market participants to pare down bets on a strong NFP release. The lack of upward pressure in Treasury yields also indicates lowered expectations for September Fed policy shift as the key macroeconomic variable, job growth, may not show the desired momentum. During yesterday's and today's trading session, the yield on 10-year US Treasury bonds declined and now offer a yield of 1.285% on the paper.The ADP jobs estimate came almost twice lower than the forecast - 374K against the expected 613K. In addition, the hiring component in the ISM manufacturing activity index released yesterday also failed to meet expectations. The index actually went down from 52.9 to 49 points (contraction zone), that is, the overall hiring rate in the sector decreased compared to the previous month. In general, the index is on a slippery slope despite minor improvement from the previous month:Unsurprisingly, the dollar resumed its decline yesterday, but initially saw an aggressive sell-off hit roadblocks around 92.40 points on the DXY. This is roughly the lowest level for a month. Below is a short-term technical setup for DXY: At the beginning of the week, the price broke the uptrend support line (dashed line with a positive slope) and is now testing support, which is the upper border of the “wedge” pattern, which has been significant for the dollar index for almost a year (orange line). In the framework of the short-term downtrend, the price may correct up to a maximum of 92.50, and in the event of a negative NFP surprise, move into a decline, while support is likely to emerge slightly below the level of 92 points.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/adp-and-ism-hiring-miss-point-to-weaker-nfp-print"
via IFTTT

Market Spotlight: USDCNH Downside Opportunities

USDCNH Sitting on Key SupportThe recent sell off in USDCNH has seen the pair breaking down through the rising channel from YTD lows with price now testing the 6.4490 support level. This is a key level for the pair and has underpinned price action over the last three months. With indicators turned lower here and the Dollar trading on a weaker footing, there is risk of a break below the level which will see bears targeting the 6.4018 level next. While the CNH rally has been a little weaker over recent days as a result of softer Chinese data, there is plenty of room for the move to gather pace if we break support.Key Data to WatchThe big data to watch for this trade is obviously the US labour reports tomorrow. With the Dollar trading on a weaker footing following Powell’s Jackson Hole comments, any negative surprises tomorrow will likely send USD on a continued course lower over the near term, squashing Fed tapering expectations for now. The market is looking for 750k on the NFP, with anything below that likely to see support break in USDCNH.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/market-spotlight-usdcnh-downside-opportunities"
via IFTTT

Could the “metaverse” be the next big investment theme?

• SEE MORE Virtual reality: advertising’s next horizon, and how Facebook aims to dominate it
• SEE MORE Too embarrassed to ask: what is the metaverse?

Facebook boss Mark Zuckerberg has a vision. Soon, he says, he doesn’t want Facebook to be viewed as a social media company. Instead, he wants it to be described as a “metaverse” company.

What’s a metaverse? Well, it might just be the next big thing.

The future is happening right now all around us

I’m partial to a bit of classic sci-fi, so I recently put True Names by Vernor Vinge on my Kindle.

If you haven’t heard of it (I hadn’t) it was published in 1981 and was one of the first books to depict a virtual world that you could “plug into”. A vision of cyberspace well before William Gibson’s Neuromancer, in other words.

The story itself is fun (and short). It’s less po-faced than Gibson and less manic than Neal Stephenson. More than anything else it reminded me of Ready Player One.

But it wasn’t the story itself that really caught my attention. I’d picked up a 2001 edition which paid homage to Vinge’s foresight by packaging the book with a selection of non-fiction articles covering some of the issues predicted in the story.

These covered topics like privacy, cryptography, digital currency, anarcho-libertarianism versus all-powerful governments, artificial intelligence, robots coming for our jobs or creating new ones – all the stuff we’ve been talking about for decades now.

Thing is, most of these pieces were written in the mid-90s. At that time, I barely had an email address. The internet was a curiosity. I still got my music on CDs and rented my films from a video shop.

What struck me was just how prescient many of these pieces were. There were writers discussing how we’d all live in a version of the panopticon in the future as companies and governments fought to control our data. There was plenty of talk of digital currencies based on state-of-the-art cryptography (more than a decade before Satoshi Nakamoto invented bitcoin).

Then, in a very timely manner, on Twitter yesterday, someone posted a picture of an article about people getting bored of the internet. This was published in December 2000.

What’s my point? My point is that the internet was already deeply entrenched by then. To paraphrase Gibson, the future was already there – it was just unevenly distributed.

So what I’m wondering now is this: what other technologies or changes are at a similar point? What tech is already quite advanced and open to people who want to experiment or play with it, but not quite mainstream yet?

There are plenty of candidates out there. One that I think has a good chance of being the “next big thing” is augmented reality and virtual reality. Or to put it more succinctly – and to return us to the introduction of this email – the “metaverse”.

What is the metaverse and why would anyone bother with it?

Long story short, the metaverse is a 3D version of the internet. You already have a digital shadow (or several). The more time you spend online, and the less stringently you protect your data, the more detailed it’s likely to be. The metaverse really just takes that to the next level.

There are different levels to this but in the idealised metaverse, you’d stick on a virtual reality (VR) helmet and be represented in a digital world by a 3D avatar. You can go around doing all the stuff you can do in the real world but with better special effects.

Augmented reality (AR) is where the two realms cross over. You effectively have a digital overlay on the real world. There are already plenty of apps that use this –the Pokemon Go game might be the best known.

Or if you own a relatively up to date Android phone you can probably access the Google Art and Culture app. This allows you to – for example – pop a miniature art gallery out onto the table or the kitchen floor (that’s where I tried this last night), then walk around looking at the paintings.

It’s all daft fun for five minutes. But “normal” people can be entirely forgiven for asking: what’s it for?

The thing is, that’s what some of us were still asking about the internet 20 years ago. Now we almost literally can’t live without it.

I’m not saying that this is a sure thing by any means. But I think that any technology which makes communication between humans easier is likely to end up finding uses. And the pandemic has probably accelerated that.

Facebook’s comments on the metaverse came as the company launched a new app where you can meet 3D versions of your colleagues in a virtual meeting room.

I mean, yes. That sounds like no fun at all. And you might wonder what Facebook’s new virtual office app can offer that a Zoom call can’t.

But I suspect that there’s a tipping point involving a) the comfort of the hardware and b) the realism of the experience, that will eventually make people embrace VR because it will add useful depth to communication.

And more to the point, there are lots of other uses well beyond all this. Imagine if you could effectively digitise all of your computer hardware. You put on a pair of glasses, your screen appears, a keyboard appears – you take them off, it’s all tidied away.

That’s not even scratching the surface.

How would you invest in the metaverse?

How would you invest in that sector? This is me mostly just kicking about ideas out of curiosity, but I’ll be researching the area more.

Lots of big companies are experimenting; Facebook is the obvious one, of course. Bluntly, I find it hard to get excited about that, but a lot of that is purely a chippy dislike of the company and its constant boundary pushing, so please do ignore me – do your own research and see what you think.

Another interesting one is Snap, which doesn’t just do vanishing photos, but also makes AR glasses (you may or may not remember Google Glass, which people hated). It recently bought UK-based WaveOptics for over $500m.

Lex in the FT is unconvinced: “AR glasses in their current form are unlikely to take off, despite Facebook, Apple and Microsoft investing in the idea. Hostility to tech incursions into personal privacy is growing, not receding.”

It’s quite possibly correct and I wouldn’t be keen to invest in Snap (still loss-making). But privacy concerns are a red herring – consumers will swap privacy for convenience any day of the week, as we’ve all learned. The real issue is usability and given the pot of gold that all these companies believe is there, that’s a matter of when rather than if.

On the infrastructure side, I’m guessing a full-on metaverse would require even greater rollouts of physical equipment to support all this. Similar to the way that Netflix couldn’t take off until the internet pipes were big enough (that’s the highly technical level on which I think, don’t all applaud at once) to make streaming viable, it’ll probably take better broadband connections, more cloud storage, and the rest.

Anyway – we’ll discuss all this in future Money Mornings and in MoneyWeek magazine (get six free issues here if you’re not already a subscriber).

But I’m pretty confident that this is an area to keep a close eye on. VR is one of those techs that has been “around the corner” for many moons, but the underlying tech has caught up with the dream to a great extent, and with Facebook keen to harvest ever more of our data, I imagine it’ll be pushing this hard.

However – it is of course not the only exciting investment area “bubbling under” right now. I have a few other subjects I want to cover but I’d also love to hear your views – what do you think is the “next big thing” and why?

By the way, if you’re going to say “crypto” then I’d appreciate a bit more detail than just that...! Which apps or coins and why?

Ping me an email at editor@moneyweek.com and put “next big thing” in the subject line so I can filter them out. I might well publish the best ones, so please do let me know if you’d rather not be named.

Look forward to hearing your ideas.

from Moneyweek RSS Feed https://moneyweek.com/investments/investment-strategy/603788/how-to-invest-in-the-metaverse
via IFTTT

USD Insights Ahead of The NFP

ADP Miss - Does It Matter?The US Dollar is trading on the back foot today following the ADP employment miss yesterday. The indicator, which is often used as a proxy for gauging the more important NFP release, came in at just 374k, well below estimates of 625k. With this in mind, traders have been revising lower their expectations for tomorrow’s data. It is worth remember, however, that the correlation between the ADP release and the NFP release is not exactly a sure bet. While the two reports are sometimes, correlated, other times they are wildly un-correlated. If you’re interested in reading more, here’s a great article to check out.That being said, what’s important here is the market’s perception and reaction and big misses on the ADP report tend to see USD lower into the NFP. Now, obviously, this presents a decent buying opportunity for those who still believe that tomorrow’s number will come in strong, and looking through the bank notes ahead of release, there are plenty of them! Additionally, with the market forecasting a decline from the prior month, it seems the better opportunities are likely to be found to the upside e.g buying USD against other currencies in response to any upside surprise in the data.Manufacturing Up, Employment DownLooking elsewhere, yesterday’s manufacturing data is also worth taking into consideration. The indicator came in at 59.9 from the prior month’s 59.5, and above the expected 58.5. On the face of it, while not ground-breaking at all, this is a positive reading. However, the key for tomorrow’s data is the employment component of this release. Sadly for USD bulls, the employment index eased back to 49 in August from the prior month’s 52.9. Once again, this doesn’t look great for tomorrow’s data. However, it is worth remembering that the factory sector is the far smaller sector of the US economy and services employment is the real key to gauging broader labour market conditions. Because of the earlier release this month, however, we won’t see that reading until after the NFP.Upside USD Opportunities Into NFPThe takeaway here is that with a negative USD tone going into tomorrow’s data, it would likely take a much bigger downside surprise to send USD meaningfully lower. On the other hand, if we see a positive surprise tomorrow, this could catch the market off-guard, sending USD higher as a result.Technical ViewsUSDJPYThe contracting triangle pattern in USDJPY still holds plenty of upside risk, given the bullish trend which preceded the structure. A break higher in USD tomorrow would likely see the pattern break, putting focus on 110.92 and 111.70 next, supported by bullish indicators. To the downside, if we break lower, 109.42 and 108.71 are the key levels to watch initially.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/usd-insights-ahead-of-the-nfp"
via IFTTT

The Crude Chronicles - Episode 104

Crude Traders Cut LongsThe latest CFTC COT institutional positioning report shows that oil traders cut their net-long positions last week by more than 30k contracts. This latest reduction in upside exposure brings the total bullish position down to 374,313, marking a two-year low. The reduction comes amidst ongoing concerns over the rise in Delta variant cases, amongst others being identified globally. COVID fears are once again resurfacing as the Western hemisphere moves through the summer and faces the prospect of greater outbreaks once again as the weather cools.EIA Reports Further DrawdownDespite the reduction in upside bets, crude prices have been broadly higher over recent weeks, marking a firm rebound off the 61.80s lows printed in August. The Energy Information Administration certainly had good news for bulls this week. The EIA reported a further, large drawdown in commercial inventories. Stockpiles fell by more than 7 million barrels last month, a far deeper drag than the 3 million barrel surplus the market was looking for.Record US Oil DemandAlongside this, the group reported total-products supplied of 22.8 million barrels per day over the week. This reading is used as a gauge for total fuel demand and marks a fresh, all-time high, reflecting the ongoing pickup in demand in the US. Indeed, demand has been so strong that even with US oil production hitting its highest level since May 2020 at 11.5 million barrels per day, the market was still in drawdown.OPEC Revise Demand Outlook HigherThe OPEC meeting this week offered further support for bulls. The group, along with allied non-OPEC nations led by Russia, agreed to maintain a steady increase in production of just 400k barrels per day, avoiding the calls from some members to increase at a faster rate. Additionally, the group now sees 2022 demand as higher than originally projected despite ongoing uncertainty around the pandemic.Technical ViewsCrude OilFor now, crude prices remain capped by the 69.53 level, just ahead of the upper trend line of the corrective bear channel which has framed the sell off from YTD highs. With indicators turned higher here, a break above this level (and the channel top) will put the focus on the 74.46 level next.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/the-crude-chronicles-episode-104"
via IFTTT

Will the Rand’s strength continue in September?

USDZAR, H8

South Africa’s economic growth in the decades following the end of apartheid has been at a pace consistent with other developing countries. However, since 2007, GDP growth has tended to be lower and never recovered above 5.0%, the Covid crisis has simply added more pressure to an already vulnerable situation. Gross Domestic Product (GDP) in Q1 2021 even contracted -3.20% compared to the same quarter the previous year.

Annabel Bishop, Chief Economist at Investec, said in a routine research note that “volatility in currencies could intensify unless governments promote significant private sector investment. The South African Rand is very sensitive to changes in commodity prices, as South Africa is a major exporter of commodities, particularly metals and minerals/food commodities, and higher prices benefited the trade balance, economic growth and income of the SARS. Due to near-term support in industrial metals, the Rand could see further strength, as the emerging market’s third strongest currency this year.

USDZAR,H8

From the price records of the last 5 years, in September the USDZAR pair decreased 4 times and strengthened 1 time. How about this September? Will USDZAR weaken again like before? This year significantly, we have seen the commodity market strengthen broadly which has implications for the exchange of the Rand against the US Dollar. Apart from South African fundamentals, this September we saw some commodity assets bounce back from the point of rebound after the correction in the first weeks of August.

The Rand extended its recent gains against the US Dollar, breaking the ascending trendline adjacent to the 14.6025 support and posting a daily low of 14.3639 (50.0% FR) following USD weakness after the disappointing ADP report. Further moves would target the 14.2209 support which is slightly above the 61.8% FR (14.1491) level. Meanwhile on the upside, as long as the support for 14.1491 holds, there is a probability of the price going to 14.6025. However, the continuation of the price will be influenced to some extent by the NFP report on Friday.

Click here to access our Economic Calendar

Ady Phangestu

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

from HF Analysis /267608/
via IFTTT

Investment Bank Outlook 02-08-2021

CitiRisk off sentiment dominated Asia session as market stay cautious ahead of NFP print tomorrow. USD traded marginally stronger against G10 basket with AUD the exception as record trade surplus nudged AUDUSD higher to trade at 0.7368 at writing. USD noted mixed performance against Asia FX with KRW and THB underperforming and PHP outperforming.Downside pressures in KRW as foreigners net sold $362m of KOSPI shares this morning and in absence of USDKRW sellers at current levels. THB continues to be weighed down by weak economic backdrop and persistent current-account deficit even as the Covid situation in Thailand stabilizes. Elsewhere, PHP outperformed to break below 50.0 handle, onshore suspects that importers interest away from us is driving the PHP strength here.USD traded marginally stronger against G10 basket ahead of the NFP print tomorrow. As a frame of reference, consensus estimates for NFP sit at 748k, while the Bloomberg ‘whisper’ figure lies higher at 800k.CIBCFX FlowsAustralia July trade surplus widened to AUD12.1bn versus estimates of AUD10bn. However, further reading into the details showed that iron ore exports fell 5% from previous month. AUDUSD reversed away from 0.7365. Our trader Jon believed there has been some profit taking in AUDJPY and widening of AU-NZ yield spreads played a part. Intraday resistance seen at 0.7377 then 0.7400. Not much in terms of option expiry today, AUD1.1bn at 0.7350 for tomorrow.Comments from BoJ dove Kataoka failed to stir USDJPY, said that in his personal view is that the BoJ should aggressively buy bonds, push down yields to prop up capex, investment in growth areas. No one paid attention, traders were busy with selling JPY crosses since the opening. Seemed that sell orders are scattered above 110.25 up to 110.50, from both corporate and Japanese retail, I was told these day traders have gone short. I am sure they will be collecting near 109.50-60. Not a lot to talk about in terms of option strikes but not $1.3bn of 110.00 strike mature tomorrow.EURUSD is back below 1.1840, dominated by sales of EURJPY. Intraday support seen at 1.1825, our trader thinks this will head higher, especially the EURCAD cross where the golden cross has clearly developed. One big asset manager has set his target at 1.50, which isn’t too distant, we think there is a potential to go beyond. In EURUSD, there is a trendline at 1.1858, should extend towards 1.1900. Not a lot of strikes due today but far bit tomorrow, concentrated on the topside from 1.1850-1.1880.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/investment-bank-outlook-02-08-2021"
via IFTTT