Spreads
Spreads
Spreads
Spreads
Spreads
The volatility in the market increased last week after the US CPI data beat forecasts.
The CPI came in over predictions at 0.1%, and Core CPI came in at 0.6%, surprising the market and pushing the Fed to hike rates more aggressively. This data boosted the USD until mixed retail sales data was released.
Meanwhile, GBPUSD broke key swing lows of 1.1400 when retail sales fell from 0.4% to 1.6%.
Last week, the USD index (USDX) boosted after the US CPI data beat forecasts which may push the Fed to hike rates more aggressively.
(All data taken from VT Markets’ MT4)
(Picture taken from forexfactory.com)
Four central banks, including the US Federal Reserve, the Bank of Japan, the Swiss National Bank, and the Bank of England (BoE), will announce their interest rate decisions this week, with the Fed rate decision and the monetary policy as the main focus.
The BoE has delayed its decision from last week after the Queen’s death.
Investors are also looking out for the release of Australia’s Monetary Policy Meeting Minutes, Canada’s CPI data, and Germany’s and the UK’s Flash Services and Manufacturing PMI, respectively.
France and US will also release their Flash Services PMI.
As the market expected, the Reserve Bank of Australia raised the cash rate by 50bps to 2.35% during its September 2022 meeting.
The board said it sought to bring inflation down to the 2–3% range while keeping the economy on an even keel. Policymakers announced to continue gradually increasing interest rates for the foreseeable future but not on a pre-set path as incoming data will guide the size and timing for the upcoming hikes.
Canada’s Consumer Price Index increased 0.10% in July of 2022 over the previous month.
As one of the inflation indicators, the CPI data will also show how bad inflation is in that country. Analysts forecasted that Canada’s CPI for July would increase by another 0.1%.
The Federal Reserve raised the target range for the fed funds rate by 75bps to 2.25%-2.5% during its July 2022 meeting, the fourth consecutive rate hike.
Fed fund futures implied investors were pricing in a more than 81% chance of another supersized 75bps interest rate hike in September, especially after a surprised CPI data from last week.
The Bank of Japan retained its key short-term interest rate at -0.1% for 10-year bond yields at around 0% during its July meeting by an 8-1 vote.
They also cut their 2022 GDP growth forecast to 2.4% from 2.9% in April, saying a slowdown in overseas economies and persistent supply chain issues due to the prolonged geopolitical tension between Russia and Ukraine.
The Swiss National Bank increased its policy rate by 50bps to -0.25% in its June meeting, which surprised financial markets that had expected the central bank to hold its policy rate steady. The board also did not rule out further interest rate increases in future meetings.
This month, analysts expect another 75bps rate hike.
The Bank of England raised its main rate by 50bps to 1.75% during its August 2022 meeting, the sixth consecutive rate hike, pushing borrowing costs to the highest level since 2009.
After being delayed from last week after the Queen’s death, this month, analysts expect another 50bps rate hike.
France’s Services PMI fell to 51.2 in August 2022 from 53.2 in July. The slowdown in the services sector is the fourth consecutive decline and the weakest growth rate since April 2021.
Business confidence plunged to its lowest level since November 2020. The report cited concerns about the impact of still-elevated inflationary pressures on demand.
Germany’s Manufacturing PMI declined to 49.1 in August of 2022, pointing to a second consecutive month of falling factory activity and the worst reading since June 2020.
Flash Services PMI also declined to 47.7 in August of 2022, pointing to the second consecutive month of contraction in services activity and the sharpest decline since February of 2021.
Analysts expect that Germany’s Manufacturing PMI will continue to plummet to 47.1 and Flash Services PMI reading will improve to 49.5.
UK Manufacturing PMI declined to 47.3 in August of 2022, pointing to the first contraction in factory activity since May 2020. UK Services PMI went down to 50.9 in August of 2022, the softest expansion in services activity in 18 months, as inflationary pressures and the cost-of-living squeeze resulted in heightened economic uncertainty and reduced client confidence.
Analysts expect that UK’s Manufacturing PMI will be higher than 50.2 and Flash Services PMI will decline below 50.
US Services PMI declined to 43.7 in August of 2022 from 47.3 in July, pointing to the sharpest contraction in the services sector in the US since May 2020.
We can expect the US Flash Services reading to be better at 45.0.
Last week, the USD index (USDX) boosted after the US CPI data beat forecasts which may push the Fed to hike rates more aggressively. The price jump reached our Resistance Level (109.75) after opening the week lower.
In Weekly Time Frame, we can see that the Stochastic Indicator inside the overbought level is starting to reverse. Technically, this will indicate that the buying power peaked. But if we look at the surprising CPI data, this will create a possibility of fed will hike the rate aggressively this week showing there’s a possibility that the price will be slowly lower while waiting for the Fed rate decision on Wednesday. Meanwhile, prices are moving above the 20, 50, and 200-candle Moving Averages. This may indicate that higher movement is continuing even though the price still unable to break our highest weekly Resistance at 111.42
Our Weekly Resistance levels at 109.75, 110.63 and 111.42 with the Support levels at 108.03, and 104.86.
Meanwhile, in the H4 timeframe, we can see that Stochastic Indicator moved lower at the end of last week, showing that the buyer is not interested in the market. We expect that it will still go down to the oversold level while waiting for the Fed rate decision on Wednesday. Prices are moving above 200-candles Moving Average but at the level of 20 and 50-candles moving average which shows that some consolidating movement might happen before the lower movement in the short term.
Our H4 Resistance levels at 109.87, 110.19 and 110,77 with the Support levels at 108.92. 108,25 (200 EMA) and 107.75.
Last week, gold prices lowered affected by the stronger US Dollar, breaking our lowest support level at $1,676 and the 200-candle Moving Average.
In the weekly timeframe, we can see that the Stochastic Indicator is showing a lower movement entering the oversold level, showing that Gold is moving lower. Gold prices just broke the 200-candle Moving Average showing that lower movement will be available if the price was unable to move back higher.
Our Weekly Resistance levels at $1,728, and $1,762 with the Support levels at $1,659, and $1,565.
Meanwhile, in the H4 timeframe, we can see that the Stochastic Indicators show a strong higher movement, showing that Gold is moving higher to end the week after a strong down movement which was potentially caused by a taking profit action in the market. Meanwhile, we can see that the price is below the 20, 50 and 200-candle Moving Average, which indicates that the price will still move lower.
Our H4 Resistance levels at $1,710 and $1,728, with the Support levels at $1,659 and $1,634.
Last week, US Stocks fell after the market are worried about the inflation condition and the potential of another aggressive hike rate from the fed. NAS100 reached our support level at 11849.
In the Weekly timeframe, we can see that Stochastic Indicator is moving lower, with the price moving below 20 and 50-candles moving average, we still expect the lower movement to reach the 200-candles Moving Average before trying to reach our next support level at 11286.
Our Weekly Resistance levels are at 12958 and 13583, with the Support levels at 11286 and 11037.
While in our H4 timeframe, we can see that our stochastic indicators are inside the oversold level and starting the reversal movement, meanwhile prices are now moving below 20, 50 and 200-candle Moving Averages showing that potential lower movement is still intact yet we need to be cautious of the short term higher movement.
Our H4 Resistance levels are at 12178 and 12558, while the Support levels are at 11659 and 11484.
Last week, US Stocks fell after the market are worried about the inflation condition and the potential of another aggressive hike rate from the fed. DJ reached our support level at 30619.
In the Weekly timeframe, we can see that Stochastic Indicator is moving lower and reaching the oversold level. With the price moving below 20, 50-candles moving average and above 200-candles moving average, we can expect that price has the potential of moving lower to reach the 200-candles Moving average and our next support level at 29985.
Our Weekly Resistance levels are at 32226, 32980 and 34184, with the support levels at 30619 and 29985.
While in our H4 timeframe, we can see that our stochastic indicators reached the oversold level and started a reversal, meanwhile, prices are moving below the 20, 50 and 200-candle Moving Average. We can expect that DJ30 might goes higher in the short term before going back lower in the longer term.
Our H4 Resistance levels are at 31818 and 32459, while the support levels are at 30611 and 30159.
