China, Japan fuel broad USD outflows

GBPUSD – technical overview

Signs have emerged of the market wanting to put in a longer-term base after collapsing to a record low in September 2022. The November 2022 monthly close back above 1.2000 strengthens this prospect. Any setbacks should now be well supported ahead of 1.2500. Next key resistance comes in at 1.3143.

• R2 1.2747 – 30 August high – Strong
• R1 1.2643 – 4 September high – Medium
• S1 1.2446 – 7 September low – Medium
• S2 1.2400 – Figure – Medium

GBPUSD – fundamental overview

The Pound recovered on Monday, getting help from broad US Dollar outflows and hawkish BOE comments. BOE Mann was out saying he saw further rate hikes, as holding rates risked embedded inflation. Key standouts on Tuesday’s calendar come from UK employment, Eurozone and German ZEW reads, and the German current account.

USDJPY – technical overview

At this stage, it looks like the market is wanting to resume the bigger picture uptrend and head back towards a retest of that multi-year high from October 2022 up at 151.95. Look for any weakness to continue to be well supported on dips.

• R2 148.00 – Figure – Medium
• R1 147.88–  8 September/2023 high – Medium
• S1 145.90 – 11 September low – Medium
• S2 144.44 – 1 September low – Strong

USDJPY – fundamental overview

The Yen opens up the new week on the front foot after BOJ Governor Ueda was out on the weekend saying the BOJ may possibly have enough information and economic data by the end of the year to judge if wages will continue to rise, which would in turn allow the Bank to assess a key condition towards the decision of persisting with ultra-loose monetary policy. Key standouts on Tuesday’s calendar come from UK employment, Eurozone and German ZEW reads, and the German current account.

AUDUSD – technical overview

There are signs of the potential formation of a longer-term base with the market trading down into a meaningful longer-term support zone. Only a monthly close below 0.6400 would give reason for rethink. Back above 0.6523 will take the immediate pressure off the downside and strengthen case for a bottom.

• R1 0.6617– 10 August high – Strong
• R2 0.6523 – 30 August high – Medium
• S1 0.6357 – 6 September/2023 low – Strong
• S2 0.6300 – Figure – Medium

AUDUSD – fundamental overview

The expectation for additional stimulus out of China, recovery in the RMB, and some broad based US Dollar selling as the week gets going has inspired a healthy amount of demand for the Australian Dollar. Key standouts on Tuesday’s calendar come from UK employment, Eurozone and German ZEW reads, and the German current account.

USDCAD – technical overview

Above 1.3000 signals an end to a period of longer-term bearish consolidation and suggests the market is in the process of carving out a more significant longer-term base. Next key resistance now comes in up into the 1.4000 area. Setbacks should be very well supported down into the 1.3000 area.

• R2 1.3700 – Figure – Strong
• R1 1.3695 – 7 September high – Medium
• S1 1.3561 – 11 September low – Medium
• S2 1.3489 – 1 September low – Strong

USDCAD – fundamental overview

The local market in Canada is still pricing a cumulative 40%-50% chance of an additional rate hike by year end, which has helped to inspire renewed bids in the Canadian Dollar after last week's decline from softer Canada employment data. Key standouts on Tuesday’s calendar come from UK employment, Eurozone and German ZEW reads, and the German current account.

NZDUSD – technical overview

Overall pressure remains on the downside with the market once again stalling out on a run up into the 0.6500 area. Ultimately, a break back above 0.6015 would be required to take the immediate pressure off the downside. A monthly close below 0.6000 would intensify bearish price action.

• R2 0.6133 – 4 August high – Strong
• R1 0.6015 – 1 September high – Medium
• S1 0.5859 – 5 September/2023 low – Medium
• S2 0.5841 – 10 November 2022 low – Medium

NZDUSD – fundamental overview

The expectation for additional stimulus out of China, recovery in the RMB, and some broad based US Dollar selling as the week gets going has inspired a healthy amount of demand for the New Zealand Dollar. Key standouts on Tuesday’s calendar come from UK employment, Eurozone and German ZEW reads, and the German current account.

US SPX 500 – technical overview

Longer-term technical studies are in the process of unwinding from extended readings off record highs. Look for rallies to be well capped in favor of lower tops and lower lows. A monthly close back above 4600 will be required to take the immediate pressure off the downside. Next key support comes in at 4328.

• R2 4541 – 4 August high – Medium
• R1 4533 – 31 August high – Medium
• S1 4328 – 26 June low – Medium
• S2 4300 – Round Number – Strong

US SPX 500 – fundamental overview

We've finally reached a point in the cycle where the Fed recognizes unanchored inflation expectations pose a greater downside risk than over-tightening. This is significant, as it means less investor friendly monetary policy, even in the face of a less certain growth outlook. Overall, we expect inflation to continue to be a problem in 2023 that results in downside pressure into rallies despite market expectations that would argue otherwise.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs. Setbacks should now be well supported above 1600 on a monthly close basis ahead of the next major upside extension. Next major resistance comes in at 2100, above which opens the next extension towards 2500.

• R2 1988 – 20 July high – Strong
• R1 1950 – 30 August high – Medium
• S1 1885 – 21 August low – Medium
• S2 1871 – 10 March high – Strong

GOLD (SPOT) – fundamental overview

The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about inflation risk and a less upbeat global growth outlook. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.