Global growth optimism trends up

Today’s report: Global growth optimism trends up

Optimism around global growth is running notably higher of late, with financial markets getting a healthy boost, initially from the Fed policy decision, and most recently from the news of the massive stimulus pledge out of China.

Wake-up call

Chart talk: Technical & fundamental highlights

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EURUSD – technical overview

The Euro has been in a multi-month consolidation since bottoming out in 2022. Setbacks have since been exceptionally well supported on dips below 1.0500, with a higher platform sought out ahead of the next major upside extension. Look for a push through the 2023 high at 1.1276 to strengthen the constructive outlook and extend the recovery run towards 1.2000. Only back below 1.0400 negates.

  • R2 1.1276 – 2023 high – Strong
  • R1 1.1215 - 25 September/2024 high – Medium
  • S1 1.1069 - 19 September low– Medium
  • S2 1.1002 – 11 August low – Strong

EURUSD – fundamental overview

French bond yields have topped Spanish bond yields for the first time since 2007. There is concern about a European sovereign debt crisis. At the same time, Fed policy moves, the latest China easing measures and a Saudi oil production increase have taken center stage, more than offsetting Euro downside. Key standouts on Friday’s calendar come from German unemployment, Eurozone confidence and sentiment reads, Canada GDP, US core PCE, and Michigan sentiment.

EURUSD - Technical charts in detail

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 door is now open for the next major upside extension towards the 2018 high at 1.4377. Any setbacks should be well supported ahead of 1.2500.

  • R2 1.3500 – Psychological – Strong
  • R1 1.3435 – 26 September/2024 high – Medium
  • S1 1.3248 – 23 September low – Medium
  • S2 1.3145 – 18 September low – Strong

GBPUSD – fundamental overview

The Pound is offering itself up as a kind of haven away from the Euro with all of the French fiscal problems brewing. Key standouts on Friday’s calendar come from German unemployment, Eurozone confidence and sentiment reads, Canada GDP, US core PCE, and Michigan sentiment.

USDJPY – technical overview

The market has entered a period of correction after extending the uptrend to a multi-year high through 160.00. Critical support comes in around 140.00, with only a monthly close below the barrier to compromise the bullish outlook. A higher low is ideally sought out above 140.00 in favor of a bullish continuation.

  • R2 147.18 – 2 September high – Strong
  • R1 145.58 – 27 September high – Medium
  • S1 142.90 – 25 September low – Medium
  • S2 141.74 – 20 September low – Strong

USDJPY – fundamental overview

We've mostly been seeing mild Yen selling in recent sessions, presumably mostly on the back of a BOJ which is sounding a little more cautious about the timing of any future rate hikes. Key standouts on Friday’s calendar come from German unemployment, Eurozone confidence and sentiment reads, Canada GDP, US core PCE, and Michigan sentiment.

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 0.6200 would give reason for rethink. A monthly close back above 0.6900 will take the big picture pressure off the downside and strengthen case for a bottom.

  • R1 0.7000 – Psychological – Strong
  • R2 0.6909 – 25 September/2024 high – Medium
  • S1 0.6737 – 19 September low– Medium
  • S2 0.6622 – 11 September low – Strong

AUDUSD – fundamental overview

Most of this latest surge in support for the Australian Dollar into the end of the week is coming from the news of the latest wave of China stimulus measures. Key standouts on Friday’s calendar come from German unemployment, Eurozone confidence and sentiment reads, Canada GDP, US core PCE, and Michigan sentiment.

USDCAD – technical overview

A sustained hold above 1.3000 over the past several months 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, with a break to open a retest of the 2020 high just ahead of 1.4700. Setbacks should be very well supported down into the 1.3000 area.

  • R2 1.3648 – 19 September high –Strong
  • R1 1.3600 –Figure – Medium
  • S1 1.3420 – 25 September low – Medium
  • S2 1.3358 – 31 January low – Strong

USDCAD – fundamental overview

The Canadian Dollar has been a clear underperformer in recent sessions, taking a hit on the news of the Saudi oil production increase and subsequent sharp drop in the price of oil. Meanwhile, local data hasn't helped much either after the Canada business barometer eased from 55 to 56.9. Key standouts on Friday’s calendar come from German unemployment, Eurozone confidence and sentiment reads, Canada GDP, US core PCE, and Michigan sentiment.

NZDUSD – technical overview

Overall pressure remains on the downside with the market continuing to stall out on runs up into the 0.6500 area. At the same time, there are some signs of the market wanting to put in a longer-term base. Ultimately, a break back above 0.6500 would be required to take the medium-term pressure off the downside and encourage this prospect. A monthly close below 0.5800 will intensify bearish price action.

  • R2 0.6400 – Figure – Strong
  • R1 0.6356 – 25 September/2024 high – Medium
  • S1 0.6176 – 17 September low – Medium
  • S2 0.6106 – 11 September low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar remains well in demand on the back of a better than expected September ANZ Roy Morgan consumer confidence read and the latest China stimulus measures. Key standouts on Friday’s calendar come from German unemployment, Eurozone confidence and sentiment reads, Canada GDP, US core PCE, and Michigan sentiment.

US SPX 500 – technical overview

The longer term uptrend remains intact and dips continue to be exceptionally well supported. Critical support comes in at 5093, with only a break back below this level to compromise the structure and open the door for a more significant corrective decline. Until then, the focus remains on a continued push to fresh record highs.

  • R2 5800 – Psychological– Strong
  • R1 5781 – 26 September/Record high – Medium
  • S1 5596 – 13 September low – Medium
  • S2 5540 – 12 September low – Medium

US SPX 500 – fundamental overview

The US equities market remains exceptionally well supported in 2024 on the back of an ongoing expectation for more rate cuts than less going forward. Investors are feeling better about a soft landing in the US economy and this has also been accompanied by an accommodative adjustment of Fed policy. It will however be important to keep an eye on inflation, bigger picture economic data and geopolitical risk in the months ahead.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs and this next major upside extension into the 2500-3000 area. Setbacks should now be well supported above 2300 on a monthly close basis.

  • R2 2700 – Psychological– Strong
  • R1 2686 – 26 September/Record high – Medium
  • S1 2472 – 4 September low – Medium
  • S2 2432– 15 August low – Medium

GOLD (SPOT) – fundamental overview

The yellow metal has pushed record highs in 2024 with solid demand from medium and longer-term accounts. These players are more concerned about inflation, geopolitical risk and a less upbeat global growth outlook. All of this should keep the commodity well supported over the coming months.

Peformance chart: 30-Day Performance vs. US dollar (%)

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Daily Reports Global FX Insights   joelkruger  

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