Insights and Analysis for Today's Markets

Market Overview

This week has unfolded rather interestingly—outside of expectations. On Tuesday, Australian wages decreased to 0.8% from 0.9%, indicating a slowdown in the jobs market. The UK's Claimant Count Change surged to 135k from 36.2k, pushing the pound lower for a time. This was further exacerbated by the CPI y/y at 2.2%, lower than the expected forecast, signaling disinflation in the economy and increasing the likelihood of a BOE rate cut in September.

The RBNZ also surprised the market by cutting rates unexpectedly to 5.25% from 5.50%, weakening the Kiwi against the dollar and other currencies. However, traders are still assessing how an AUD/NZD trade might proceed given the slowing Australian economy. Analysts and investors are waiting for the jobs data release later this morning at 9:30. A lower-than-forecasted Employment Change paired with higher unemployment may indicate an economic slowdown, potentially requiring a stimulus. However, if the numbers are as expected, market sentiment will likely maintain expectations for a rate cut in October.

Meanwhile, U.S. data came as no surprise, aligning with market expectations for a September rate cut. The Core PPI came in at 0%, PPI m/m at 0.1%, and CPI y/y at 2.9%. Both Core CPI and CPI m/m matched expectations at 0.2%.

There are still a few more data releases this week that could further reinforce market expectations for the Aussie Dollar, U.S. Dollar, and the Pound. After this week's trading session, we can anticipate more aggressive positioning in these currencies.

GOLD -Yesterdays trading unfolded as expected, with position traders driving prices lower in preparation for the anticipated September rate cut, following U.S. CPI data that came in lower than expected, increasing the likelihood of rate cuts. Given this, we see GOLD possibly testing 2431.705 or even trading below that level toward 2401.779. However, we advise taking trades according to individual systems with a long-term bullish market outlook.

SILVER - The SILVER market has dropped below 27.725, reflecting repositioning by major traders. Like GOLD, this market is finding further support for bullish expectations in the upcoming September period. Until then, we may see large traders driving prices lower to secure better buying positions. However, unexpected news from West Asia, such as the recent arms deal with Israel, could positively impact the market by increasing demand for metals. (More on this in the next analysis.)

DXY - The dollar is likely to either drop or consolidate at current levels as anticipation builds for a September rate cut. We expect lower demand for the dollar. That said, we will continue to monitor price action; unless it breaks below previous lows, the market may consolidate within the 102.775 range.

GBPUSD -The pound encountered weakness at 1.28508 after data releases showed increased signs of a potential BOE rate cut in September. This could also be a result of the riots in the UK, as evidenced by the sudden spike in unemployment claims. (More on this in the next analysis.)

AUDUSD -The slight slowdown in the AUD is due to weaker jobs data released yesterday, causing the Aussie Dollar to encounter resistance and fail to reach 0.66541. While we expect the data to improve eventually, market sentiment points to an expectation of a rate cut in October, with a potential surprise in September, similar to what occurred with the Kiwi. With that in mind, there may be sudden buying of the Aussie Dollar to drive prices up before the inevitable selling.

NZDUSD - The Kiwi experienced a sudden drop following the RBNZs decision to cut rates to 5.25%. Governor Orr stated that inflation is on track and that easing monetary policy is appropriate now. Analysts and investors are pricing in another rate cut at the next meeting in September, furthering bearish market expectations for the Kiwi. This may create opportunities for trades against safe-haven assets like the Yen, the Franc, and the petro-currency CAD.

EURUSD - Euro strength emerged after market expectations were supported by anticipated rate cuts against the USD. However, the 1.10361 level should hold significance for the Euro as markets continue to assess economic expectations. No further rate cuts are currently being discussed as the Olympics just concluded. Normal market activity and economic demand should resume soon, with more updates expected in the coming days.

USDJPY -The Yen is expected to strengthen soon. The Japanese Yen and the Nikkei wobbled after Japan's Prime Minister, Fumio Kishida, announced his resignation next month, although Asian shares rose overall as markets recovered from the recent downturn. Prices are currently hovering around the 146.512 level and may soon drop below this level following a squeeze in market prices.

USDCHF -The Franc is facing pressure, with an overall outlook pointing to a potential sell-off in the markets soon. The 0.87041 level has successfully resisted further bullish action. However, there is also a possibility for prices to spike upward briefly, allowing for premium selling.

USDCAD - The Canadian Dollar continues to strengthen, with trading comfortably below 1.37261. The likelihood of further CAD strength is high as the world monitors developments in West Asia. We will also keep a close eye on oil prices in relation to recent economic developments. With the imminent attack on Israel, we expect further buying of the Canadian Dollar. (More on this in the next analysis.)

COT Report Analysis

CAD - WEAK (2/5)

CHF - STRONG (2/5)

GBP - WEAK (1/5)

JPY - STRONG (3/5)

EUR - STRONG (4/5)

AUD - WEAK (4/5)

NZD - WEAK (3/5)

USD - STRONG (4/5)

SILVER - STRONG (3/5)

GOLD - STRONG (3/5)