Market Roundup
• Japan Services Price Index (CSPI) (YoY) 2.8%,2.9%forecast,3.1% previous
• China Jul Chinese Industrial profit YTD 3.6%,3.5% previous
Looking Ahead Economic Data (GMT)
• 06:00 German GDP (QoQ) (Q2) -0.1% forecast, 0.2% previous
• 06:00 German GDP (YoY) (Q2) -0.1% forecast, -0.2% previous
• 06:00 German Sep GfK German Consumer Climate -18.4 previous
• 09:30 Belgium Aug CPI (YoY) 3.64% previous
• 09:30 Belgium Aug Belgium CPI (MoM) 0.71% previous
•10:00 UK Aug CBI Distributive Trades Survey -11 forecast, -43 previous
Looking Ahead Events And Other Releases (GMT)
•No Events Ahead
Currency Forecast
EUR/USD: The euro traded sideways against the dollar on Tuesday as lingering concerns over tensions in the Middle East partially offset investors' optimism for imminent U.S. interest rate cuts. Geopolitical risks kept early currency moves subdued, though fears of an escalating conflict following Israel and Hezbollah's major missile exchange over the weekend petered out. Major currencies were trading near milestone highs, with the dollar approaching its lowest level in over a year. This shift was supported by the anticipated U.S. rate cut in September, following Federal Reserve Chair Jerome Powell's hints at such a move in his Jackson Hole speech on Friday. Immediate resistance can be seen at 1.1184(Daily high), an upside break can trigger rise towards 1.1200(Higher BB).On the downside, immediate support is seen at 1.1098(38.2%fib), a break below could take the pair towards 1.1070 (Aug 20th low).
GBP/USD: The British pound remained relatively stable on Tuesday as thin liquidity conditions and a UK bank holiday influenced light trading as investors continued to digest the dovish remarks made by Fed Chair Jerome Powell on Friday. On the data front, British shop prices fell in annual terms this month for the first time since October 2021, pushed down by summer sales of clothes and household goods, a survey showed on Tuesday. The British Retail Consortium said shop prices fell by 0.3% in August compared with the same month in 2023, after a 0.2% increase in July.Prices of non-food goods dropped by 1.5%, the biggest fall in just over three years, while food prices increased by 2.0%, slowing from 2.3% in July and marking the smallest rise since November 2021. Immediate resistance can be seen at 1.3107(23.6%fib), an upside break can trigger rise towards 1.3128(Higher BB).On the downside, immediate support is seen at 1.3006(38.2%fib), a break below could take the pair towards 1.2936(50%fib).
AUD/USD: The Australian dollar steadied against dollar on Tuesday as investors were cautious ahead of key of domestic inflation data. The key risk is the July inflation report due on Wednesday, which is expected to show a marked slowdown in headline inflation to 3.4% from 3.8%.Australian retail sales for July are due on Friday and will be scrutinised to see if consumers spent additional income after the government's tax cuts, potentially adding to the inflation challenge.With headline inflation expected to be back in the target band of 2% to 3% later this year, the RBA will be under pressure to ease policy. The Aussie held at $0.6773, having recoiled from a 2024 high of $0.6798. Immediate resistance can be seen at 0.6799 (23.6%fib), an upside break can trigger rise towards 0.6829(Higher BB).On the downside, immediate support is seen at 0.6733 (July 10th low), a break below could take the pair towards 0.6705(38.2%fib).
USD/JPY: The dollar strengthened against the yen on Tuesday as geopolitical tension in the Middle East intensified, prompting investors to seek shelter in dollar. Hezbollah launched hundreds of rockets and drones at Israel early on Sunday, prompting Israel's military to respond with airstrikes involving approximately 100 jets to counter a larger assault. This confrontation marked one of the most significant clashes in over 10 months of border conflict. The yen was a shade lower at 144.67 per dollar, giving up some of its safe haven gains from the previous session which saw it rise to a three-week high of 143.45 per dollar. Strong resistance can be seen at 145.00(Psychological level), an upside break can trigger rise towards 146.56(38.2 %fib). On the downside, immediate support is seen at 143.56(23.6 %fib), a break below could take the pair towards 142.45(Lower BB).
Equities Recap
Asian stocks declined on Tuesday as investors weighed the potential for upcoming U.S. interest rate cuts and awaited earnings reports from AI standout Nvidia.
Japan's Nikkei eased 0.16 , China's blue stock index fell 0.28% while Hong Kong's Hang Seng index was 1% lower in early trading.
Commodities Recap
Gold prices dipped slightly on Tuesday due to a modest rebound in the dollar. However, losses were limited by investor optimism regarding potential U.S. rate cuts and ongoing concerns about the Middle East crisis.
Spot gold was down 0.4% to $2,507.96 per ounce, as of 0238 GMT. U.S. gold futures fell 0.5% to $2,543.20.
Oil prices paused their recent advance, retreating in Asian trading on Tuesday after climbing more than 7% over the previous three sessions.
Brent crude futures fell 32 cents, or 0.39%, to $81.11 a barrel at 0154 GMT, while U.S. West Texas Intermediate crude futures fell 36 cents, or 0.46%, to $77.06 a barrel.
