What we are looking for

  • USD sustaining recent rebound momentum: Treasury yields holding up and negative risk appetite play into the USD ticking higher in recent sessions.
  • Indices are mixed: European indices are playing catch up on the strong Wall Street close on Friday, but US futures are lower on the risk appetite dip following the Chinese data disappointment.
  • Commodities falling: A stronger USD and negative risk appetite bias add up to commodities lower. Precious metals and oil are all lower.
  • Data trading: Data traders will be eyeing the New York Fed Manufacturing early in the US session. It is not tier-one data but can still impact USD.   


Markets were looking strong into the weekend, but there has been a faltering in risk appetite following disappointment in Chinese economic data. Industrial Production, Retail Sales and Fixed Asset Investment all came in considerably lower than expected. This is hitting commodities prices, higher risk forex such as the Aussie and Kiwi, whilst also dragging on US equity futures. US dollar traders will be looking toward a speech by the FOMC’s Christopher Waller maintains the hawkish line that Fed speakers have taken recently.  

It is a fairly quiet start to the week for the economic calendar. There is nothing during the European morning, so attention will be on the (Empire State) New York Fed Manufacturing. The survey had been negative for two months before picking up well in July. However, this improvement is expected to dissipate somewhat in August. 

Today’s news

Market sentiment sours after China data: There is a move out of higher risk forex with safer haven plays performing well. Equities are slipping, whilst commodities are also lower.

Treasury yields are holding ground early today: There is little direction on yields. Watch for the reaction to a speech by the Fed’s Waller later. A hawkish line would pull yields higher again.

Chinese economic data misses: Industrial Production fell to 3.8% from 3.9% (an improvement to 4.6% was expected). Retail Sales fell to 2.7% from 3.1% (a recovery to 5.0% had been forecast). 

Fed’s Waller speaks: There are fewer Fed speakers this week, but Waller will be watched. He is a permanent voter (on the board) and is very hawkish. 

Cryptocurrencies slip on risk appetite decline: Bitcoin has fallen sharply intraday. It had moved initially above $25,000 but is now down -1% and is around $24,000.

Economic Data:

  • US New York Fed Manufacturing (at 12:30 GMT) – The survey is expected to decline to 8.5 in August (from 11.1 in July)

Major markets outlook

Broad outlook: There is a risk-negative bias across major markets this morning. 

Forex: USD is performing well, with AUD and NZD significantly underperforming.

  • EUR/USD has fallen back from the resistance from the overhead supply at 1.0350, the six-month downtrend and the 55-day moving average. After a strong negative candle on Friday, the move has continued today and is now eyeing a test of the recovery uptrend (c. 1.0215 today). For now, the run of higher lows continues, with initial support at 1.0200 as a gauge. The first key higher low is at 1.0120 with 1.0095 key. The bulls will be wary as the daily RSI falls back below 50. 
  • GBP/USD fell for a second session on Friday back from the resistance at 1.2293. This move has continued this morning, with the bottom of the near-term trading range at 1.2000 being the key gauge of support. The RSI falling below 45 would be a warning sign of a range breakdown. Initial support is at 1.2060.
  • AUD/USD is pulling back this morning, retreating to test the support of the breakout at 0.7045/0.7070. For now, the momentum is still positively configured with the daily RSI decisively above 50. However, the bulls will be keen to hold this support band above 0.7045. We still look to use weakness within what is now a multi-week uptrend channel as a chance to buy for a medium-term recovery towards 0.7265/0.7280.

Commodities: Precious metals are still unable to break resistance, whilst an oil recovery is falling over again.

  • Gold is still fluctuating around the resistance band between $1785/$1805. Although the market is lower today, for now, this is a pause in the recovery rather than a corrective move. However, moving consistently below $1783 would complete a small top pattern and could pull the market back towards the $1760 area. Momentum has been positive but is starting to wane. The daily RSI below 50 would be a warning. A close above $1805 would re-engage the bulls for $1840/$1858 as the next test.
  • Silver rallies strongly on Friday but has retreated once more today. This is all between the growing resistance band of $20.45/$20.90. Although the recovery has lost some traction, there is still a positive configuration on the daily RSI as it holds above 50. A breach of initial support at $20.23 would question the recovery, but the key support is the higher low at $19.54. A close above $20.90 opens the upside once more.
  • Brent Crude oil has seen the near-term recovery faltering at $102.95 to leave what could now be another lower high under the next key resistance at $106.40. Breaking initial support at $99.30 opens for a retest of the $95.90 low. We favour using rallies as a chance to sell for further weakness towards the support around $95/$96.

Indices: Wall Street just easing off from the recent strong breakout. European markets hold uptrend momentum too.

  • S&P 500 futures posted another strong bull candle to break decisively clear of the old key high at 4200. This continues the one-month uptrend with the move developing what is increasingly a medium-term recovery. We look to buy into weakness. With the daily RSI above 70, there is still potential for profit-taking, but we would look to use any weakness as a chance to buy. There is good support between 4170/4200 with 4080 now a key higher low. Above 4303 opens 4355 initially. 
  • German DAX has been following a trend higher over the past four weeks and broke decisively above 13795 on Friday. We look to use near-term weakness as a chance to buy now. The band between 13625/13795 is now a good band of support to work from. With RSI momentum pushing into the 60s, this shows that weakness is being bought into. Above Friday’s high of 13880, the next important resistance area is around 14300.
  • FTSE 100 continued the four-week uptrend to close at two-month highs on Friday. An early pullback this morning is well within the uptrend, but with the strong momentum and daily RSI in the 60s, this will be seen as a chance to buy. Initial support at 7457 is growing in importance near term. Initial resistance is Friday’s high at 7547 with the next important resistance area at around 7635/7650. 

This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. INFINOX is not authorised to provide investment advice. No opinion given in the material constitutes a recommendation by INFINOX or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.