What we are looking for

  • USD continues to strengthen: Strengthening of the USD took hold once more yesterday on major forex despite the weaker-than-expected core retail sales and industrial production. The move has continued overnight.
  • Indices tracking lower once more: Markets have turned risk-averse once more. Equity markets are falling in Europe with a risk-off bias (DAX underperforming FTSE 100). US futures are also solidly lower again, with NASDAQ leading the move lower.
  • Commodities falling as Gold breaches huge support: Metals prices are falling this morning with silver solidly lower. Gold is also lower, having broken enormous long-term support at $1680.
  • Data trading: EUR will react if there is anything other than an unrevised Eurozone inflation in the final reading today. Michigan Sentiment will be key for USD later.    


Since the hot US inflation data on Tuesday, there has been a reformation of the established trends that have dominated major markets for several months. The USD strength is reasserting. This comes alongside a bias of risk-averse sentiment that is weighing on higher-risk assets. Yesterday’s weaker-than-expected US Retail Sales and Industrial Production have only seemed to play into these trends. 

Although Chinese activity data overnight has suggested an improvement in retail sales and industrial production, this glimmer of light is not reflected in the mood of markets early in the European session. Equity markets have continued to fall, with US futures decisively lower. GBP is also underperforming in the wake of the worse-than-expected August UK retail sales data. 

Looking ahead, Eurozone inflation and the US consumer will be in focus on the economic calendar today. Final Eurozone HICP inflation for August is expected to be unrevised, so is unlikely to cause too many shockwaves. However, the Michigan Sentiment will be the big focus. Sentiment is expected to pick up in September, driven by improvements in both current conditions and expectations. However, traders (and the Fed) will also be watching out for the inflation expectations components too. Any reduction may ease the pressure on the Fed to be super aggressive in next week’s FOMC.

Today’s news

Market sentiment is negative once more: Equity markets are falling, with a risk-negative bias. This means NASDAQ is underperforming on Wall Street and the DAX is underperforming in Europe. Silver is underperforming gold amongst the metals.

Treasury yields continue to edge higher: The US 10-year yield is once more close to the 3.50% mark that it hit back in June. The 2-year yield has hit 3.90% this morning, a level not seen since October 2007.  

Chinese data comes in better than expected: Trends are starting to improve. Retail Sales have picked up year on year to 5.4% (from 2.7%), with Industrial Production also improving to 4.2% (from 3.8%). Both beat expectations.

UK Retail Sales are worse than expected in August: Core sales (ex-fuel) fell by -1.6% in the month meaning that the year-on-year core sales were -5.0% (-3.1% in July). This was much worse than the -3.4% forecast.

US Q3 GDP is tracking lower: The Atlanta Fed’s GDPNow growth model has shown that GDP is on track to grow by just +0.5% in Q3. This has been revised lower from +1.3% previously. This follows the lower-than-expected US Retail Sales and Industrial Production data.

Cryptocurrencies falling again: As risk appetite has faltered, cryptocurrencies have also fallen back. Bitcoin closed lower yesterday and is another -0.4% lower today at around $19,750. Ethereum is lower by -2.0% at $1473. 

Economic Data:

  • Eurozone inflation – final August (at 09:00 GMT) – Final inflation is expected to be unrevised at 9.1% for headline HICP (up from 8.9% in July) and core HICP at 4.3% (up from 4.0% in July).
  • US Michigan Sentiment - prelim (at 14:00 GMT) Prelim sentiment is expected to improve to 60.0 in September (up from 58.2 in August) 

Major markets outlook

Broad outlook: Risk-negative bias with USD strength again dominant.

Forex: USD outperformance is once more dominating. GBP is the big underperformance after UK Retail Sales disappointed.

  • EUR/USD has held up relatively well since Tuesday's sell-off, consolidating in a tight band of around 75 pips for the past few sessions. However, the renewing USD strength is once more pulling back towards a test of the support band 0.9900/0.9950. Momentum remains negatively configured and near-term rallies remain a chance to sell for what is a likely test of the 0.9863 September low. Initial resistance is coming in at 1.0030. The importance of resistance at 1.0197 is growing on a medium-term basis.
  • GBP/USD is now accelerating lower. This morning’s breach of the low at 1.1405 leaves Cable at multi-decade lows. Below here, we are looking at round number supports, but there is no significant support until parity. There is the lower bound of the six-month downtrend channel that sits around 1.1320 today which could perhaps hold up the decline. Momentum remains bearishly configured, with further downside potential on the RSI (possibly towards the mid-20s). Overhead supply means that there is a band of initial resistance of 1.1405/1.1480.

  • AUD/USD has turned lower once more and has now broken the 0.6680 support of the July low. This takes the pair to its lowest since June 2020. The daily and four-hour charts show negative momentum configuration but also that there is still downside potential in this move lower. Initial resistance is between 0.6700/0.6770.

Commodities: Gold has broken huge long-term support, whilst silver is also pulling decisively lower again. Oil once more looks to have failed around key resistance.

  • Gold has plunged through the crucial support at $1680. This has been a massive floor for the price since February 2021. Having held on four separate occasions, the support has finally given way. This could open the way towards the $1450/$1550 area. The initial support band is between $1550/$1610. Momentum is very negative with the RSI at 30. Any technical rally will encounter resistance of overhead supply between $1680/$1697.
  • Silver has started to decisively track lower again. The bear candle yesterday is being followed by further selling today. A new trend of lower highs is also forming. There is initial resistance at $19.20/$19.24. The next support is at $18.32/$18.56. There is also plenty of downside potential if the selling pressure ramps up.
  • Brent Crude oil has pulled back as another technical rally has faltered. The resistance band between $93.25/$96.40 has proved too much of a barrier and the market has pulled lower once more. The falling 21-day moving average is again a basis of resistance for the smaller technical rallies. This now favours a retest of the $88.25 low once more.

Indices: The near-term rebound has again been sold and equity markets are once more in retreat.

  • S&P 500 futures are once more falling away. Wednesday’s rebound proved to be something of a dead cat bounce and the market is falling back to now test the September low at 3883. This move lower has also broken a three month recovery uptrend. A close below 3883 would open the next leg lower. It would bring the July low at 3723 back into view too. Initial resistance is between 3920/3980.
  • German DAX has fallen over again and is now accelerating lower towards a test of the early September lows at 12590/12675. The potential for a retest of the June/July lows of 12375/12425 is growing ever more likely. Momentum is negatively configured and near-term rallies are again a chance to sell. There is the resistance between 12900/13100.
  • FTSE 100 has fallen back in recent days and intraday rallies are being sold into. However, there is an initial basis of support forming at 7229 this morning and it will be interesting to see if this can hold. The important near-term supports of 7127/7172 from the early September lows remain firmly intact. The bulls will be looking at a break above 7335 to engage further recovery momentum.

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.