What we are looking for

  • USD remains strong: The USD strength trend remains in play across major forex. However, we are increasingly watching the bounceback in EUR.
  • Indices attempt to recover in the European session: After a sell-off during yesterday’s Wall Street session, there is an attempt to reclaim the losses as US futures rebound. However, the trend of selling into strength remains dominant.
  • Commodities suffer from negative risk appetite: Precious metals continue to sell into strength whilst oil fell sharply yesterday. This weakness is continuing today. 
  • Data trading: EUR traders will be watching for any surprises in Eurozone inflation. The ADP Employment change may get a muted reaction as it returns after a two-month break. CAD traders will be watching for surprises in the Canadian GDP data.


There is still a theme of selling into strength for risk assets. This was underscored by Fed Chair Powell’s hawkish speech at Jackson Hole. There was another sell-off in yesterday’s US session (amid geopolitical concerns on Taiwan and further hawkish implications for central banks). So yet again, this morning we are seeing an attempted risk rally. The official China PMIs came in slightly ahead of expectations, which is helping to fuel a minor rebound. Whether it can last is another issue. Traction may be limited as the Nonfarm Payrolls report approaches.

US index futures are higher this morning, attempting to recover the -1% decline on Wall Street yesterday. European markets found a modicum of support, but the moves have been tepid and have already fallen back. Major forex is reflecting the China PMIs, with AUD and NZD rebounding well. Oil initially benefitted from the risk-positive bias this morning, but has now fallen over whilst precious metals are still struggling. 

Eurozone inflation is the key data on the economic calendar today. Eurozone HICP inflation is expected to edge higher to 9% headline and 4.1% core. With German and Spanish inflation coming in largely as expected, whilst French inflation was a shade lower, there may not be the usual upside surprise to the euro area forecast. After two months of re-calibrating their data, the private payrolls company ADP resumes with its ADP employment change in August. The forecast is for strong growth of 300,000 jobs. Canadian GDP for June and Q2 is also announced. Both are expected to show positive growth which would sustain a hawkish path for the Bank of Canada.

Today’s news

Market sentiment picks up: A minor rebound on US futures, with AUD and NZD outperforming in forex reflects a risk-positive bias. The moves are very much counter to recent selling phases though. Equity markets continue to struggle, along with precious metals.

Treasury yields continue to edge higher: Uptrends are intact on Treasury yields, with the 2-year yield again back above the 3.45% high from June.

China PMIs with a small beat: The official Chinese PMIs have all come in slightly ahead of expectation. Manufacturing remains in contraction at 49.4 (up from 49.0) with Non-Manufacturing slipping to 52.6 (from 53.8). The General PMI has slipped to 51.7 (from 52.5).

Iraq’s opinion on OPEC production: According to Iraqi sources, it is too early to talk about OPEC output reduction.

Nord Stream 1 flows stop: According to data from Germany the gas flows are at zero now.

More hawkish ECB member comments: Following recent hawkish comments from ECB members, Muller (Estonia, hawk) says they need to keep raising rates. Nagel (Germany, hawk) noted that the ECB needs to act decisively. Wunsch (Belgium, hawk) said that the price rises are structural and not just shocks. Stournaras (Greece, very dovish) is less hawkish and is looking for gradual normalisation, needing to be prudent.

Cryptocurrencies again try to recover: Bitcoin fell into the close yesterday but has rebounded c. +1% this morning and is back above $20000 again.

Two Fed speakers today: Loretta Mester (hawk, 2022 voter) speaks at 12:00 GMT. Raphael Bostic (voter in 2024, leans hawkish) speaks at 22:30 GMT. 

Economic Data:

  • Eurozone HICP inflation - flash (09:00 GMT) Flash inflation is expected to increase to 9.0% on headline HICP (from 8.9% in July). Core inflation is expected to increase to 4.1% (from 4.0%)
  • US ADP employment change (12:15 GMT) The ADP is expected to be 300k jobs in August (no data for June or July)
  • Canada GDP (14:00 GMT) Monthly GDP is expected to be +0.1% in June with a Q2 GDP expected to be +1.0% (+0.8% in Q1) 

Major markets outlook

Broad outlook: Sentiment is trying to recover yet again. However, already there are worrying signs of the move petering out on European indices.

Forex: AUD and NZD are the main outperformers, along with JPY. Moves elsewhere are fairly choppy.

  • EUR/USD has been finding buyers between 0.9900/0.9950 and looking to recover. However, moves are tentative and the old resistance around 1.0020/1.0035 is still holding back the recovery. Unwinding RSI on the daily chart and a more constructive configuration on the four-hour chart reflects a near-term improving outlook. There is still scope for a recovery towards 1.0095 and the resistance around 1.0200, but higher low support at 0.9980 needs to hold.
  • GBP/USD remains under selling pressure with yesterday’s bull failure in the 1.1715/1.1760 resistance. Intraday rallies are sold into and there has been a move to new multi-year lows at 1.1620. Another early rally is already faltering today. Below 1.1648 there is little real support until the COVID breakout spike low of 1.1410.
  • AUD/USD fell sharply on Friday and again yesterday to put mounting pressure on the support around 0.6840/0.6870. A trend of lower highs is forming and intraday rallies are being sold into. A move below 0.6840 (especially on a closing basis) would be a bearish breakdown and open downside. Resistance is building at 0.6955.  

Commodities: Precious metals continue to fall away, whilst a bull failure looks to have been seen on oil.

  • Gold failed in recovery at $1765 in the middle of the resistance between $1754/$1772 and is now tracking decisively lower. With the RSI failing at 50 and now at multi-week lows but also with downside potential, there is scope for further weakness in the price. A move below $1711 would re-open the $1680 key support. Resistance is mounting between $1727/$1745.
  • Silver has turned decisively lower once more and is eyeing a test of the $18.14 key July low. Intraday rallies are being sold into and overhead supply is mounting. There is initial resistance between $18.70/$18.90 and it would need a move above $19.45 for recovery to take off. Subdued momentum indicators suggest near-term rebounds are a chance to sell.

  • Brent Crude oil was unable to hold on to the price support at $102.95/$103.50 as a bull failure appears to have been posted at yesterday’s high of $105.20. This is an important moment as the broken uptrend suggested a shift in sentiment. However, if there is a close below yesterday’s low at $98.20 it would suggest the market is pulling decisively lower once more.

Indices: US futures are trying to settle after another sell-off. European markets are struggling to hold any recovery traction.

  • S&P 500 futures have sold off sharply in recent sessions to bring the market back to an important medium-term pivot band at 3910/3950. This will be a key test now as a break under 3910 would be a decisive bearish move that would re-open the June/July lows again. The concern is already growing with the bull failure at 4072 which was under the old lows between 4080/4110 (which are now overhead supply resistance).
  • German DAX looked to be recovering well, but a bull failure at 13153 has posted a “Shooting Star” candle which is a negative signal in a downtrend. The overhead supply between 13075/13200 is mounting. Momentum remains corrective on the daily chart and intraday rallies continue to look like a chance to sell. We favour a retest of 12700 in due course. 
  • FTSE 100 is racking up the bear candles and increasingly seeing intraday rallies sold into. Momentum is decisively corrective now and yet another intraday bull failure this morning is adding pressure back on the 7309 support. A closing breakdown would open 7205 as the next support. Initial resistance is at 7384/7411. 


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