Daily Market Analysis

Market Focus

US stocks advanced on Wednesday, even though Federal Reserve officials signaled that bond tapering would probably start in November at the earliest. During a press conference, Fed Chair Jerome Powell also said that mid-2022 could be the end of tapering, which means if Fed announces tapering in November, it will create an eight-month taper process. Stock markets ignored Fed’s tapering hints amid mixed details. On top of that, Gold and oil both rose, as the decline in crude oil inventories was more than expected.

The benchmarks, S&P 500, Dow Jones and Nasdaq both rose on Wednesday. S&P 500 was up 1% on a daily basis, the index rebounded from a two-month low and recorded the biggest climb since July. Wednesday was also the first time for S&P 500 to finish in positive territory in five trading sessions. Nine out of eleven sectors posted a gain as the energy and financials sectors are the best performing among all groups, rose 3.16% and 1.58%, respectively. The Nasdaq gained the most of 1.02%.

The Federal Reserve kept interest rate unchanged at 0.25%, same with market’s expectations. But the policymakers are divided over the rate hike, now expecting a start from either 2022 or 2023 versus the previous support for 2023. For investors now, the timeline of bond tapering and any shifts in expectations for rate hike are crucial information.

In Asia, stock markets declined on Wednesday amid concerns about Evergrande group’s debt crisis. But China avoided a major selloff after the country’s central bank boosted its injection of short-term cash into the financial system. In Japan, BOJ left its interest rate policy unchanged, Japanese yen dropped.

Main Pairs Movement:

Despite lingering effects from China’s Evergrande credit issue, markets advanced on Wednesday’s trading as investors turn their attention to the Fed’s bond tapering timetable and interest rate projections. As of writing, all major U.S. indices have gained from yesterday’s slump. The two-day meeting of the FOMC yielded a marginally more hawkish tone of the Fed and a potential start date for scaling back pandemic era monetary measurements. The minutes of the meeting also indicated a potential rate hike projected to start, as early as, 2022 as long as the Fed’s employment and inflation goals continue to be met.

The U.S. dollar index slipped at the release of the FOMC minutes, thus benefiting most currency pairs against the dollar; however, when Fed Chair Jerome Powell gave his speech, market sentiment changed quickly, and the dollar soared, hurting currencies against the dollar.

Technical Analysis:

GBPUSD (4-hour Chart)

Cable began trading lower at the start of the European session, but the pair will find support at around the 1.362 price level. Cable quickly rebounded from the session’s low once the American trading session began, and the pair saw a quick boost once the FOMC minutes were release. The dollar weakened against the backdrop of the Fed’s, newly found, hawkish tone, despite the Fed’s commitment to keep near term bond purchsing measures unchanged.

From the technical aspect, Cable traded below our estimated support level of 1.3641 for the first half of the trading day, but the American trading session brought the pair back to positive territory. The near term resistance level of 1.3687 remains unbroken;however, Fed Chair Jerome Powell’s speech, scheduled for later today, might compromise that resistance level if the Greenback continues to weaken against the pound. RSI for the pair indicated a neutral 42, as of writing. Cable is, currently, trading above the 50, 100, and 200 day SMA.

Resistance: 1.3687, 1.381, 1.3851

Support: 1.3627, 1.3603

USDCAD (4- Hour Chart)

An upbeat market sentiment has strengthened the loonie against the dollar. Ahead of the FOMC minutes release, USD/CAD was, once again, rejected from the resistance level of 1.2834; however, once the minutes were released, the dollar weakened and brought the pair below our previously estimated support level of 1.2752.

From the technical aspect, USD/CAD continues to see downward pressure near the 1.28 price level. The 1.2752 support level did not hold for the pair as the dollar continues to weaken on the back of the FOMC’s announcements. As of writing, RSI for the pair sits at 52, indicating neutral buying; furthermore, the pair is trading above the 50, 100, and 200 day SMA.

Resistance: 1.2834, 1.2912

Support: 1.2752, 1.2635, 1.2586

AUDUSD (Daily Chart)

AUD/USD continues to be range bound between 0.722 and 0.728. The FOMC minutes release brough a short spike to AUD/USD, but the spike was not sustainable and the pair is again traindg lower, as of writing. The Auddis dollar continues to be depressed due to poor employment figures and the strong economic ties between China and Australia. The increasingly hawkish tone of the Fed also provides a negative outlook for the pair.

From the technical aspect, AUD/USD successfully defended the 0.7222 support level in the early part of the trading session; however, this support level will be tested again as the dollar begins to gain strength after FED chair Jerome Powell’s speech. As of writing, RSI for AUD/USD sits at 42, and the pair is trading below the 50, 100, and 200 day SMA.

Resistance: 0.728, 0.7332, 0.7375

Support: 0.7222, 0.7117

Economic Data

Daily Market Analysis

Market Focus

US stocks declined near the end of trading on Tuesday, edging lower for the day. Investors are now evaluating the risks from China’s strict regulations on the real-estate sector and this week’s Federal Reserve meeting. Markets await Wednesday’s update from the Fed as well as details about how the China government will respond the Evergrande crisis.

The benchmarks, S&P 500 and Dow Jones both dropped on Tuesday. The S&P 500 was down 0.1% on a daily basis, continuing its bearish traction for a fourth day. The index was opened higher but had a high volatility the whole day. The industrial, communicate service and utilities sectors are the worst performing among all groups, dropped 0.7%, 0.33% and 0.24%, respectively. The Nasdaq, on the contrary, posting a 0.1% gain for the day.

Investors are watching from the sidelines for the two-day Fed meeting that stared Tuesday, the potential timeline for bond tapering and any shifts in expectations for raising interest rates will both be pivotal for global stock market.

In Asia, Evergrande tumbles further after S&P Global Ratings says default is likely. Despite concerns about broader contagion still remain, things are looking up as Wall Street believes that China has it under control. Investors expect China will save its biggest real-estate firm, either directly or indirectly, from being like a Lehman saga. Evergrande Chairman and the International Monetary Fund’s (IMF) Chief Economist Gita Gopinath also sound optimistic in his latest speech and supported the brighter concerns.

Main Pairs Movement:

China’s Evergrande declined further on Tuesday’s trading, but the broad equity and currency markets bounced back on fresh dollar strength and investors are now turning their attention to Wednesday’s FOMC press conference and the Fed’s interest rate decisions. Despite spending returning to pre-pandemic level, the U.S. still posted fewer job gains, less than expected inflation in August, and some economic fatigue brought on by the resurgence of the Delta variant; thus, analysts are predicting that the September FOMC meeting would not result in a tapering commitment, rather analysts are expecting the Fed to remain dovish and the FOMC would keep quantitative easing measures intact for the near term.

Most USD based currencies declined for a second straight trading session as the Greenback gained fresh strength. Cable rebounded slightly at the beginning of today’s trading, but would decline once the North American trading session began. USD/CAD slipped during the European session, but recovered swiftly as the American trading session began. AUD/USD was also able to repair some of the losses from the previous trading day, but would lose ground as the American trading session began.

Technical Analysis:

GBPUSD (4-hour Chart)

Cable found support at around 1.3641 at the start of the trading day, and the pair continued to repair loss ground from yesterday’s trading. However, as the American trading session began and U.S. equity markets rallied, Cable once again traded lower as the dollar gained strength throughtout the American trading session.

From the technical aspect, Cable met resistance at the 1.3687 price level and was unsuccesful at breaking through it before the pair began trading lower. As of writing, Cable is trading at the lower bound of the bollinger bands, while RSI for the pair sits at 32.21, indicating some over selling in the market. Cable is trading below the 50, 100, and 200 day SMA.

Resistance: 1.3687, 1.381, 1.3851

Support: 1.3641, 1.3603

USDCAD (4- Hour Chart)

USD/CAD was unable to keep yesterday’s gain, instead, the pair slipped, as much as, 0.8% for the most part of Tuesday’s trading sessions, before finding support at around the 1.275 price level. Prime Minister Justin Trudeau successfully defended his, historical, third term, despite not winning a majority in the parliament and the popular vote. During his campaign, Prime Minister Trudeau has pledged to raise taxes on financial institutions and to impose stricter emission rules for the oil and gas sector.

From the technical aspect, USD/CAD continues to be rejected from the 1.2834 resistance level, but the pair has found higher levles of support at the 12752 price level. As of writing, USD/CAD is trading at the upper half of the bollinger bands and RSI for the pair indicates 60.11, suggesting mild over buying in the market. USD/CAD is trading above the 50, 100, and 200 day SMA.

Resistance: 1.2834, 1.2912

Support: 1.2752, 1.2635, 1.2586

AUDUSD (Daily Chart)

AUD/USD gained during the European session, the pair climbed to a session high of 0.7283 before the American trading session began. As the Greenback gained strenth, AUD/USD entered negative territory and is trading lower towards our estimated support level of 0.7222. The RBA Minutes, released today, failed to boost demand for the Aussie dollar. The Minutes showed the RBA’s continued dovish stance and no reversal in the RBA’s bond purhcasing program in light of weaker job postings in August.

From the technical aspect, AUD/USD has met new resistance at the 0.728 price level. As of writing, AUD/USD is trading at 0.7233, above our estimated support of 0.7222. The pair is trading at the lower bound of the bollinger bands, while RSI for the pair indicates 39.77, indicating mild under buying in the market. AUD/USD is trading below the 50, 100, and 200 day SMA.

Resistance: 0.728, 0.7332, 0.7375

Support: 0.7222, 0.7117

Economic Data

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Daily Market Analysis

Market Focus

US stock declined on Monday, which was also the biggest fall in about four months. Concerns about China’s real-estate sector and a possible Fed bond tapering caused a plummet in global stock market. However, the S&P 500 index pared some losses in the last hour of trading, as traders started to buy the dip again. The bearish movement witnessed in S&P 500 was an opportunity to buy stocks amid improved global economic recovery.

The benchmarks, S&P 500, Dow Jones and Nasdaq both dropped on Monday. S&P 500 was down 1.7% on a daily basis, the index finished in the negative territory for a third day and erased its gains from earlier in the week. The energy, cons discret and financials sectors are the worst performing among all groups, dropped 3.04%, 2.37% and 2.22%, respectively. The Nasdaq fell to its lowest level in about a month.

US dollar and Treasuries both gained before Wednesday’s Fed meeting, as investors expect Fed to give more hints about the timetable of tapering. Strong US Retail Sales data also supported prospects of early Fed tapering, which would eventually be seen to take away the punch bowl for Wall Street.

In Asia, Hong Kong stocks slumped as investors tracked the risk of contagion from the debt crisis at China Evergrande Group. Evergrande executives are working to remedy its business prospects but a messy meltdown at worst or a managed collapse are feared. Therefore, a bailout by Beijing can be hoped as a best scenario for financial markets.

Main Pairs Movement:

Monday’s trading was marked by a broad market price correction and fears over the possible default of China’s property developer giant, Evergrande Group, which has one of the world’s largest debt burdens for any publicly traded real estate management or development company. Analysts have also pointed out that a price correction was due because of the long bull run that U.S. indices have enjoyed over much of 2021. The Hang Sheng Index dropped 3.3% to its lowest close since October.

All U.S. dollar based foreign exchange pairs fell as demand for the safe haven dollar increased amid concerns over China’s credit issue. Cable saw strong selling pressure at the beginning of Monday’s trading and is struggling to find support as trading continues through the day. USD/CAD rallied on the back of strong demand in the U.S. dollar. AUD/USD struggled, as well, on the dollar’s rally. Investors will be paying attention to the RBA minutes, which is scheduled to release on the 21^st.

Technical Analysis:

GBPUSD (4-hour Chart)

Cable fell sharply on Monday as money flowed to the safe haven asset—the Greenback. After sliding around 0.2% on the previous trading day, Cable began today’s trading even lower. Losing north of 0.6% during the European trading session, GBPUSD was able to find some breathing room around the 1.3669 price level before the American trading session brought the pair to even lower territory. As of writing, Cable is trading at 1.3653, which is lower than our previously estimated support level of 1.3727.

From the technical aspect, Cable is trading at the lower bound of the bollinger bands and is currently trending towards the immediate support level of 1.3603. Cable has failed to defend the previously estimated support level of 1.368. Cable has fell below the 50, 100, and 200 day SMA. RSI for Cable sits at 31.90, suggesting some overselling in the market.

Resistance: 1.381, 1.3849, 1.3905

Support: 1.3603

USDCAD (4- Hour Chart)

During the American trading session, USD/CAD climbed to a one-month high of 1.2895. The pair has since settled back down to near the 1.28 price level, which is our previously estimated resistance level for USD/CAD. Rally for the pair was fueled by investors pouring money into the safe haven dollar as concerns over China has boiled over into the foreign exchange market. However, looking ahead into the week, there are significant events that could sway the pair in either direction. On the one hand, the election for the House of Commons is set to take place on Monday; on the other hand, the FED FOMC press conference is set to take place this Wednesday.

From the technical aspect, USD/CAD has broken through the 1.28 resistance level and came close to 1.29 during today’s trading. RSI for the pair sits at 72, as of writing, suggesting some over buying in the market. USD/CAD is trading above the 50, 100, and 200 day SMA and the pair is trading at the upper bound of the bollinger bands.

Resistance: 1.1806, 1.1894, 1.1965

Support: 1.1664

AUDUSD (Daily Chart)

AUD/USD suffered as investors rushed to the safe haven dollar as market sentiment sours. AUD/USD declined, as much as 0.7%, during the early hours of trading. The pair broke through our previously estimated support of 0.7285 and continued trading lower before finding support around our estimated level of support at around 0.7222. The RBA meeting, scheduled for Tuesday, will shed more light on the Australian central bank’s monetary policy direction. Having already scaled back its monthly bond buying measures, the RBA is expected to remain dovish. The credit issue in China could also have spilling over effects on the Aussie dollar, as China is one of the largest exporting country for Australia.

From the technical aspect, AUD/USD has fallen below the 0.7285 support level but has found support around 0.7222; however, if the pair continues to trade lower, the pair will not find support until around the 0.711 price level. RSI for the pair sits at 40.42, indicating a rather neutral buying sentiment. AUD/USD is trading below the 50, 100, and 200 day SMA.

Resistance: 0.7379, 0.7468

Support: 0.7222, 0.7117

Economic Data

Daily Market Analysis

Market Focus

US stocks declined on Friday, touching the lowest levels in four weeks. Investors now are evaluating the resilience of the global recovery amid concerns about the delta virus and risks from China. On top of that, Friday is the day of quarterly expiration of options and futures, which can create volatility. Oil slipped, while gold advanced.

The benchmarks, S&P 500, Dow Jones and NASDAQ both dropped on Friday. S&P 500 was down 0.9% on a daily basis, the index edged lower for a second day and erased its gains from earlier in the week. The material, utilities and technology sectors are the worst performing among all groups, dropped 2.06%, 1.59% and 1.52%, respectively. The NASDAQ, in the same way, finished in positive territory for a third day. Global stock market struggled to maintain optimism in the face of a likely pending change in Fed’s taper plan, slower economic growth and high inflation.

From economic data’s angle, the University of Michigan’s preliminary sentiment index was released on Friday, showing that US consumer sentiment rose slightly but remained close to a decade low. High prices also result in deteriorated buying conditions. The Fed will probably hint at its meeting next week on the timeline of bond tapering and make a formal announcement in November.

In Asia, stock markets were mixed as the debt crisis at China Evergrande Group continued. Casino stocks extended their losses amid tightening regulations in Macau.

Main Pairs Movement:

US dollar advanced on Friday, touching the highest level since August 27. The Dollar Index started to gain bullish momentum in the beginning of American session and pushed higher after the U.S. Michigan Consumer Sentiment index released. Consumer confidence in the US improved modestly in September with the Index rising to 71 from 70.3 in August. This reading came in slightly weaker than the market expectation of 72.2. The DXY index rose 0.4% on a daily basis. Market focus now shifts to next week’s FOMC meeting, as investors expect Fed to give more hints about the timeline of bond tapering.

EUR/USD and GBP/USD both declined on Friday amid stronger US dollar across the board, losing 0.33% and 0.38% for the day, respectively. The EUR/USD pair continued its slide, dropping to a fresh monthly low during American trading hours. The Eurozone Core Consumer Price Index (YoY) rose by 1.6%, in line with expectations. Meanwhile, the Core CPI for August (MoM) also edged higher by 0.3%. As for the cable, Bank of England will announce their interest rate decision on September 23.

Gold advanced slightly on Friday. After climbing to a daily high during European session, gold lost its traction and dropped below $1,750 amid renewed USD strength. The precious metal posted a 0.05% gain on a daily basis. WTI Crude Oil, on the contrary, dropped more than 0.9% on Friday.

Technical Analysis:

GBPUSD (4-hour Chart)

GBPUSD trades under 1.3800 level, on the back foot after UK’s disappointed Retail Sales data, -0.9% in August. From the technical aspect, the intraday bias looks bearish as GBPUSD falls below the ascending trend line, indicating that the upside momentum has been overturned on the four- hour chart. The bearish move is expected to continue as the RSI has not reached the oversold territory, giving more rooms for the pair to extend further south. Bears might continue to head toward the next immediate support level at 1.3727.

Resistance: 1.3771, 1.3798, 1.3820

Support: 1.3727

EURUSD (4- Hour Chart)

EURUSD trades below 1.1800 level, remaining pressured after the US Consumer Sentiment missed estimates in September. From the technical perspective, EURUSD continues to trade negatively as the pair still trades within the descending channel. At the same time, technicals are pointing lower since the pair fails to climb above the 20 and the 50 SMAs. The RSI on the four- hour chart is above 30, thus outside oversold territory, whilst the MACD is negative, lending supports to bears; that being indicated, EURUSD is still on the downside. Nonetheless, the downside might face some obstacles as the pair has reached the lower bound of Bollinger Band, due for a pullback.

Resistance: 1.1806, 1.1894, 1.1965

Support: 1.1664

XAUUSD (Daily Chart)

From the technical aspect, the price of gold is currently in a descending triangle on the daily chart, with the bottom support line at 1756.90 and the resistance at around $1800. As mentioned earlier, the price of gold formed support near $1753 after a sharp drop on Thursday, and the RSI indicator was in the oversold area. Therefore, the next trend of gold should be able to take a breather with its small rebound. On the other hand, on the 1-hour chart, based on Fibonacci indicators, the short-term resistance is at the level of $1,765.58, and the next resistance is at the level of 1,778.62. All in all, the long term movement for the gold is downside.

Resistance: 1763.51, 1837.13, 1928.22

Support: 1689.89, 1598.80

Economic Data

Daily Market Analysis

Market Focus

US stock declined on Thursday after swinging between gains and losses. Expiration of options and futures will be on Friday, which usually result in high volume and volatility. After seven months of gains, equity market has been choppier mid-way through September, but some market strategists believe that this is actually quite normal from a historical seasonal standpoint.

The benchmarks, S&P 500 and Dow Jones both dropped on Thursday. S&P 500 was down 0.2% on a daily basis, the index edged lower a day after it posted its biggest gain since August on Wednesday. The material and energy sectors are the worst performing among all groups, dropped 1.09% and 1.06%, respectively. The NASDAQ, on the contrary, finished in positive territory for a second day.

On top of that, US Core Retail Sales data was released on Thursday, retail sales rose 0.7% last month, boosted by back-to-school shopping and child tax credit payments. The data unexpectedly increased in August, easing some concerns about a sharp slowdown in economic growth. The news has bolstered investor expectations for next week’s policy meeting and how soon the US central bank will start to taper stimulus. However, the weekly jobless claims increased to 332K, higher than what market had expected. Therefore, market fluctuated as investors digested the impact of mixed economic data. Market focus now shifts to next week’s FOMC meeting.

In Asia, stock market was surrounded by selling pressure, as the debt crisis at China Evergrande Group keep fermenting. Furthermore, casino stocks in Macau extended their losses amid the government’s tightening regulations on casino firms.

Main Pairs Movement:

The U.S. core retail sales figures for August was due earlier today and the news quickly sent shockwaves across foreign exchange markets. August retail sales increase by 1.8%, month over month, excluding car sales. The robust August spending figures went against fears of the Delta variant hampering economic recovery and provides a much-needed boost of confidence in the course of the U.S. economy. Majority consumer spending, in August, shifted from the service industry to furniture, groceries, hardware, and online purchases.

Most currencies dropped against the dollar as demand for the Greenback soared. Cable trended lower and dropped through our previously estimated support level of 1.3801. USD/CAD gained as demand for the dollar soared, but the pair is still consolidating between 1.2589 and 1.268 with no clear down or up trend. AUD/USD, also, fell through our previously estimated support level of 0.731 as the dollar gained strength.

Technical Analysis:

GBPUSD (4-hour Chart)

Cable traded higher during the European trading session as the U.K. cabinet reshuffle passed smoothly; however, as the robust U.S. retail figures and American trading hours arrived, the dollar gained strength and started to drag Cable down. Cable tumbled, as much as, 0.53% at the beginning of the American trading session. The strong dollar brought Cable beneath our previously estimated support level of 1.3801 and the pair is trading at 1.378, as of writing. Speculators will be eyeing next week’s FOMC meeting as FED bond tapering is seemingly imminent.

For technical aspect, GBP/USD reversed yesterday’s upward trend amid a resurgent of dollar demand due to healthy August retail sales figures. Cable has broken through our previously estimated support level and is continuing to trend downwards, as of writing. Nearest support for the pair sit at 1.3755; however, the U.K retail sales figures for the month of August are due tomorrow and could provide some upward momentum for bulls and the pound if figures return better than estimated results. RSI is, currently, sitting at 37.74, suggesting some under buying in the market. Cable has broken ground below the 50, 100, and 200 day SMA; furthermore, the pair is edging close to the lower bound of the bollinger bands.

Resistance: 1.3905, 1.3937, 1.3958

Support: 1.3755, 1.368, 1.3604

USDCAD (4- Hour Chart)

USD/CAD trended downwards at the beginning of the trading day, but quickly recovered from the session low of around 1.26 and gained more than 0.5% once the American trading session began. Strong dollar demand has brought the pair to challenge our estimated resistance level of 1.2708 and help the pair regain all of the lost ground since Monday. Speculators, however, should still be mindful that the loonie is highly dependent on the global export and commodity prices, thus indications of international economic slow down could drag the loonie lower still and propel USD/CAD to higher levels. The Canadian federal election will take place next Monday, and polls are showing a slight favor to Justin Tredeau’s Liberal party.

For technical aspect, USD/CAD is still contained by our previous resistance estimates, but the pair is edging closer to the 1.27 price level. RSI is currently sitting at a marginally over-baught level of 55. USD/CAD has reached the upper bounds of the bollinger bands after today’s dollar rally, and the pair is currently trading above the 50, 100, and 200 day SMA.

Resistance: 1.2708, 1.2834, 1.2912

Support: 1.2589, 1.252, 1.2494

AUDUSD (4- Hour Chart)

The Audtralian Bereau of Statistics revealed that the unemployment rate fell to 4% in August, compared to 4.6% in July; however, the decline in the unemployment rate is attributed to the lowered participation rate in August. Despite a better unemployment rate in August, the lowered participation rate raised concerns and bearish sentiment for the Aussie dollar. AUD/USD began the day trending lower, and, once the U.S. retail sales figures were released, the pair trended even lower and broke through our previously estimated support level of 0.731; however, as of writing, AUD/USD has successfully defended the 0.7285 support level and the pair is beginning to stable around that price level.

For technical aspect, RSI indicates 55.38, suggesting neutral buying sentiment. AUD/USD successfully defended our previously estimated support level of 0.7285, but the pair dropped through the 0.731 support level. Currently, the pair trades at the lower bound of the Bolliner bands, and the pair is trading below the 50, 100, and 200 day SMA.

Resistance: 0.7379, 0.7468

Support: 0.7285, 0.7222, 0.7117

Economic Data

Dear Client,

As part of our commitment to providing the best reliability and service to our client, we are planning an upgrade in our server on Septembert 18th 2021.

As a result, we will be conduct maintenance according to the schedule below.
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Daily Market Analysis

Market Focus

US stock advanced on Wednesday, recording the highest gain in three weeks. The stock market was benefitted from the fact that concerns about a slowdown in economic growth has eased. Crude oil and treasury bond yields both rose. Gold price, on the contrary, declined on Wednesday.

The benchmarks, S&P 500, Dow Jones and the NASDAQ all rose on Wednesday. S&P 500 posted a 0.9% gain on a daily basis, the index was closed in positive territory for only second time in eight trading sessions. The energy and industrial sectors are the best performing among all groups, rose 3.81% and 1.12%, respectively. The energy sector was supported by the bullish momentum witnessed in US crude oil prices, as US inventories run low and storms disrupt US production. Therefore, it’s a rapidly tightening market for crude oil.

On top of that, even though the US CPI data released on Tuesday could be seen as reducing pressure on the Fed to start pulling back on loose monetary policy and meanwhile, increasing the uncertainties about the timeline of bond tapering. Investors are still worried about the rising costs on economic reopening and the impact of the Delta variant around the world.

In Asia, stocks declined after reports showed that China’s economy was damaged in August from rigorous virus controls and tight curbs on property. Casino companies fall on China regulation concern, as Macao plans to strengthen the regulation on casino firms.

Main Pairs Movement:

Lingering effects of a weaker, than expected, U.S. CPI figure are still felt today in foreign exchange markets. Both the U.S. 10-year and 30-year treasury yield fell on Wednesday. The Canadian CPI rose more than 10% in August to 4.1%, compared to 3.7% in July; however, the BOC still remains dovish and believe that inflation should be transitory. The U.K. CPI for August beat estimates and showed a 0.7% growth, month over month.

Cable repaired some of the losses from the previous trading day and is trading at 1.38446, as of writing. Better than estimated CPI data has helped boost the pound. The loonie rose against the dollar as the Canadian CPI also reported better than estimated results. The Aussie, however, fell against the greenback as Covid and inflationary concerns continue to plague any upward movement from the pair AUD/USD.

Technical Analysis:

GBPUSD (4-hour Chart)

The U.K. CPI for August set the record for the largest ever recorded increase in the CPI National Statictic 12 month inflation series. U.K. core CPI rose to 112.1, compared to 108.8 in August of 2020. The service industry, including restaurants, hotels, recreation and culture, and food and non alchoholic beverages, is the major driver for August price rises. Cable began the day trending lower, but, as U.K CPI data released, the pair quickly gained more than 0.4% to hit the session high of 1.38537. Speculators will be eyeing the BOE policy meeting, which will happen on the 23^rd of September.

For technical aspect, GBP/USD reversed yesterday’s downward trend and gained more than 0.2% during the European trading session. Despite falling through our previous support level estimate, Cable found support at the 1.38 price level and was met with resistance at around the 1.383 price level. RSI for the pair sit at 49.7, as of writing. GBP/USD has trended towards the middle of the bollinger bands and is trading above the 50 day SMA.

Resistance: 1.3905, 1.3937, 1.3958

Support: 1.3813, 1.3755, 1.368

USDCAD (4- Hour Chart)

USD/CAD gained during the European trading session, but slipped once the August CPI data released and the American trading session began. Post CPI release, the loonie gained, as much as, 0.4%, and dragged USD/CAD to a session low of around 1.263. The BOC maintains its view that price surges in August remains transitory, but stronger than expected CPI figures will temp BOC to keep forward guidances unchanged, especially in light of poor growth figures. Speculators will be eyeing the housing starts figure, which will be released on Thursday, and the U.S. initial jobless claims report, also releasing on Thursday. The loonie is also riding the strong tailwind fueled by increasing oil prices and commodity prices.

For technical aspect, USD/CAD is still contained by our previous resistance estimates. Strong selling pressure still exists around the 1.2708 price level, evident from the pair’s quick price movement reversal after closing in on that resistance level. RSI sits at 45.55, suggesting some under buying. The pair sits at the lower half of the bollinger bands and is trading below the 50, 100, and 200 day SMA, as of writing.

Resistance: 1.2708, 1.2834, 1.2912

Support: 1.2589, 1.252, 1.2494

AUDUSD (4- Hour Chart)

The Australian unemployment rate will be due tomorrow, with analysts estimating a 4.9% target. The central bank of Australia has committed to tapering plans– reducing bond buying purchasees from 5 billion AUD per week to 4 billion AUD per week, but extending quantitative easing measures into February of 2022. The Delta variant is still a strangling factor on Australia’s economy, as confirmed cases have continued to rise over this month. AUD/USD continued its downward trend as trading began for the day, but was able to gain back some group once the American trading session began.

For technical aspect, RSI indicates 42.2, suggesting weaker buying sentiment. AUD/USD successfully defended our previously estimated support level of 0.731, but the pair met resistance at around 0.7335. Currently, the pair trades at the upper bound of the Bolliner bands, and the pair is trading below the 50, 100, and 200 day SMA.

Resistance: 0.7379, 0.7468

Support: 0.731, 0.7285, 0.7285, 0.7222

Economic Data

Daily Market Analysis

Market Focus

US stock declined after a less-than-expected CPI data was released on Tuesday. The so-called core CPI increased 4.0% in August on a year-on-year basis after advancing 4.3% in July, which offer some validation of views among Fed officials that high inflation will be temporary, meanwhile, increasing uncertainties for the timing of Fed’s bond tapering.

The benchmarks, S&P 500, Dow Jones and the NASDAQ, initially pushed higher following the CPI report, but optimism quickly faded, and the US stock market started facing downward momentum. In conclusion, the influence of the CPI data was overwhelmed by concerns about Delta variant, risks from elevated inflation, slow economic growth and growing chances of a corporate tax rate hike. SP500 posted a 0.6% loss on a daily basis, as the energy and financial sectors are the worst performing group. Dow Jones and the NASDAQ declined 0.8% and 0.3%, respectively.

In Asia, Hong Kong and China’s stock market wavered as investors now focus on the troubles of indebted developer China Evergrande Group. Chinese authorities is facing pressure to find a resolution to a months-long crisis that has intensified obviously in recent days. The company is now dealing with protests by homebuyers, retail investors and employees as it struggles to meet its obligations. Japan’s Nikkei 225 Stock Average, on the contrary, closing at the highest level since 1990.

Main Pairs Movement:

The Bureau of Labor Statistics Core CPI report returned lower than expected price rises in August. The August CPI saw an increase of 0.3%, seasonally adjusted, missing analyst estimates by 4%; these results further validate President Joe Biden and the Fed’s stance that inflation could be temporary and transitory. The energy index increased by 2%, most among all data collected by the BLS, due to the increase of 2.8% in the gasoline index.

Most currency pairs against the U.S. dollar experienced a slight gain at the release of a weaker CPI, but the dollar gained back, and pairs saw a drop. GBP/USD surged at the data release, but would hit its resistance and lose all of its gains during the initial news release. USD/CAD saw a drop during the initial news release, but the dollar quickly repaired loses and successfully defended its support levels. AUD/USD surged at the initial new release, but would go on to drop through our previously estimated support level hours post U.S. CPI release.

Technical Analysis:

 GBPUSD (4-hour Chart)

The GBP/USD pair soared by, as much as, 0.4% to its session high of 1.391 right after the BLS released its August CPI report; however, the pair would soon tumble, as much as, 0.54% to 1.383 over the next two hours.As of writing, the pair has found support at 1.383 and is attempting to repair some losses, but Cable has met resistance at the 1.385 price level and is, once again, trending lower. Despite the sharp loss on Tuesday, the pound is still supported by Governor Andrew Bailey and the BOE’s hawkish stance. Speculators are betting that the BOE would continue its hawkish view and hike interest rates by 15 basis points by May of next year.

For technical aspect, GBP/USD is still confined to its month long upward channel. Since the announcement of the U.S. CPI data, RSI for Cable has dropped and is hovering around 53.4, as of writing. Cable has met new resistance at around the 1.39 price level, but long term resistance for the pair still sits at 1.3958.

Resistance: 1.3905, 1.3937, 1.3958

Support: 1.3813, 1.3755, 1.368

USDCAD (4- Hour Chart)

USD/CAD plunged at the release of the U.S. CPI data. The pair lost, as much as, 0.39% to its session low of 1.2605; however, the pair quickly recovered and was able to gain more than 0.5% and reach its session high of 1.268 over the next two hours, post data release. Bearish signals still exist for the loonie, because manufacturing sales in Canada declined by 1.5% (MoM) in July, wose than the market consensus of 1%.

For technical aspect, RSI indicates 54, suggesting a relatively calm market. The pair currently sits at the middle of the Bollinger Bands and is trading above the 50, 100, and 200 day moving average. Despite the rapid price movements for the pair today, USDCAD is still bound in the 1.26 price range and did not fall through our previous support estimate of 1.2581.

Resistance: 1.2708, 1.2834, 1.2912

Support: 1.2589, 1.252, 1.2494

AUDUSD (4- Hour Chart)

The AUD/USD pair gained 0.4% during the hour of U.S. CPI release but dropped, as much as, 0.61% post U.S. CPI data release; furthermore, the price drop for the pair brought it beneath our previous suppport estimate of 0.7345. AUD remains to be under strong selling pressure in the foreseeable future, due to a dovish central bank, fall in natural resources commodity prices and rising COVID concerns. Despite the Greenback showing weakness due to lower than expected CPI data, the Aussie dollar is still plagued by a dovish central bank stance. On Tuesday, Governer Philip Lowe downplayed the possibility of an, earlier than expected, rate hike.

For technical aspect, RSI indicates 35.2, suggesting weaker buying sentiment. Currently, the pair sits at the lower bound of the Bolliner bands, and the pair is trading below the 50, 100, and 200 day SMA.

Resistance: 0.7379, 0.7468

Support: 0.731, 0.7285, 0.7285, 0.7222

Economic Data