Breaking: Private sector employment rises by 132,000 in August vs 288,000 expected

The data published by Automatic Data Processing (ADP) showed on Wednesday that private sector employment in the US rose by 132,000 in August. This reading came in weaker than the market expectation for an increase of 288,000.

Commenting on the report, “our data suggests a shift toward a more conservative pace of hiring, possibly as companies try to decipher the economy's conflicting signals,” said Nela Richardson, chief economist, ADP. “We could be at an inflection point, from super-charged job gains to something more normal.”

Market reaction

With the initial market reaction, the US Dollar Index edged lower and was last seen trading flat on the day at 108.85.

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Gold Price Forecast: XAU/USD remains on the defensive amid risk-on, Fed rate-hike jitters

Gold attracts some dip-buying on Tuesday, though lacks any strong follow-through.

Retreating US bond yields undermine the USD and offer some support to the metal.

The risk-on impulse caps the upside amid expectations for aggressive Fed rate hikes.

Gold reverses a modest intraday dip to the $1,729 area and turns neutral during the first half of the European session, though it lacks any follow-through. The XAU/USD is currently seen exchnaging hands at around the $1,735 region and so far, has struggled to capitalize on the overnight bounce from over a one-month low.

The US dollar meets with a fresh supply for the second straight day and retreats further from a 20-year high touched the previous day, which, in turn, offers some support to the dollar-denominated gold. The ongoing USD profit-taking slide could be solely attributed to another decline in the US Treasury bond yields, which further benefits the non-yielding gold.

The upside, however, remains limited amid firming expectations for a supersized 75 bps Fed rate hike at the September meeting. The bets were reaffirmed by Fed Chair Jerome Powell's hawkish remarks on Friday, signalling that interest rates would be kept higher for longer to bring down inflation. This, along with the risk-on impulse, seem to cap gains for gold.

Chinese authorities pledged to stimulate the world’s second-largest economy and boosted investors' confidence. This is evident from a strong rally in the equity markets, which might hold back traders from placing bullish bets around the safe-haven precious metal. This warrants caution before confirming that gold has formed a bottom and positioning for any further gains.

Market participants look forward to the US economic docket - featuring JOLTS Job Openings data and the Conference Board's Consumer Confidence Index later during the early North American session. This, along with the US bond yields, might influence the USD. Apart from this, the risk sentiment might contribute to producing short-term trading opportunities around gold.

From a technical perspective the pair is in a medium-term downtrend that began in March 2022. This suggests the overall bias is still for lower prices to come. Major, multiple support – comprised of key lows from 2021 as well as the 200-week SMA – kicks in at $1680.00, however, and if price gets that low it will likely find a floor there and, either consolidate or bounce.

The daily chart is more complex and less bearish. Monday's dragon-fly doji candlestick is a bullish reversal insignia which will be confirmed if today (Tuesday, August 30) ends bullishly green – if not then sellers may still prevail. Confirmation would suggest at least the potential for a recovery back up to the 50-day SMA and the swing high at around $1760.00. Furthermore, markets are slow, traditionally a warning to traders not to go short. Many may have gone into wait-and-see mode till the fog clears and the market shows its hand. 

This might not happen until the closely-watched US monthly jobs report, popularly known as NFP, is released on Friday. August's employment figures will provide some insight into the economy's health in the face of rising rates and stubbornly high inflation. This, in turn, will drive the USD demand and gold prices ahead of the next FOMC meeting in September. A better-than-expected figure will suggest the economy is still booming and the Fed has more work to do to tame inflation, strengthening the dollar in the process but depressing gold. A weaker-than-expected result will have the opposite effect and probably help gold prices go higher.  

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EUR/USD Price Analysis: Interim top in place?

EUR/USD regains composure after the earlier drop near 0.9900.

Bullish attempts should meet initial hurdle near 1.0100.

EUR/USD reverses the initial pessimism, including a test of the vicinity of the 0.9900 zone on Monday.

The recent failure to advance beyond 1.0100 leaves this region as a potential near-term top, while the 0.9900 neighbourhood seems to offer quite a decent contention for the time being. The breach of the 2022 low at 0.9899 (August 23) could sponsor a deeper pullback to the December 2002 low at 0.9859.

In the longer run, the pair’s bearish view is expected to prevail as long as it trades below the 200-day SMA at 1.0819.

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GBP/USD needs to clear strong resistance at 1.1870 to gather bullish momentum

GBP/USD has managed to recover above 1.1800 on Friday ahead of FOMC Chairman Jerome Powell’s remarks at the Jackson Hole Symposium. The pair will reveal a buildup of bullish momentum on a break past 1.1870, FXStreet’s Eren Sengezer reports.

Pound struggles to turn bullish ahead of Powell

“In case the chairman's comments suggest that the bank could opt for another 75 basis points in September, GBP/USD could turn south amid a stronger dollar. On the other hand, an optimistic tone inflation outlook should hurt the greenback and help GBP/USD gain traction.”

“On the upside, cable faces key resistance at 1.1870, where the Fibonacci 23.6% retracement level of the latest downtrend is located. Above that level, the 50-period SMA forms interim resistance at 1.1900 ahead of 1.1940 (Fibonacci 38.2% retracement).”

“1.1800 (psychological level, 20-period SMA) aligns as initial support before 1.1750 (static level, end-point of the downtrend) and 1.1720 (Aug. 23 low).”

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US: Weekly Initial Jobless Claims decline to 243K vs. 253K expected

Initial Jobless Claims fell by 2,000 in the week ending August 20.

US Dollar Index trades flat on the day above 108.50.

There were 243,000 initial jobless claims in the week ending August 20, the weekly data published by the US Department of Labor (DOL) showed on Thursday. This print followed the previous week's print of 245,000 (revised from 252,000) and came in better than the market expectation of 253,000.

Further details of the publication revealed that the advance seasonally adjusted insured unemployment rate was 1% and the 4-week moving average was 247,000, an increase of 1,500 from the previous week's unrevised average.

"The advance number for seasonally adjusted insured unemployment during the week ending August 13 was 1,415,000, a decrease of 19,000 from the previous week's revised level," the DOL further announced.

Market reaction

The US Dollar Index edged higher after this data and was last seen trading virtually unchanged on the day at 108.56.

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Gold Price Forecast: XAU/USD capped by sellers aligned around $1,750

Gold price has been on the back foot, despite the generally negative market mood, currently trading at around $1,745.80 a troy ounce. The metal bottomed at the beginning of the week at $1,727.70, as the dollar outperformed other safe-haven assets throughout the first half of the week. Nevertheless, the greenback got hit by poor US data released on Tuesday, pulling down from its recent highs and correcting extreme overbought conditions against most major rivals. The bright metal peaked at $1,754.07 but so far cannot retain the $1,750 mark, with sellers quickly appearing in attempts to surpass the level. XAU/USD is seen at a critical juncture as bull-bear tug-of-war could set in, FXStreet’s Dhwani Mehta reports.

Meanwhile, financial markets are relatively quiet at the moment as investors await the US Durable Goods Orders report, expected to post a modest 0.6% advance in July. Such a tepid report will likely exacerbate concerns about a recession and weigh on high-yielding assets. The dollar will likely resume its bullish momentum after the latest pullback and is seen strengthening against its brighten rival. 

XAU/USD bears return after rejection above $1,750

“The 14-day Relative Strength Index (RSI) is turning south once again while below the midline, suggesting that the downside pressure could build up in the sessions ahead.”

“Adding credence to the bearish bias, the 50-Daily Moving Average (DMA) is fast approaching the 21 DMA from above.”

“A sustained break below the Fibonacci Retracement (Fibo) level of the recovery from yearly lows of $1,681 to the August 10 high of $1,808 at $1,729 will open up the downside towards the $1,700 mark.”

“Bulls need a daily closing above the $1,750 psychological level, above which the 38.2% Fibo resistance at $1,760 will be probed. Further up, the meeting point of the 21 and 50 DMAs at $1,769 will be a tough nut to crack for XAU bulls.”

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EUR/USD Price Analysis: A deeper pullback could see 0.9859 retested

EUR/USD clocks new cycle lows in the sub-0.9900 zone.

Further losses could test the December 2002 low near 0.9860.

EUR/USD accelerates the daily losses and briefly breaks below the 0.9900 level, or new cycle lows.

Further weakness remains in the pipeline for the time being. Against that, the breakdown of the 2022 low at 0.9899 (August 23) should leave the door open to a probable deeper retracement to the December 2002 low at 0.9859.

In the longer run, the pair’s bearish view is expected to prevail as long as it trades below the 200-day SMA at 1.0845.

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US: Chicago Fed National Activity Index improves to 0.27 in July from -0.25

Chicago Fed National Activity Index moved into positive territory in July.

US Dollar Index clings to daily gains above 108.00 after the data.

The Federal Reserve Bank of Chicago's National Activity Index (CFNAI) improved to 0.27 in July from -0.25 (revised from -0.19) in June.

"The CFNAI Diffusion Index, which is also a three-month moving average, edged up to –0.05 in July from –0.08 in June," the publication further read. "Fifty-five of the 85 individual indicators made positive contributions to the CFNAI in July, while 30 made negative contributions. Fifty-five indicators improved from June to July, while 30 indicators deteriorated. Of the indicators that improved, 17 made negative contributions."

Market reaction

This report failed to trigger a noticeable market reaction and the US Dollar Index was last seen rising 0.26% on a daily basis at 108.40.

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Gold Price Forecast: XAU/USD struggles near one-week low amid sustained USD buying

Gold witnesses selling for the second straight day on Tuesday amid modest USD strength.

Hawkish Fed expectations and elevated US bond yields continue to underpin the greenback.

Recession fears could limit losses for the safe-haven XAU/USD ahead of the FOMC minutes.

Gold attracts fresh selling near the $1,783 region on Tuesday and turns lower for the second successive day. The XAU/USD drops back closer to a one-week low touched the previous day, around the $1,774 area during the first half of the European session and now seems vulnerable to a further slide.

Following a brief consolidation through the early part of trading on Tuesday, the US dollar gains some positive traction for the third straight day and exerts some pressure on the dollar-denominated gold. Despite last week's softer US CPI report, Fed officials stressed that it is too soon to declare a victory on inflation and have maintained a hawkish tone. This, in turn, suggests that the Fed would stick to its policy tightening path and continues to underpin the greenback.

In fact, the markets are currently pricing in a greater chance of at least a 50 bps rate hike at the next FOMC policy meeting in September. This remains supportive of elevated US Treasury bond yields, which turns out to be another factor driving flows away from the non-yielding yellow metal. The downside, however, seems cushioned, at least for the time being, as investors might now prefer to move on the sidelines ahead of the FOMC meeting minutes, scheduled for release on Wednesday.

Investors would look for clues about the possibility of a larger 75 bps rate hike move in September. This could play a key role in influencing the near-term USD price dynamics and help determine the next leg of a directional move for gold. In the meantime, growing worries about a global economic downturn could lend some support to the safe-haven precious metal. Traders now look forward to the housing market data and Industrial Production figures from the US for some impetus on Tuesday.

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Brent Oil to trade at only $90 by year-end – Commerzbank

Following last week’s massive setback, the latest recovery of oil prices is likely to falter. In the view of strategists at Commerzbank, oil prices should continue to decline until the end of the year.

Market will be amply supplied in the coming months

“The oil market should be more than amply supplied for the time being.”

“We now envisage a Brent price of only $90 by year-end.”

“The EU oil embargo that will come into force at the end of the year will probably prevent any further price slide.”

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GBP/USD surges past 1.2200 mark amid softer US inflation data-inspired USD slump

GBP/USD adds to its intraday gains and rallies to a one-and-half-week high amid a brutal USD selloff.

A weaker US CPI report pushed back expectations for a larger Fed rate hike and weighed on the USD.

A strong rally in the US equity futures exerts additional downward pressure on the safe-haven buck.

The GBP/USD pair catches aggressive bids and surges past the 1.2200 mark, hitting a one-and-half-week high during the early North American session.

The intraday US dollar selling picks up pace following the release of weaker US consumer inflation figures, which, in turn, provides a goodish lift to the GBP/USD pair. The Bureau of Labour Statistics reported that the headline US CPI remained flat in July against the 0.2% rise anticipated. Adding to this, the yearly rate decelerated to 8.5% during the reported month, again missing estimates pointing to a fall to 8.7% from the 9.1% in June.

Furthermore, core inflation, which excludes food and energy prices, came in at 0.3% MoM and held steady at a 5.9% YoY rate vs 0.5% and 6.1% anticipated, respectively. The softer data now seems to have pushed back market expectations for a larger Fed rate hike move at the September policy meeting and prompts aggressive selling around the USD. Apart from this, a strong rally in the US equity markets exerts additional pressure on the safe-haven buck.

The strong intraday move up allowed the GBP/USD pair to break through the 1.2130-1.2140 resistance zone, triggering an aggressive short-covering move. Hence, it remains to be seen if the momentum is backed by genuine buying or turns out to be a stop run amid the Bank of England's gloomy economic outlook.

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Silver Price Analysis: XAG/USD seems poised to appreciate further and aim to reclaim $21.00

Silver oscillates in a narrow band and consolidates its recent gains to a multi-week high.

The overnight breakout through the 50-DMA/50$ Fibo. confluence favours bullish traders.

Any meaningful dips could now be seen as a buying opportunity and remain short-lived.

Silver consolidates the previous day's strong gains to a six-week high and remains confined in a range above mid-$20.00s heading into the North American session.

The overnight breakout through the $20.30-$20.35 confluence - comprising the 50-day SMA and the 50% Fibonacci retracement level of the $22.52-$18.15 downfall - favours bullish traders. Positive technical indicators on the daily chart add credence to the constructive set-up and support prospects for a further near-term appreciating move.

Hence, a subsequent move up towards the 61.8% Fibo. level, around the $20.85 area, now looks like a distinct possibility. Some follow-through buying beyond the $21.00 mark would be seen as a fresh trigger for bulls and lift the XAG/USD towards the $21.40-$21.50 intermediate resistance en-route the $22.00 round-figure mark.

The latter coincides with the 100-day SMA and should keep a lid on any further gains for the XAG/USD, at least for the time being. That said, a convincing break above should pave the way for an extension of the recent recovery move from a two-year low, around the $18.15 region touched on July 14.

On the flip side, the $20.35-$20.30 confluence resistance breakpoint now seems to protect the immediate downside ahead of the $20.00 psychological mark. This is closely followed by the $19.80-$19.75 region (38.2% Fibo. level), Friday's swing low around the $19.55 area, and the 23.6% Fibo. level support, around the $19.20 zone.

Failure to defend the aforementioned support levels would negate any near-term positive bias and shift the bias back in favour of bearisha traders. The XAG/USD would then turn vulnerable to weaken further below the $19.00 mark, towards the next relevant support near the $18.40 area en route to the YTD low, around the $18.15 region.

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GBP/USD on track to break below the July 29 low near 1.2065 – BBH

GBP/USD has stabilized after its post-BoE sell-off but remains heavy. With no obvious safety net in sight, economists at BBH expect the pair to drop under the July 29 low at around 1.2065.

BoE is set to continue tightening

“A move above 1.21 earlier today failed to trigger any follow-through buying. We believe GBP/USD is still on track to break below the July 29 low near 1.2065.”

“Despite the gloomy outlook, the Bank of England is set to continue tightening as inflation spirals ever higher.”

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Dollar firm ahead of jobs report – BBH

Win Thin, Global Head of Currency Strategy at BBH, offers a brief overview of the US dollar price action on Friday and the closely-watched US monthly jobs data. The popularly known NFP report would play a key role in influencing the near-term USD price dynamics amid the recent hawkish remarks by several Fed officials.

Key Quotes:

“DXY has risen 3 of the past 4 days and is trading near 106 currently. We maintain our strong dollar call as Fed officials are making it clear that markets misread the Fed’s commitment to lowering inflation.  The greenback is also getting more traction as data came in stronger than expected.  Today’s jobs data will likely be key for the medium-term dollar outlook.”

“Consensus sees 250k jobs added vs. 372k in June, while the unemployment rate is expected to remain steady at 3.6% and average hourly earnings are seen falling two ticks to 4.9% y/y.  Fed Chair Powell stressed labor market strength many times in his post-decision press conference, which supports our view that the Fed is not about to pivot while the economy remains at full employment.  June consumer credit will be also reported and is expected at $27.0 bln vs. $22.347 bln in May.”

“WIRP suggests a 50 bp hike September 21 is fully priced in, with around 40% odds of a larger 75 bp move.  The swaps market is pricing in 100 bp of tightening over the next 6 months that sees the policy rate peak near 3.5%, followed by the start of an easing cycle over the subsequent 6 months.  The Fed has made it clear that this is not its expected rate path and so we look for a hawkish shift in market pricing in the coming days and weeks if the U.S. data cooperate.”

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EUR/USD Price Analysis: Looks side-lined within 1.0100-1.0300

EUR/USD regains poise and approaches 1.0200 on Thursday.

Price action remains stuck with the 1.0100-1.0300 range.

EUR/USD reverses part of the weekly pullback and manages to retest the vicinity of the 1.0200 region on Thursday.

In light of key releases in the US docket on Friday, the pair is expected to keep the current 1.0100-1.0300 range broadly in place for the time being. The loss of the lower bound of the range could see a potential visit to the parity level return to the radar.

In the longer run, the pair’s bearish view is expected to prevail as long as it trades below the 200-day SMA at 1.0934.

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Gold Price Forecast: XAU/USD retreats from 50-HMA with eyes on Taiwan, US macro

Gold price fades recovery moves as traders struggle for clear directions.

China Caixin Services PMI, mixed Fedspeak favor XAU/USD buyers.

US-China tensions over Taiwan, recession woes keep sellers hopeful.

US ISM Services PMI, Factory Orders may entertain traders but risk catalysts are more important.

Gold price (XAU/USD) fails to extend daily gains around $1,770 amid the early Wednesday morning in Europe. In doing so, the yellow metal buyers struggle for fresh clues to stretch the latest recovery moves inside a trend-widening chart pattern.

Mixed concerns over Taiwan and an absence of strongly hawkish Fed comments seem to restrict immediate XAU/USD moves. Also challenging the gold price is the upbeat prints of China Caixin Services PMI for July contrasting to the official activity numbers at home and abroad, as well as broad recession woes.

US House Speaker Nancy Pelosi vows to not abandon Taiwan amid Chinese pressure, per Bloomberg, while Taiwan President shows readiness to retaliate Beijing military moves, if any. On the other hand, the private services gauge from the dragon nation rose to 55.5 versus 48 expected and 54.5 prior.

Elsewhere, St. Louis Federal Reserve President James Bullard and Cleveland Fed President Loretta Mester talked down US recession concerns while supporting chatters about the 50 basis points (bps) rate hike in September. However, San Francisco Fed President Mary Daly said that she is looking for incoming data to decide if they can downshift the rate hikes or continues at the current pace, as reported by Reuters.

Amid these plays, S&P 500 Futures rise 0.25% intraday while the US 10-year Treasury yields drop 1.5 basis points (bps) to 2.726% at the latest.

Given the market’s indecision, gold traders should wait for the US Factory Orders for June and ISM Services PMI for July. Also important will be to the headlines surrounding China, Taiwan and Fed.

Technical analysis

Gold price pares daily gains inside a one-week-old megaphone trend widening technical chart formation on the hourly play.

That said, the XAU/USD’s latest pullback from the 50-HMA, at $1,770 by the press time, lacks support from the MACD, which in turn hints at the quote’s further advances towards the previous day’s high near $1,788.

However, upper line of the aforementioned megaphone pattern, near $1,790, could challenge the bullion’s further upside.

Meanwhile, pullback moves may initial aim for the stated formation’s support line, close to $1,755, before directing gold sellers towards the 50% Fibonacci retracement of July 27 to August 02 upside, near $1,749.

Also acting as the downside filter is the 61.8% Fibonacci retracement level around $1,740.

Overall, gold price grinds higher and may witness further volatility inside the megaphone.

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EUR/JPY Price Analysis: Outlook negative below the 200-day SMA

EUR/JPY drops further and challenges the key 200-day SMA.

Below the latter, the cross could risk a deeper retracement.

EUR/JPY extends the bearish move well south of the 134.00 mark on Tuesday.

In the meantime, price action in the cross remains entrenched in the negative territory, losing ground for the fourth consecutive session so far.

A break below the key 200-day SMA, today at 133.69, carries the potential to accelerate losses and shift the outlook to negative.

Immediately to the downside now emerges the May low at 132.65 (May 12).

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GBP/USD climbs to fresh daily high, further beyond 1.2200 amid sustained USD selling

GBP/USD regains positive traction on Monday amid the prevalent USD selling bias.

Diminishing odds for more aggressive Fed rate hikes continue to weigh on the USD.

A softer risk tone, rebounding US bond yields to limit the USD losses and cap the pair.

The GBP/USD pair jumps back above the 1.2200 mark during the early part of the European session, attracting fresh buying on the first day of a new week. Spot prices, however, still remain well below a one-month high at around the 1.2245 touched on Friday.

The US dollar languishes near its lowest level since July 5, which is turning out to be a key factor lending support to the GBP/USD pair. Market participants continue to scale back their expectations for more aggressive rate hikes by the Federal Reserve amid worries about an economic downturn. This, to a larger extent, overshadows Friday's stronger US Personal Consumption Expenditures (PCE) and continues to weigh on the greenback.

The British pound in contrast is underpinned by rising bets for a 50 bps rate hike by the Bank of England – though, that said, a combination of factors could cap gains for the GBP/USD pair. The recent optimistic move in the equity markets has run out of steam amid growing recession fears. This, along with a modest bounce in the US Treasury bond yields, should help limit the downside for the USD and act as a headwind for the major, at least for now.

Investors might also refrain from placing aggressive bets and prefer to wait on the sidelines ahead of confirmation from the Bank of England policy meeting on Thursday. Apart from this, important US macro data scheduled at the beginning of a new month would determine the next leg of a directional move for the GBP/USD pair. A rather busy week kicks off with the release of the ISM Manufacturing PMI, which could provide some trading impetus to the major.

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