Market News Report - 01 September 2024
This past week, the euro faltered the most compared to other currencies. Meanwhile, the winners included the New Zealand and Canadian dollars.
Let's see what to expect from all the major forex markets performance-wise in our latest news report.
Market Overview
Below is a brief technical and fundamental analysis breakdown for all major currencies.
US dollar (USD)
Short-term outlook: bearish.
STIR (short-term interest rate) markets expect at least four full rate cuts before the end of this year. They also suggest a 30% chance of a 50 bps cut at the next meeting in mid-September.
Another bearish focus for the US is the slowing labour market. As with the beginning of any month, watch out for the unemployment rate and Non-Farm Payrolls on Friday.
https://www.tradingview.com/x/Wy8X87zG/
The DXY chart aligns perfectly with the fundamentals, having recently reached a major support area (100.617) on the daily chart. Meanwhile, the key resistance is far away at 107.348 and will likely remain untouched for some time.
Long-term outlook: bearish.
Markets anticipate several full rate cuts before the year ends. Also, data on weakened jobs is another bearish driver for the dollar.
Only geopolitical risks, bond market selling, and interest rate differentials can affect this sentiment.
Euro (EUR)
Short-term outlook: weak bearish.
The European Central Bank (ECB) has stressed that it is data-dependent. This means that certain economic data, like employment data, may boost the euro.
However, the primary bearish driver is the interest rate, with STIR markets anticipating a 100% chance of a 25 bps rate cut at the next meeting this month.
On the bright side, German inflation recently fell to its lowest level since March 2021, to 1.9% (from 2.3% in July 2024).
https://www.tradingview.com/x/7Tm8dbq3/
Meanwhile, the chart tells a slightly different story. After breaking the last major resistance, the next target is 1.12757. Meanwhile, the key support area lies far below at 1.07774.
Long-term outlook: weak bearish.
The ECB hasn't committed to a specific future path with the interest rate. They are data-dependent, meaning data around inflation, growth, and wage improvement can lift the euro. However, their meeting in July was slightly more dovish than hawkish.
British pound (GBP)
Short-term outlook: bearish.
The Bank of England (BoE) cut the interest rate by 25 basis points at the beginning of last month. However, the BoE remains data-dependent and has no set future path. STIR markets are currently pricing two additional cuts for the remainder of 2024.
The central bank's current key theme is fighting persistent inflation in the United Kingdom. Any future failures here would likely weaken the GBP.
https://www.tradingview.com/x/NlQMbSEe/
As with the euro, the British pound has been saved by dollar weakness on the charts. It has just broken the major resistance at 1.31424. Despite this, it remains an area of interest due to appearing in a high time frame.
On the other hand, the nearest key support is far away at 1.26156.
Long-term outlook: weak bearish.
While the interest rate is the chief bearish driver for the pound, the BoE has yet to signal a future path in this regard.
STIR markets predict a rate hold next month (74% chance vs. 62% chance last week). Furthermore, two-way risks remain based on upcoming economic data, particularly with inflation.
Japanese yen (JPY)
Short-term outlook: bullish.
The yen is the only currency where a change to the short-term outlook is necessary (from 'weak bullish' to 'bullish')
The primary bullish catalyst is the Bank of Japan’s (BoJ) recent decision to hike the interest rate.
STIR markets expect a hold (99% probability, up from 95% last week) at the next meeting but a hike at the start of next year. So, the bias is intact, and we should expect buyers on dips, more so with the dollar's macro outlook indicating a decline.
https://www.tradingview.com/x/2pb8kM2Q/
After cooling down recently, USD/JPY looks to have resumed its downtrend, aligning with the outlook mentioned.
The major support level to watch is 140.252. Meanwhile, the major resistance (at 161.950) is too far for traders to worry about.
Long-term outlook: weak bullish.
In addition to the recent rate hike, other bullish catalysts for the yen include lower US Treasury yields.
Also, the Bank of Japan is actively intervening in the forex markets, contributing to the JPY's upside.
Australian dollar (AUD)
Short-term outlook: weak bullish.
The Reserve Bank of Australia (RBA) unsurprisingly kept the interest rate unchanged not long ago to keep the fight against persistent inflation rate. Based on their language, a hike isn't out of the question this year.
Like many currencies, the Aussie remains data-sensitive, whether we look at economic growth, labour, or inflation going forward. The recent rise in China's share prices, which correlates with the Aussie, has been positive for the currency. Still, there is doubt over the longevity of this run.
https://www.tradingview.com/x/MKk5TBO0/
The Aussie market has risen noticeably of late, having reached a recent resistance level. While the next nearby target is 0.68711, we need to see how it behaves at the latter.
Meanwhile, the major support level is down at 0.63484.
Long-term outlook: weak bullish.
The RBA remains hawkish as per last week's meeting, focusing on core inflation. Overall, it's crucial to be data-dependent with the Aussie, with recent labour data keeping the bullish script alive.
However, the Australian dollar is pro-cyclical, so it is exposed to slow economic growth in other countries.
New Zealand dollar (NZD)
Short-term outlook: weak bearish.
New Zealand's central bank recently dropped the Kiwi's interest rate from 5.50% to 5.25%.
Lower-revised cash rate projections also hint at the potential for further cuts in the near future.
https://www.tradingview.com/x/lKGeQc3J/
The Kiwi has recently breached a major resistance at 0.62220. While we can look towards a future level, this area is still worth considering.
Conversely, the major support is at 0.58498, an area which it is unlikely to test soon.
Long-term outlook: weak bearish.
In its latest meeting, the central bank's dovish stance (where it cut the interest rate) puts the Kiwi in a 'bearish bracket.'
However, as a risk-sensitive currency like the Aussie, any growth data in China could trigger bullishness for NZD. As with its counterpart, traders should be data-dependent.
Canadian dollar (CAD)
Short-term outlook: bearish.
The ongoing mortgage stress in Canada has forced the Bank of Canada (BoC) to be dovish, the first major bearish catalyst. With a rate cut last month, STIR markets have increased the probability to over 90% of the same in Wednesday's meeting.
https://www.tradingview.com/x/6Rh1SQm5/
The CAD continues to strengthen mildly due to USD weakness. It now looks to test the next major support target at 1.33586, while the major resistance is far ahead at 1.39468.
Long-term outlook: weak bearish.
Expectations of a rate cut remain the focal point, with the BoC governor Macklem himself saying it's reasonable to expect more cuts in the future. Moreover, STIR markets have priced in an additional cut sometime this year.
The mortgage stress remains a major factor in this interest rate policy, and the BoC will have to cut rates to alleviate it. Still, this narrative is getting tired.
Expect encouraging oil prices, along with general economic data improvement to save the Canadian dollar's blushes.
Swiss franc (CHF)
Short-term outlook: bearish.
STIR markets forecast a rate cut later this month (a 35% chance) and December this year.
Secondly, SNB expects a moderate improvement in inflation, GDP (Gross Domestic Product), and unemployment to rise slightly in the near term.
However, the Swiss franc can strengthen during geopolitical tensions like the Middle East crisis.
https://www.tradingview.com/x/ZqD2mZ7B/
After a notable retracement at the start of last month, USD/CHF is looking to test the support area at 0.83326. Meanwhile, the major resistance level is far higher at 0.92244.
Long-term outlook: weak bearish.
The expected rate cut in the next SNB meetings for 2024 is the main bearish driver. However, the SNB's chairperson, Thomas Jordan, expressed that "appreciation of the Swiss Franc has an impact on monetary policy." This means that potential intervention by the central bank can go either way.
Conclusion
The fundamental outlooks of each currency have remained mostly unchanged from the previous report, except for JPY and NZD. Key news events to watch this week include the US unemployment rate and the CAD interest rate decision.
As always, hope for the best and prepare for the worst, but this report should help guide you in determining the bias you should have for each currency.
Let's see what to expect from all the major forex markets performance-wise in our latest news report.
Market Overview
Below is a brief technical and fundamental analysis breakdown for all major currencies.
US dollar (USD)
Short-term outlook: bearish.
STIR (short-term interest rate) markets expect at least four full rate cuts before the end of this year. They also suggest a 30% chance of a 50 bps cut at the next meeting in mid-September.
Another bearish focus for the US is the slowing labour market. As with the beginning of any month, watch out for the unemployment rate and Non-Farm Payrolls on Friday.
https://www.tradingview.com/x/Wy8X87zG/
The DXY chart aligns perfectly with the fundamentals, having recently reached a major support area (100.617) on the daily chart. Meanwhile, the key resistance is far away at 107.348 and will likely remain untouched for some time.
Long-term outlook: bearish.
Markets anticipate several full rate cuts before the year ends. Also, data on weakened jobs is another bearish driver for the dollar.
Only geopolitical risks, bond market selling, and interest rate differentials can affect this sentiment.
Euro (EUR)
Short-term outlook: weak bearish.
The European Central Bank (ECB) has stressed that it is data-dependent. This means that certain economic data, like employment data, may boost the euro.
However, the primary bearish driver is the interest rate, with STIR markets anticipating a 100% chance of a 25 bps rate cut at the next meeting this month.
On the bright side, German inflation recently fell to its lowest level since March 2021, to 1.9% (from 2.3% in July 2024).
https://www.tradingview.com/x/7Tm8dbq3/
Meanwhile, the chart tells a slightly different story. After breaking the last major resistance, the next target is 1.12757. Meanwhile, the key support area lies far below at 1.07774.
Long-term outlook: weak bearish.
The ECB hasn't committed to a specific future path with the interest rate. They are data-dependent, meaning data around inflation, growth, and wage improvement can lift the euro. However, their meeting in July was slightly more dovish than hawkish.
British pound (GBP)
Short-term outlook: bearish.
The Bank of England (BoE) cut the interest rate by 25 basis points at the beginning of last month. However, the BoE remains data-dependent and has no set future path. STIR markets are currently pricing two additional cuts for the remainder of 2024.
The central bank's current key theme is fighting persistent inflation in the United Kingdom. Any future failures here would likely weaken the GBP.
https://www.tradingview.com/x/NlQMbSEe/
As with the euro, the British pound has been saved by dollar weakness on the charts. It has just broken the major resistance at 1.31424. Despite this, it remains an area of interest due to appearing in a high time frame.
On the other hand, the nearest key support is far away at 1.26156.
Long-term outlook: weak bearish.
While the interest rate is the chief bearish driver for the pound, the BoE has yet to signal a future path in this regard.
STIR markets predict a rate hold next month (74% chance vs. 62% chance last week). Furthermore, two-way risks remain based on upcoming economic data, particularly with inflation.
Japanese yen (JPY)
Short-term outlook: bullish.
The yen is the only currency where a change to the short-term outlook is necessary (from 'weak bullish' to 'bullish')
The primary bullish catalyst is the Bank of Japan’s (BoJ) recent decision to hike the interest rate.
STIR markets expect a hold (99% probability, up from 95% last week) at the next meeting but a hike at the start of next year. So, the bias is intact, and we should expect buyers on dips, more so with the dollar's macro outlook indicating a decline.
https://www.tradingview.com/x/2pb8kM2Q/
After cooling down recently, USD/JPY looks to have resumed its downtrend, aligning with the outlook mentioned.
The major support level to watch is 140.252. Meanwhile, the major resistance (at 161.950) is too far for traders to worry about.
Long-term outlook: weak bullish.
In addition to the recent rate hike, other bullish catalysts for the yen include lower US Treasury yields.
Also, the Bank of Japan is actively intervening in the forex markets, contributing to the JPY's upside.
Australian dollar (AUD)
Short-term outlook: weak bullish.
The Reserve Bank of Australia (RBA) unsurprisingly kept the interest rate unchanged not long ago to keep the fight against persistent inflation rate. Based on their language, a hike isn't out of the question this year.
Like many currencies, the Aussie remains data-sensitive, whether we look at economic growth, labour, or inflation going forward. The recent rise in China's share prices, which correlates with the Aussie, has been positive for the currency. Still, there is doubt over the longevity of this run.
https://www.tradingview.com/x/MKk5TBO0/
The Aussie market has risen noticeably of late, having reached a recent resistance level. While the next nearby target is 0.68711, we need to see how it behaves at the latter.
Meanwhile, the major support level is down at 0.63484.
Long-term outlook: weak bullish.
The RBA remains hawkish as per last week's meeting, focusing on core inflation. Overall, it's crucial to be data-dependent with the Aussie, with recent labour data keeping the bullish script alive.
However, the Australian dollar is pro-cyclical, so it is exposed to slow economic growth in other countries.
New Zealand dollar (NZD)
Short-term outlook: weak bearish.
New Zealand's central bank recently dropped the Kiwi's interest rate from 5.50% to 5.25%.
Lower-revised cash rate projections also hint at the potential for further cuts in the near future.
https://www.tradingview.com/x/lKGeQc3J/
The Kiwi has recently breached a major resistance at 0.62220. While we can look towards a future level, this area is still worth considering.
Conversely, the major support is at 0.58498, an area which it is unlikely to test soon.
Long-term outlook: weak bearish.
In its latest meeting, the central bank's dovish stance (where it cut the interest rate) puts the Kiwi in a 'bearish bracket.'
However, as a risk-sensitive currency like the Aussie, any growth data in China could trigger bullishness for NZD. As with its counterpart, traders should be data-dependent.
Canadian dollar (CAD)
Short-term outlook: bearish.
The ongoing mortgage stress in Canada has forced the Bank of Canada (BoC) to be dovish, the first major bearish catalyst. With a rate cut last month, STIR markets have increased the probability to over 90% of the same in Wednesday's meeting.
https://www.tradingview.com/x/6Rh1SQm5/
The CAD continues to strengthen mildly due to USD weakness. It now looks to test the next major support target at 1.33586, while the major resistance is far ahead at 1.39468.
Long-term outlook: weak bearish.
Expectations of a rate cut remain the focal point, with the BoC governor Macklem himself saying it's reasonable to expect more cuts in the future. Moreover, STIR markets have priced in an additional cut sometime this year.
The mortgage stress remains a major factor in this interest rate policy, and the BoC will have to cut rates to alleviate it. Still, this narrative is getting tired.
Expect encouraging oil prices, along with general economic data improvement to save the Canadian dollar's blushes.
Swiss franc (CHF)
Short-term outlook: bearish.
STIR markets forecast a rate cut later this month (a 35% chance) and December this year.
Secondly, SNB expects a moderate improvement in inflation, GDP (Gross Domestic Product), and unemployment to rise slightly in the near term.
However, the Swiss franc can strengthen during geopolitical tensions like the Middle East crisis.
https://www.tradingview.com/x/ZqD2mZ7B/
After a notable retracement at the start of last month, USD/CHF is looking to test the support area at 0.83326. Meanwhile, the major resistance level is far higher at 0.92244.
Long-term outlook: weak bearish.
The expected rate cut in the next SNB meetings for 2024 is the main bearish driver. However, the SNB's chairperson, Thomas Jordan, expressed that "appreciation of the Swiss Franc has an impact on monetary policy." This means that potential intervention by the central bank can go either way.
Conclusion
The fundamental outlooks of each currency have remained mostly unchanged from the previous report, except for JPY and NZD. Key news events to watch this week include the US unemployment rate and the CAD interest rate decision.
As always, hope for the best and prepare for the worst, but this report should help guide you in determining the bias you should have for each currency.
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- Est. Since 2018.
- Up to 100% Profit Share.
- Balance Based Drawdown.
- 1-Step & 2-Step Funded Accounts.
citytradersimperium.com/
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