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The GBP/USD currency pair experienced a slight correction on Monday but remained in a strong, short-term, upward trend. The current trend period raises many questions, as we have discussed before. Such explosive growth, reminiscent of Bitcoin, often serves as a precursor to a prolonged decline. Traders are using the last chance to buy in fully, but they will soon start to take profits on long positions, which will be a harbinger of a new downward trend. Of course, this is just a hypothesis, and any hypothesis requires confirmation. So far, there are none.   However, let's draw traders' attention again: even in the short term, the pound shows such strong growth that it needs to be more consistent with the macroeconomic and fundamental background. Over the past few months, we have repeatedly mentioned that we expect a decline in the British pound. The decline has yet to begin, and the British currency cannot even correct itself properly, especially in the 24-hour time frame. Let's ask ourselves: Is the British economy really that strong, and is the Bank of England's stance aggressive enough for the pound to show a rise of 2500 in three quarters? The answer is obvious. Of course, part of this trend should be attributed to a simple technical correction after a significant decline.   Another part of the trend is the pound's recovery after Liz Truss's departure. But even with these two "buts," it seems too much. Interestingly, such a momentum trend can continue for some time. The market sees that the pound is growing and logically continues to buy, even though there are no grounds for it. Therefore, the conclusion remains the same: the pound is rising illogically, and at any moment, this growth may end with a crash, but the upward trend can continue for as long as the market deems necessary, largely ignoring the fundamental background.   Events this week may cause a decline in the pound This week, the Bank of England will hold its regular meeting in the UK. The key rate is likely to increase for the thirteenth consecutive time, which is unsurprising. We receive very few comments and forecasts from Bank of England representatives, making it extremely difficult to predict the regulator's future actions. However, the market does not doubt that monetary policy will be tightened again.   If so, this decision has already been priced in. However, if even one "dovish" hint comes from the Bank of England's corridors, it could end badly for the pound. It is evident to everyone that the Bank of England can only maintain elevated interest rates for a limited period. The rate has already reached 4.5%, and after a deceleration in the tightening pace, two 0.25% rate hikes have already been implemented. This week might witness the occurrence of the third and final hike. The British economy has teetered on the brink of recession for four consecutive quarters, and each subsequent rate increase further raises the likelihood of a recession commencing within this year. However, we have been aware of all these factors for quite some time.       On Monday, there were no noteworthy developments concerning the dollar or the pound. Tuesday will also have scarce news. The real excitement will commence on Wednesday when Jerome Powell, the Chairman of the Federal Reserve, makes his debut appearance in Congress. This event might go unnoticed, as Mr. Powell will provide an account of the Federal Reserve's operations and respond to inquiries from senators and congress members. Since the Federal Reserve is an independent entity not subject to the control of the US government, Powell has no reason to fear. He will not face job loss and can address questions according to his own judgment. It is no secret that US authorities would prefer a less aggressive monetary policy since the regulator's actions have led to a banking crisis. But again, Powell and his colleagues have a different view on this matter: inflation is their top priority. We do not expect any "dovish" statements from Jerome. Accordingly, we do not expect the dollar to weaken after his speeches in Congress. The pound has excellent chances of starting a decline this week if the fundamental background means anything to the market.    

Bitcoin The crypto market is still buzzing over the potential launch of a US Bitcoin exchange-traded funds.  First it was BlackRock and now WisdomTree and Invesco are filing their ETF applications.  As the economic resilience of the US ends, it will be interesting to see how Bitcoin and all the other top cryptos perform. The use case for cryptos is slowly making progress as JPMorgan has expanded their blockchain-based token to euro payments. Bitcoin is hovering around the $30,000 region and traders are becoming optimistic that a path to $40,000 is forming.  With a de-risking moment occurring on Wall Street    

It’s been a relatively slow start to the week so far but things are likely to pick up with more appearances from prominent central bankers and key data due for release in the coming days. Equity markets are a little higher early in the European session after what has been a tough couple of weeks. Stubborn inflation has investors concerned that there may be a much heavier economic price to pay for restoring price stability which appears to have shaken confidence a little. Not only are more rate hikes being priced in but the prospect of rate cuts this year has become more fantasy than reality. Obviously, some are faring much worse than others, the UK being a prime example, but progress has also been much slower than hoped elsewhere and the likelihood is that getting from 4% to 2%, for example, may prove more challenging again. We need to see some concrete signs of progress or sentiment could suffer much further.   Can bitcoin be propelled higher on ETF excitement? We’ve seen some consolidation in bitcoin in recent days after it hit fresh highs for the year late last week. There’s been no shortage of crypto newsflow but the excitement around an ETF may well be what’s pulled traders back in. Either way, it promises to be an intriguing and potentially volatile second half to the year as we await the outcome of that and the action brought against various exchanges from the SEC. ​  

Commodities were tested after Fed Chair Powell triple downed on the Fed’s dot plots.  The dollar initially caught a bid but that was short-lived.  At the end of the forum, traders really didn’t learn anything new.   Oil Before the EIA report, crude prices were wavering after a larger than expected drop in inventories, countered fears that several banks will be sending the global economy into recession. Yesterday, the API report showed crude stocks declined by 2.4m bpd. Energy traders however turned bullish quickly the EIA energy report showed a 9.6 million bpd draw and robust demand signs everywhere.  US crude exports rose above the 5 million bpd level, jet demand rose to highest level since 2019, and the 4-week average gasoline demand surged to the best levels since December 2021.  The oil outlook was too pessimistic and this report reset the market.   Gold Gold remains in the house of pain, falling to a 3-month low as investors grapple with FOMO and as central banks send global bond yields higher. The peak of tightening cycles keeps getting pushed higher and that has been bad news for gold. Gold did not get any favors from Fed Chair Powell as the pushback of more tightening saw rate cut bets pushed deeper into next year.  The precious metal also got some hawkish signals from the ECB and BOE, while the BOJ noted that there are signs inflation will pick up next year and that the BOJ is ready to shift policy, potentially even as soon as this year. All eyes are on gold’s $1900 level, as a breach could trigger some technical selling.  Gold is above where it was trading before the ECB forum, so it might continue to stabilize here.  

Oil remains range bound but ending the week on a positive Oil prices are edging higher again today but given how they’ve traded over the last couple of months I’m struggling to read too much into it. The inventory data on Wednesday was bullish on the face of it and the eurozone inflation data today won’t do it any harm either, but uninspiring Chinese PMIs overnight don’t fill me with confidence. Broadly speaking, it’s range-bound as it has been since early May, and showing little signs of breaking in either direction. The range is getting very gradually smaller but at such a slow pace that it doesn’t really tell us much at this point. It very much feels like traders are awaiting more information on inflation and, by extension, interest rates, and until we have a better idea of the outlook, it could remain in this pattern.   Gold struggling amid US interest rate concerns Gold continues to languish around $1,900 after slipping below here briefly on Thursday for the first time since March. Strong economic data from the US has reaffirmed fears that a resilient economy may stand in the way of the Fed ending the tightening cycle, increasing the possibility of more hikes and a harder landing. There are clear signs of progress on inflation but with the economy and labour market showing such resilience, officials may be concerned that getting from 4.4% to 2% may be much harder than what’s been achieved so far. And the longer it remains above, the longer rates will remain high which is a big risk to the longer-term economic prospects.  

Gold Gold prices are steadying following disappointing global PMI data and on expectations the US economic outlook could start to deteriorate more quickly.  Gold should find a home above the $1900 level on  weaker growth expectations following the headlines on student loan debt, tougher times for small and medium size businesses, and potentially a stop and go Fed rate hiking cycle.   Bitcoin Bitcoin hovers above the $30,000 as traders sift through a plethora of fake news and await a meaningful update on the regulatory front.  Over the weekend, false reports circulated that SEC Chair Gensler was going to resign after an internal investigation.  Crypto traders are growing impatient, but it might be a while before we get some meaningful news regarding Grayscale’s lawsuit or further Bitcoin ETF clarity.  Bitcoin appears to be stuck in a range again, trading between $28,000 and $31,500.     

Saudi and Russian cuts no game-changer for oil Oil prices were rising for a fourth session, with output curbs from Saudi Arabia and Russia initially giving fresh momentum to the recent recovery. The Saudis announced a one-month extension to their voluntary one million barrel cut, taking the reduction to the end of August which was swiftly followed by Russia announcing that it will cut exports by 500,000 barrels per day next month. That the market rallied only a little over 1% on the announcements, before giving it back, suggests traders don’t view today’s decisions as a game-changer or even unexpected, when it comes to Saudi Arabia. Brent crude continues to trade in the same range, roughly between $72-$77 at this point and only a break of either of these levels will suggest something has fundamentally shifted.  

Can oil break above its two-month range after Saudi and Russian cuts? Oil prices are higher again today but still remain within their two-month range. The rally has been aided by the cuts announced by Saudi Arabia and Russia this week but ultimately, another failure to break above the range will suggest traders have largely shrugged it off. The previous high in Brent two weeks ago came just above $77 and a failure to hit that will represent yet another lower peak over the last month or so and may, therefore, merely confirm that we remain in a very gradual consolidation. We do appear to have seen a slight uptick in momentum over the last couple of days though so perhaps we’re going to see a real test of the previous peak, a break of which could be quite bullish.  

Limited growth in foreign demand After a weak first quarter, Dutch exports are expected to pick up over the rest of 2023 and 2024, in line with a recovery in global merchandise trade, which recently experienced a setback. Conditions have improved as supply chain disruptions are hardly hampering trade anymore, global destocking is gradually decreasing, and China is no longer having lockdowns. This expectation is also in line with the increased outlook of producers regarding foreign turnover in the next three months. However, goods exports are likely to grow only at a slow pace. The economies of the eurozone, the US, and the UK remain weak, and the shift from goods to services consumption continues.   Inventory reduction will gradually decrease Producers are still relying on their inventories due to reduced demand and significantly diminished supply chain issues. The historically large stock of materials and finished products is increasingly seen as a cost item since financing has become more expensive due to higher interest rates. With the long-lasting disrupted supply chains fresh in memory and considering the current geopolitical unrest, producers won’t deplete their buffer stocks completely. However, a majority of Dutch producers still consider their finished product inventory to be too large. Therefore, traders and final producers are aligning their inventories with expected sales. Suppliers are also reducing their inventories. This bullwhip effect has led to significant production declines at the beginning of value chains, such as in basic chemistry, basic metal, and plastic industries, but it will gradually decrease.   Bottom for energy-intensive industry in sight On the other hand, new orders in the chemical and plastics industries are picking up again. Energy prices are also significantly lower than the average of the past year. Therefore, some recovery in the energy-intensive industry is possible from the second quarter onwards. As a result, the energy-driven growth gap between manufacturing sectors is gradually disappearing. However, due to economic headwinds and energy prices expected to remain structurally higher than in 2021, the energy-intensive industry does not anticipate a quick return to previous production levels.

Economic calendar for July 10 Monday is traditionally accompanied by an empty macroeconomic calendar. No important statistical data is expected to be published in the European Union, the United Kingdom, and the United States. Therefore, investors and traders intend to rely on the incoming flow of information and news. EUR/USD trading plan for July 10 Due to the technical overbought signal of the euro in the short-term and intraday periods, a price pullback is possible. To continue the current upward cycle, market participants need to overcome the resistance level around 1.1000. If the price remains consistently above this level, it may stimulate an increase in long positions.      

GBP/USD trading plan for July 10 In this situation, the return of the price to the local high indicates a prevailing bullish sentiment among market participants. The pullback we are observing can serve as a stage for regrouping trading forces before further growth. To confirm the continuation of the upward trend, it is necessary to keep the price above the level of 1.2850, which may trigger a technical signal for further growth.       What's on the charts The candlestick chart type is white and black graphic rectangles with lines above and below. With a detailed analysis of each individual candle, you can see its characteristics relative to a particular time frame: opening price, closing price, intraday high and low. Horizontal levels are price coordinates, relative to which a price may stop or reverse its trajectory. In the market, these levels are called support and resistance. Circles and rectangles are highlighted examples where the price reversed in history. This color highlighting indicates horizontal lines that may put pressure on the asset's price in the future. The up/down arrows are landmarks of the possible price direction in the future.  

Gold Gold traders have their rally caps on after ECB’s Knot signaled they could be ready to pause in September and after Canadian inflation dropped to the BOC’s control range for the first time since March 2021. ​ Global bond yields are falling and that is good news for bullion investors. ​     So far this earnings season, the big banks have outlined a vision that includes slowing growth in the US, which should allow the Fed to be one and done with rate hikes. ​ Unless core inflation proves to be a lot stickier than Wall Street fears, the peak in global rates should be in place by the fall. ​ Gold might struggle to make a run at the $2000 level, but that could change if bond yields continue to come down and the Fed signals they are likely done hiking next week after delivering one last quarter-point rate rise. ​ ​ ​ ​    

ECB hikes rates by 25 basis points Signals the central bank may pause at the next meeting in September Euro slides as eurozone yields fall   The ECB raised rates for potentially the final time in the tightening cycle on Thursday, although it refused to give any indication of what will happen going forward. Instead, the central bank is insisting that decisions will be guided by the economic data and that interest rates will need to remain sufficiently restrictive for some time. This is consistent with what we heard from the Fed a day earlier and what most major central banks will be communicating soon enough if they aren’t already. We remain in a period of uncertainty on the economic data, despite the progress that has already been achieved and the further moves that are expected over the rest of the year. If the inflation data continues to improve as many expect, there’s every chance the ECB pauses in September and doesn’t then feel it necessary to hike further by October. There are, of course, an abundance of upside risks to the inflation data from the economy continuing to display significant resilience, as we’ve already seen this year, or fresh energy or food price shocks. These things and more could tempt the ECB to hike further later in the year.     Euro falls below 1.10 against the dollar The lack of commitment to further rate hikes from the ECB today weighed on the euro and saw eurozone yields decline. The single currency plunged against the dollar, slipping back below 1.10 after coming close to 1.1150 earlier in the day.       It would appear the ECB has failed to open the door to a pause without triggering too much excitement, as it would have preferred. President Lagarde was desperately trying to avoid doing so in the press conference, repeatedly referring back to previous comments rather than directly answering questions, and it seems in doing so, traders have instead opted to read between the lines. We may see efforts to correct this in the weeks ahead.  

Traders push back RBA rate hike bets until November WTI and Brent crude implied volatility falls to lowest since 2020 Turkey unloads significant portion of gold holdings The Australian dollar tumbled after the RBA kept rates on hold again and signaled they might be done tightening.  Given most economists expected a hike, aussie-dollar was ripe for a plunge.  US dollar strength also supported the decline after the Treasury increased their net borrowing estimate.     Oil The oil price rally is ready for a break as US stocks soften and the dollar firms up.  August is off to a slow start for energy traders as the outlook on demand could face rising prices.  The oil market will likely remain tight even if the oil giants, like BP start delivering large price increases.  Oil remains one of the most attractive trades and buyers will likely emerge on every dip.   Gold Gold prices are not seeing safe-haven flows as US equities tumble, because the US dollar is catching a bid as yields rise higher.  Gold is going to need to see Treasury yields come down, but that might not happen until the market fully prices all the longer-dated issuance that is coming from the Treasury.  Gold’s moment in the sun is coming, but first markets need to see the bond market selloff end. If bearish momentum remains in place, gold could find major support at the $1940 level. Until we get beyond Apple earnings and the NFP report, positioning might be limited.  

China increased gold holdings for a ninth straight month in July Oil unfazed as Ukraine sea attack Russian oil tanker didn’t lead to a major disruption Dollar supported amidst bond supply concerns; 10-year Treasury yield rises 3.8bps to 4.074%   Oil Crude prices are lower following a surge in the US dollar and as Saudi Arabia anticipates a bumpy road for the crude demand.  The Saudis are raising prices across most of Asia and Europe, with the Arab light crude only being boosted by 30 cents, which was less than the 50-cent rise expected by traders. The initial rally from news that a Russian oil tanker was damaged  only provided a brief rally on Sunday night.  Unless we see a meaningful disruption to crude supplies, prices will remain  Also dragging oil prices down is the rising expectations that the US will see a recession by the end of 2024.  A Bloomberg investor poll showed two-thirds of 410 respondents expect a recession by the end of next year and 20% see one by the end of this year.    Gold Gold prices are struggling here on a strong dollar and as global bond yields rise and after an early round of Fed speak are still supporting the case for one more hike by the Fed. Wall Street is playing close attention to fixed income at the start of the trading week, which saw the bond market selloff cool at the end of last week after a mixed nonfarm payrolls report. If Treasury yields rally above last week’s high, that could trigger some technical buying and that could be very negative for gold prices.  For many traders, this week is all about inflation data and any hot surprises could prove to be short-term bearish for gold.  As earnings season wraps up, stocks have mostly posted better-than-expected results (excluding Apple) and that has hurt the gold’s safe-haven appeal.  At some point over the next few weeks, if the stock market rally can’t recapture the summer highs, a decent pullback could help trigger a big move back into gold.     

ADP posts 177,000 new jobs but traders not convinced US Q2 GDP revised lower to 2.1% (2.4% previously) USD pares six week gains after weaker figures this week   The recovery in equity markets appears to have stalled on Wednesday as traders likely eye the big economic releases later in the week. The ADP and revised GDP numbers may attract some attention but they were never likely to have too great an impact. The ADP report has long been ignored as a reliable precursor to the NFP report on Friday and at times it’s frankly been wildly off. That it’s come in at a reasonable 177,000 doesn’t offer any real insight in terms of Friday’s payrolls, with the focus instead remaining on them in relation to yesterday’s JOLTS data which saw a marked decline. If we see a trend of weaker hiring and fewer job openings then the Fed will be more at ease ending the tightening cycle. Today’s data was never likely to be overly impactful with tomorrow’s inflation, income, and spending figures, prior to Friday’s payrolls, always the primary focus. That could well set the tone for September ahead of some major central bank meetings.   EURUSD has been buoyed by the recent economic data, with the figures indicating that the higher for longer narrative may be less intense than feared.   EURUSD Daily       The pair has now rallied for three days and is closing on an interesting level around 1.10 where it may run into some resistance from the 55/89-day simple moving average band. It’s also a notable psychological level. There are also some interesting Fib levels around here if this is merely a corrective move following the sell-off of the last six weeks.

It's early December, which means traders have very little time left before the start of the "dead season." The currency market will be active for a few more weeks before entering the Christmas-New Year lethargy. The EUR/USD pair is no exception here. Typically, life in the FX market slows down after the December meetings of the Federal Reserve and the European Central Bank (on December 12-13 and 14, respectively). For some time, traders reflect on the outcomes of these meetings, but inevitably, "winter holidays" set in. The main feature of the upcoming week is the "silence" of the Fed officials. The so-called "blackout period" started on Saturday: for 10 days leading up to the Fed meeting, officials of the U.S. central bank generally do not speak publicly or grant interviews. Therefore, EUR/USD traders will be focused on economic reports. Let's take a look at the economic calendar and see what awaits us in the coming days.   Monday The first working day is traditionally quite empty for EUR/USD. During the European session, the Sentix investor confidence indicator will be published. This is a leading indicator as it measures investors' sentiment towards the eurozone economy. Since March 2022, the indicator has been in the negative territory, but in November, it showed positive dynamics, rising from -21.9 to -18.6. In December, experts expect a further improvement to -15.0. Also on Monday, ECB President Christine Lagarde is expected to speak. She will participate in a conference that includes a Q&A session. The head of the ECB may comment on the latest eurozone inflation data, although the theme of the meeting, let's say, does not lend itself to such questions (the conference is organized by the French Academy of Ethics and Political Sciences). During the U.S. session, a report on factory orders in America will be published. The volume of total orders is expected to decrease by 2.7% in October, while core orders are expected to increase by only 0.3%. Tuesday On Tuesday, the final estimates of the PMI data for November will be published. According to forecasts, they will coincide with the initial reports (in this case, the market will likely ignore this data). Traders will focus on the ISM Non-Manufacturing Purchasing Managers' Index (PMI), which will be published during the U.S. session. This indicator has declined over the past two months, but according to most experts, it will rise to 52.5 points in November. However, if the index falls into the "red zone," the dollar will come under significant pressure. Let me remind you that the ISM Manufacturing Index published last week did not support the greenback. In November, it reached 46.7 points, against forecasts of an increase to 48.0 (the manufacturing index has been in contraction territory for the 13th consecutive month). In addition, the U.S. Bureau of Labor Statistics will release data on the level of job vacancies and labor turnover. However, considering that the market is anticipating the Non-Farm Payrolls data later in the week, they will likely overlook Tuesday's report.   Wednesday At the start of the European session, we will learn about the October volume of industrial orders in Germany. In annual terms, the indicator has been in the negative territory since July, and judging by forecasts, the situation is not expected to improve in October (forecast -5.6%). The main report of the day will be announced during the U.S. session, which is the non-farm employment in the United States from ADP. This report is considered to play the role of a kind of "harbinger" ahead of the release of official data—although quite often these indicators do not correlate. Nevertheless, the ADP report can trigger increased volatility among dollar pairs, especially if it comes out in the green/red zone. According to experts, 120,000 non-farm jobs were created in November. If the figure falls below the 100,000 mark, the greenback may come under pressure. Also, U.S. data on labor cost will be published (final estimate). This indicator, for the first time since the beginning of 2021, dropped into negative territory in the third quarter. According to forecasts, the final estimate will be revised downwards (from -0.8% to -0.9%). On the same day, ECB Executive Board member Joachim Nagel (head of the Bundesbank) will speak. Before the release of the latest data on eurozone inflation, he voiced rather hawkish theses, allowing for additional interest rate hikes in the foreseeable future. We do not know whether his position will change in light of recent events.   Thursday On this day, we will learn the final estimate of the eurozone Q3 GDP data. According to forecasts, the final result should match the second estimate (-0.1%). During the U.S. session, weekly data on initial jobless claims will be published. Since mid-October, this indicator has fluctuated in the range of 210,000 to 220,000 (except for one week when the count jumped to 233,000). According to forecasts, for the upcoming week, the indicator will come in at 220,000, i.e., at the upper limit of the "established" range. Furthermore, secondary economic reports will be released (wholesale inventories - final estimate, and consumer credit), but they usually do not have any significant impact on the market.   Friday On the last day of the trading week, key U.S. labor market data for the month of November will be published. According to preliminary forecasts, the unemployment rate in November will remain at the October level, i.e., at 3.9%. The number of non-farm payrolls is expected to increase by 185,000 (after a 150,000 increase in October) – meaning the figure will once again fall short of the 200,000 mark. In the private sector, the number of employed is expected to grow by 155,000 (after a 99,000 increase in October). And the average hourly wage level is expected to demonstrate a downtrend again – down to 4.0% YoY (in this case, it will be the lowest value of the indicator since August 2021). Obviously, such a result will not benefit the dollar, especially amid a decrease in CPI, producer price index, and the core PCE index.   On the bullish side, we have the dovish comments from some of the Fed officials (Waller, Goolsby), conflicting signals from Fed Chair Jerome Powell, and a decline in key inflation indicators. On the bearish side, we have the eurozone inflation data. The "red tint" of the latest report put an end to the discussion about the ECB rate hike in the coming months. The euro lost its fundamental trump card, but, as we know, the EUR/USD pair can successfully rise only due to the dollar's weakness. For instance, on Friday, the bears tried to break through to the 1.08 level but eventually failed. In my opinion, in the medium-term perspective (until the release of the NFP data), traders will exercise caution (both sellers and buyers), trading on "neutral territory," i.e., in the range of 1.0850 – 1.0930 (lower and middle Bollinger Bands lines on the 4H timeframe, respectively).

Indices trying to end 2023 on a high note Global stock markets seem to be headed for an end-of-year 'Santa rally' as traders and investors return to their desks after the Christmas break, gearing up for the final push into 2024. The ongoing optimism surrounding the prospect of central banks initiating interest rate reductions in 2024, with multiple cuts expected next year, continues to propel shares higher after the US stock market experienced gains in light trading, bringing the S&P 500 index to its highest intraday level in nearly two years.   This positions the S&P 500 just below 1% of its closing all-time high of 4,796.56 recorded in January 2022 with this rally reflecting investors' growing confidence in the ability of US policymakers to engineer a 'soft landing,' effectively curbing inflation without precipitating a recession with this sentiment gaining further traction after the recent US PCE index data revealed a deceleration in inflation last month. However, it is important to note that the situation in the UK is significantly more troubling after recently released data continues to indicate inflationary and economic issues in the economy as the Bank of England may have run out of moves.