US-China Comments Boost Risk Appetite, Eurozone CPIs Enter the Spotlight

Risk Assets Gain, Safe Havens Slide on Trade Talks Optimism

The US dollar traded higher against all but one of the other G10 currencies on Thursday and during the Asian morning Friday. It gained the most versus CHF, SEK, NOK and JPY in that order, while it lost some ground only versus CAD. Among the underperformers, the currencies that lost the least ground were AUD and NZD.

Nasdaq 100 — Technical Outlook

From the beginning of August, Nasdaq 100 continues to trade within a wide range, roughly between the 7380 and 7770 levels. After hitting the lower bound of it on Monday, the index reversed and travelled higher again, this way getting closer to the upper side of the range. Although there is a possibility for the price to continue climbing further up, we need to see a clear break above the 7770 barrier first. Until then, we will remain neutral and monitor the price action.

EUR-Traders Lock Gaze on Eurozone CPIs

As for today, one of the main events on the agenda may be Eurozone’s preliminary inflation data for August. The headline CPI rate is expected to have remained unchanged at +1.0% yoy, while the core one is forecast to have ticked up to +1.0% yoy from +0.9%. That said, bearing in mind that both the German HICP and CPI rates for the month declined, we see the risks surrounding the headline forecast as tilted to the downside. Even if it stays unchanged and underlying inflation ticks up, both rates would still be well below the ECB’s objective of “below, but close to 2%”.

EUR/USD — Technical Outlook

From the beginning of this week, EUR/USD continues to move lower and seems it may be heading towards the current lowest point of August, at 1.1026, reached on the 1 stday of the month. Also, the pair is trading below its short-term tentative downside resistance line taken from the high of June 28 th. For now, we will remain bearish, especially if we see a drop below the above-mentioned 1.1026 level.

As for the Rest of Today’s Events

In the US, personal income and spending for July are coming out, alongside the core PCE index for the month. Personal income is anticipated to have slowed to +0.3% mom from +0.4%, while personal spending is forecast to have accelerated to +0.5% mom from +0.3%. Bearing in mind that the monthly earnings rate for July remained unchanged, we would consider the risks surrounding the income forecast as tilted somewhat to the upside. The case for accelerating spending is supported by the acceleration in retail sales for the month.

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