The start of the trading week was quiet as the market took a breather after the Jackson Hole summit and comments from Federal Reserve chiefs that reinforced the US interest rate cut in September.
The market has priced in about a 35% chance of a 50 basis point rate hike, but that outlook will only become clear on September 6 after the US jobs report. The next Fed decision is not due until September 18. There is still a long way to go before the decision is made on August 25.
As a result, the market has become somewhat stagnant and is just waiting for the next push in most major currency pairs.
A look at the trading ranges at the beginning of the week:
- EURUSD 16 pips (22-day average 62 pips)
- GBPUSD 18 pips (22-day average 80 pips)
- USDCAD 17 pips (22-day average 67 pips)
- AUDUSD 16 pips (22-day average 61 pips)
- NZDUSD 13 pips (22-day average 68 pips)
The USDCHF pair, which reached 26 pips, was still only 35% of its normal one-day level of 76 pips. The USDJPY pair (and the corresponding Japanese Yen pairs) moved relatively more with the USDJPY range at 90 pips, but the average over the past 22 days was 236 pips). For a technical look at these pairs ahead of the new trading week, click here.
In other words, activity was limited.
US yields fell a few basis points, continuing moves from last week (click here),
Crude oil prices are higher (helped by the bombing in Israel) by about $0.39 but remain between the 100 and 200-day moving averages.
The S&P e-mini contract fell modestly (0.04%). Japan’s Nikkei fell -1.09% as it reacted to higher interest rates in Japan and lower interest rates in the US.
Bitcoin was little changed at $64,079. Friday’s close was $64,085.
Markets are expected to see the same slump during the European session, as the session is a holiday in the UK.
This week, the biggest economic data will be the US core PCE data on Friday and the weekly initial claims and durable goods data in the US (click here). There is some CPI data in Australia and preliminary data for Europe, but for Australia it is just a monthly report and in the EU the data is preliminary preliminary data.
It’s also worth noting that Nvidia will report earnings on Wednesday after the close. Salesforce, Crowdstrike, and Dell will also report and could attract interest (especially Nvidia).
I wish you good luck in your trading.