Markets experienced a mixed mood as investors remain cautious ahead of the ECB policy meeting. The hawkish ECB lifted Euro across the board and ECB’s President Lagarde’s speech will be key. Traders will be watching the US Jobs data and Fed Chair Powell’s speech later in the New York session. China’s extended lockdown measures continue to weigh global economic outlook.
AUDUSD plunged by -0.65% as the dollar gains ahead of Fed Chair Powell’s address. The Australian dollar sustained losses as the July Trade balance slumped to 8.733B against the 14.500B forecasted. RBA Governor Lowe added downside pressure to the pair, signalling smaller hikes ahead. Markets continue to price in a hawkish tone from Fed Chair Powell today. The pair trimmed yesterday’s gains targeting the 0.6700 level, a 2-year low and a break below that could trigger extended selling pressure towards the 0.6650 level. Traders should also pay close attention to US Initial Jobless Claims data due later.
EURJPY maintained steady gains at +0.09% ahead of the ECB rate hike. The ECB is set to deliver a 75bps hike to 1.25% as Europe grapples with soaring inflation. ECB President Lagarde will also be speaking later in the day. The Japanese Yen remained resilient as Q2 GDP data spurs optimism. The pair rallied to a 7-year high at 144.25 and a break above that level could reinforce a bullish outlook towards the 145.00 level. However, a failure to break above that high could trigger a market retracement towards the 142.00 support level.
GBPCHF slumped by -0.58% as RICS House Price Balance sharply dropped. The Housing data missed a forecast of 61% to 53% as economic growth gets choked by the rising cost of borrowing. UK’s PM Truss failed to lift the Pound despite a positive energy crisis plan. Swiss Franc advanced as the Unemployment rate lowered to 2.1% from a previous 2.2%. The pair broke below a near-term support level at 1.12500 and a failure to hold above the 1.1200 psychological level could trigger further selling pressure towards 1.11500.
European equities pared earlier gains as traders await the ECB decision. The FTSE100 is trading at +0.03% after rising to 7280 early Thursday. A further slide may face a challenge at 7220 and 7200. To the upside, bulls are capped by 7330 support-turned-resistance. CAC 40 is flat at -0.01% after poking above 6150 intraday resistance. Bears may reclaim 6050 before a rally to 6200. DAX trimmed gains by -0.80% dropping from 13000 psychological resistance. Levels to watch on the slide are 12800, 12700 and 12600.
US stock futures traded flat ahead of Fed Chair Powell’s speech. The S&P 500 futures were kept in a tight range between 4000 resistance and 3970 support on the day. A breakout to the upside may give bulls 4075 and 4120 while a dip may give bears 3900. The DJIA futures rose +0.10% with an intraday low at 31500 and a bullish cap at 31700. The NASDAQ 100 futures gained +0.13% after bouncing off the 12220 low. A breach of the 12320 bullish caps may make way for 12650 and 12800.
Gold maintained gains at +0.43% after rallying as Traders look forward to the Fed meeting. Goldman lifted its forecast for fed rate hikes as the inflation battle continues. Markets are pricing a 75bps in September and this could be a major headwind for gold bulls in the near term. Upside gains are capped by the 1725 level and a break above that could trigger a rally towards the 1740 level.
