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The US dollar extended its weakness against foreign currencies ahead of the US Manufacturing data. Investors are closely watching this week’s US Jobs data expected to drop underpinning dollar strength. The RBA is set to hike its rate at their Tuesday policy meeting. China and Europe’s manufacturing data missed expectations renewing recession fears.
AUDUSD rallied by +0.75% on Monday ahead of the RBA interest rate hike. The RBA is set to hike rates by 50 bps from 1.35% to 1.85% early Tuesday morning and investors are pricing in the hawkish sentiment. The pair soared for the 3rd week straight breaking above the 0.7000 psychological resistance and upside gains are capped by the 0.70500 level. A break above that level will reinforce bullish appetite toward 0.7250, a 10-week high.
EURGBP plunged by -0.30% as Eurozone data indicated slow economic activity. The Spanish, French and Italian manufacturing PMI missed expectations underpinning Euro strength in the near term. The Pound remains stronger ahead of Thursday’s Interest rate decision as investors are pricing in a 50bps hike. The pair dropped from the 0.8400 resistance as bears target the 0.8350 and 0.8300 levels in the near term. A break above 0.8400 could invalidate the near-term outlook to a bullish outlook.
NZDJPY was down by -0.19% despite recovering gains on positive New Zealand Building Consents. The data rose to -3.0% from -5.0% reading suggesting a rising demand in the housing market. China’s slowing economic activity weighed down the NZD strength.
Recession fears are pinning down the NZD leaving room for further bids on the Yen. The pair bounced off the 83.50, a 5-months low and bulls are capped by the 84.00 level. Bears may set targets at 83.00 in the short term if the bulls fail to challenge the 84.00 level.
European stocks were mixed as risk appetite was dampened by a slowdown in the Eurozone economic activity. FTSE100 recovered earlier losses and bulls are up by +0.09% above the 7450 near-term barrier. The next target is at the 7500 and 7600 psychological levels.
DAX rallied by +0.40% above the 13450 and bulls may seek to fill in a price action gap between the 13750 and 13650 created on 13 June 2022. CAC40 was slightly lower by -0.18% underpinned by a drop in French Manufacturing PMI from 49.6 to 49.5 in July. Critical areas to watch are the 6400 support and 6600, a 4-months high.
US stock futures opened lower as yields rallied on Fed member Kashkari reinforced fed tightening to bring down inflation to 2%. S&P500 futures were lower by -0.18% despite last week’s rally towards the 4200 near-term resistance, a 3-months high.
Nasdaq100 futures dropped by -0.30% as bulls lose steam below the 13000 psychological level. A break above that high could reinforce the bullish outlook and targets will be extended towards the 14000 level. However, bulls need to defend the immediate resistance turned support level at 12500.
DJIA Index trimmed gains by -0.06% and upside gains are capped by the 33500 level. There is near-term support at 32500 and if bulls manage to maintain gains above that level a break above the 33000 psychological level could be breached in the near term.
The benchmark US10-year yield rallied by +0.34% on Monday despite closing below 2.70% on Friday. Upside gains are capped by the 2.70% level and a failure to break above that level could cause selling pressure toward the 2.55%.
