In this largely data-void week, markets are likely to remain choppy. Many investors and traders are looking forward to the Jackson Hole Symposium which starts on Thursday, where heads of key central banks may provide clues about the path of their respective monetary policies. Ahead of the Jackson Hole, the US dollar's selling has paused for the time being. Having trended lower for much of this year, most of the bad news might be priced in. So without any fresh catalyst from either the US or elsewhere it may refuse to significantly fall further. Meanwhile sentiment towards the British pound remains negative and so if the dollar were to stage a more meaningful comeback then the GBP/USD would be the one to watch as it could drop heavily. At the time of this writing, the GBP/USD was testing last week’s low at 1.2830. The FX markets may also find direction from the equity and commodity markets. Crude oil slumped yesterday but both contracts have bounced back a tad from their respective key technical levels, although this was having very little impact on the USD/CAD which at the time of writing was higher ahead of this afternoon's Canadian retail sales figures. Copper recovery continues and the Australian dollar remains largely in favour as a result, though the AUD/USD pair was down as a result of the US dollar recovery. Stocks have also managed to stage a small recovery. Consequently, the perceived safe haven Japanese yen, Swiss franc and gold have all eased back. In the event of a dollar comeback and stock market recovery the USD/JPY and USD/CHF may find strong support. However if equities turn lower again then these dollar pairs could drop the most due to safe haven demand. Gold needs to climb above $1295 to $1300 resistance area in order to attract fresh technical momentum buying. If it manages to do that then this may attract the attention of the bears in the equity markets and in turn in the USD/JPY and USD/CHF FX pairs.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.