Forex

The dollar lost some ground in August 2023 due to a weaker labor market and the US economy that is growing at a more reasonable rate.

Jerome Powell restated the Fed's assessment that the labor market will need to loosen up in order to bring inflation down to the 2% objective at the Jackson Hole Economic Symposium. Since the core inflation rate has remained sticky due to the tight labor market, the Fed may need to raise rates by 25 basis points before the year ends.

Job vacancies in the United States reported 1.5 jobs for every unemployed individual, the lowest level since 2021 but still elevated. The release of ADP statistics barely 15 minutes after German inflation data highlighted fresh symptoms of weakening in the labor market ahead of the highly anticipated non-farm payroll data.

The US Dollar is headed lower following a shortfall in GDP figures and the beating it received as a result of a significant decline in the JOLTS employment vacancies data. Even still, the bright Greenback is beginning to lose some of its luster, as evidenced by the US Dollar Index (DXY) falling below 104.00. The DXY's overall summer rally is still going strong, but it is beginning to feel somepressure.

Due to weaker-than-expected GDP numbers, the US dollar continued to lose value. The Gross Domestic Product (GDP) reported by the US Commerce Department for Q2 was 2.1% lower than the government's previous forecasts of 2.4%, an increase from Q1's 2%. Together with the ADP National Employment report's underperformance of 195K at 177K, this demonstrated the labor market's waning strength.

From a technical perspective, the USD/JPY is still upward-biased, but a break of the Ichimoku Tenkan-Sen line near 145.95 might lead to a drop, with support developing around the daily high of June 30 that has since become support, or 145.07. Otherwise, the next stop could be 146.00 if purchasers retake the Tenkan-Sen line. The year-to-date high of 147.37 may be tested if the latter is breached.

The US Dollar (USD) is losing ground to the Euro (EUR), which propels the EUR/USD to break over the 1.0900 resistance level and reach multi-day highs above 1.0930 when the European session on August 30 comes to a close.

The market's assumption that the Bank of England(BoE) will likely conduct two additional rate hikes of 25 basis points this year caused the British pound to increase past $1.27 and hit the highest point since August 24. Ben Broadbent, the deputy governor of the Bank of England, added that in order to combat persistent inflation pressures, the UK could need to maintain higher interest rates over an extended period of time.

The Reserve Bank of Australia (RBA) may decide to maintain interest rates at its upcoming policy meeting as a result of Australia's inflation declining to a 17-month low in July. A two-day gaining streak was broken by the AUD/USD, which was trading around 0.6460 during the European session on August 30. Due to the negative macroeconomic data from Australia announced early on Wednesday, the pair is under pressure to fall.

Commodities

Since US private employment data have reproduced dismal job openings data, the price of gold is attempting to break above $1,940.00 despite a sideways performance. Following an impressive surge, the precious metal climbs close to the top of the chart pattern known as the Rising Channel, which was created on a brief time scale. The price of gold continues to rise above the 20-day and 50-day Exponential Moving Averages, indicating a positive shift in the mid-term trend.

Silver price gave additional positive trades during August closing to reach the new anticipated target of 25.00, while stochastic clearly develops positive momentum and enters oversold areas. So, the odds are valid to resume the projected positive trend on an intraday basis, with the next target at 25.50, considering that exceeding 24.60 will halt the expected climb and cause the price to fall.

According to preliminary data from the American Petroleum Institute, oil prices kept rising during the fourth week of August, setting a one-week high after a steep decline in US crude stocks. Traders are awaiting official inventory data from the Energy Information Administration later today, with forecasts that inventories will fall for the third week. The price of US crude climbed 0.75% to $81.85 per barrel, while Brent fell 0.65% to $85.49 per barrel.

Indices

The S&P 500 closed above the ascending trendline and above the Inchimoku Cloud. Besides, a Head and shoulder pattern that was being developed appears to have been shattered by the Index closing above 4,459 at the end of August. The key support of 4,340 was never broken, implying that the head and shoulder pattern is not confirmed yet.

The Nasdaq 100 has halted its decline and canceled its Shoulder-Head-Shoulder pattern by closing above 15,367. Bears can still cling to the idea that the RSI remains negative and has to exceed 60 to change the downtrend sentiment. If the RSI closes above 60, the Nasdaq 100 has more upward potential in the upcoming months.

The Dow Jones Industrial Average's increase and daily chart closed above 34,696 indicate that August's corrective phase lower has ended, with the July peak of 35,690 now within reach. The minor psychological barrier near 35,000 remains the initial upside goal.

Market Events

Bank of England confirmed to keep their official bank rate unchanged (5.25%) on August 3. US non-farm employment change was reported at 187K on August 4, which is only 2K above the previous month. UK GDP reported 0.5% on August 11, 0.3% higher than the expectation. The US retail sales report was published on August 15, showing a 0.4% rise compared to last month. However, the US prelim GDP declined by 0.3%, as reported on August 30.