Safe haven outperforms while dollar lags

Relatively sedate session sees the US dollar give up some gains while slight risk-off gives yen and franc a higher finish ahead of tonight’s Fed minutes.

EUR/USD: Italian political woes as PM resigns

This morning’s attention has been on Italy’s PM resignation and talks over the next two days to form a new government, though with the greenback lagging yesterday this pair’s price managed to finish higher (as well as the remaining majors against the dollar). There wasn’t much Eurozone economic data on the calendar yesterday, and that’s set to be the case today before preliminary PMIs are released tomorrow. In the meantime, it’ll be the Fed’s minutes released tonight that’ll keep investors on their toes to determine the likelihood of another rate cut, with Powell’s talk on Friday at Jackson Hole the next key item. Rate cut likelihoods out of the US central bank have already been dropping but are still majority pricing in a 0.25% drop next month, even as pressure from the White House rises to deliver even more monetary easing.

GBP/USD: Finishing higher against a lagging greenback

There’s been no notable Brexit progress as of yet, with a meeting schedule to take place between the UK’s PM and the German Chancellor. And while this pair’s price made fresh lows in yesterday’s session, it did finish higher thanks to a weakening US dollar. Thus far however, it hasn’t managed to undo what has been a bear trend technical overview that is stalling heavily at the lows and hurting sell breakout strategies that haven’t born any fruit for over a week, with sell reversals offering a better chance. In terms of sentiment, fresh longs have been taking profit and shorts initiating at the lows, resulting in retail bias dropping 4% to a still heavy long 73%. Light UK data around noon today, with the USD aspect of this pair set to get effected by tonight’s Fed minutes.

USD/JPY: Finishing lower yesterday with the bulk of those losses being undone as of today morning

The pair’s bear trend technical overview continues to get tested and stall heavily at current levels, needing little to shift back to a more consolidatory outlook with its ADX no longer showing a propensity to trend but with its price still below all its main long-term moving averages. The catalyst for the shift in the first place were significant risk-off moments in early August, and hence intraday movement hasn’t offered significant follow through on sell breakout strategies (and to a lesser extent reversals). Safe haven currencies’ yen and franc outperformed yesterday in a slight risk-off play, but that means the source of movement remains risk appetite and hence should be noted prior to initiating a trade in this pair ahead of tonight’s Fed minutes that are set to effect the USD aspect of this pair directly, and the JPY aspect indirectly via risk.

USD/CAD: Higher highs but a lower finish in line with its current consolidatory technical outlook

Oil prices were largely consolidatory yesterday in line with its technical overview, and both USD and CAD lagged against the remaining FX majors (though not by much). As it stands, while the bulk of the technical indicators are positive for this pair and showing an ongoing propensity to trend, intraday movement has been more in line with consolidatory conformist technical strategies, with reversals on a lack of difference between the two. However, two key items today are set to effect both aspects of this pair and entice contrarian breakout strategies: (1) Canadian CPI figures set to show modest growth for the month, and (2) the Fed’s minutes. Going into the event retail bias moved a notch higher to a heavy short 67%, with institutional bias at a majority short 58%.

AUD/USD: Finishing higher but still stalling near the lows on its daily chart

Commodity currencies underperformed against most of the FX majors yesterday, but with the greenback retreating the most, the pair’s price managed to finish higher. What it hasn’t managed to do just yet however, is take its pair’s price significantly off the lows to undo its current bear trend technical overview that’s been stalling heavily at the lows and with more of its technical indicators shifting back to neutral. Light Australian data this morning before tomorrow’s preliminary PMI figures, and Fed minutes in between set to shake USD related pairs – including this one.


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