Weekly Market Report: Aug 08-13, 2022

Review:

A rally in US stocks that has powered on despite skepticism from Wall St faces a reality check in the coming week, as key inflation data on the 12.08.2022 threatens to shut the door on expectations of a dovish shift from the Federal Reserve.

Technical comment:

The RSI shows upside momentum.

Preference scenario:

Traders looking for an opportunity to go long may find a window if the price breaks out above 12630.00, with targets at 13580.00 and 14275.00 in extension.

Alternative scenario:

A breakout below 12630.00 would open the downside further, with 12030.00 and 11040.00 as targets.

Review:

USDCAD rallies to a fresh monthly high (1.2985), following the larger-than-expected rise in US Non-Farm Payrolls (NFP) (528K new jobs were added in July vs the 250K consensus). The update to the Consumer Price Index (CPI) may sway the exchange rate as the Federal Reserve struggles to reduce inflation. The upbeat NFP report along with the 30.6K contraction in Canada Employment may keep USDCAD afloat over the coming days as the data prints feed into the monetary policy outlook, and the Bank of Canada (BoC) may come under pressure to adjust its approach after deciding to “front-load" the path to higher interest rates.

Technical comment:

A support base has formed at 1.2910, allowing for a temporary stabilisation.

Preference scenario:

An opportunity to go long may present itself should the price break out above 1.2910, in which case the next targets to look out for sill be at 1.2950 and 1.2970 in extension.

Alternative scenario:

Should the price break out below 1.2910, look for further downside movement, with 1.2890 and 1.2870 as targets.

Review:

Gold, which typically encounters a meltdown in any situation that calls for stiff Fed rate hikes — and a US jobs report that’s more than twice stronger than forecast certainly qualifies as one of those situations — held relatively well under the circumstances.

Technical comment:

The RSI calls for a rebound.

Preference scenario:

Long positions are favoured if the price conquers the 1710.00 area and continues to climb towards 1815.00 and then 1860.00 in extension.

Alternative scenario:

A breakout below 1710.00 will send the price lower to 1680.00 and 1645.00.

Review:

Oil prices continued their recent retreat after suffering the worst week since April on worries about stalling global demand as central banks keep tightening. Stronger-than-expected US payrolls data on Friday also saw investors expecting a steep interest rate hike by the US Federal Reserve next month- a move that is negative for oil markets.

Technical comment:

The RSI shows downside momentum.

Preference scenario:

Should the price break out below 108.00, the further downside path will be open, with targets at 75.50 and 64.50 in extension.

Alternative scenario:

A breakout above 108.00 will open the upside further, with 118.00 and 130.00 as targets.

Review:

The Euro had a mostly positive week, gaining ground against six of its seven major counterparts.The lone decliner was EURUSD rates, which fell by 0.45% following the July US jobs report.The second week of August sees a much quieter Eurozone economic calendar than in previous weeks. Over the coming days, there is only one ‘high’ rated data release, while there are less than ten "medium" rated data releases.

Technical comment:

The RSI is mixed to bearish.

Preference scenario:

The price braking out below 1.0370 would open the downside, with targets at 0.9950 and 0.9800 in extension.

Alternative scenario:

Conversely, a breakout above 1.0370 would call for 1.0600 and 1.0800, as the next upside targets.

Review:

The Bank of England (BoE) rose interest rates last week but markets focused on the central banks expectation of a recession in Q4 this year. Recession talk has been stewing of late and now that the BoE surprisingly aired their interpretations of the current UK economic climate, next weeks GDP release will carry even more weight than any previous issues this year.

Technical comment:

The RSI calls for a new upleg.

Preference scenario:

If the price slashes through the 1.2045 level and continues upwards, an opportunity to go long will present itself, giving traders a shot in the arm to propel the price to 1.2110 and then 1.2130 in extension.

Alternative scenario:

Should the price dip below 1.2045, look for further downside with 1.2020 and 1.2000 as targets.