The Swiss franc rises in very calm markets The euro and the British pound on the soft side

FX markets are very quiet in Asian session today, and could stay that way for the day with a super light economic calendar. The Australian dollar and the Swiss franc are currently the strongest for the week, followed by the Canadian and the kiwi. On the other hand, the dollar and the yen are both more flexible, as well as the pound sterling and the euro. Traders are likely still waiting for the biggest bets until the US CPI release on Wednesday.

Technically, the Swiss franc is worth a watch today. GBP/CHF is now down to 1.1525. The firm break will resume a larger downtrend from 1.3070. And in any case, the outlook will remain bearish as long as the resistance of 1.1774, even in case of a new recovery. At the same time, EUR/CHF is back to the low of 0.9697, and the breakout will also resume its long-term downtrend.

In Asia, at the time of writing, the Nikkei is down -0.92%. Hong Kong’s HSI index is up 0.40%. China Shanghai SSE is up 0.25%. Singapore Strait Times is down -0.36%. Japan’s 10-year JGB yield is down -0.008 to 0.170. Overnight, the DOW rose 0.09%. The S&P 500 fell -0.12%. The NASDAQ fell -0.10%. The 10-year yield fell -0.075 to 2.765.

Westpac’s Australian consumer sentiment fell to 81.2 in August

The Australia Westpac Consumer Confidence Index fell -3% to 81.2 in August. The reading was on par with the lows of Covid and the global financial crisis. Additionally, there was a cumulative decrease of -22.9% from the recent high reached in November 2021.

Economic conditions for the 12 months fell from 80.3 to 73.9. Economic conditions for the next five years fell from 91.6 to 90.7. The index of unemployment expectations fell from 109.8 to 103.4. The house price expectations index fell from 104.9 to 97.1.

As for the next RBA meeting on September 6, Westpac expects the central bank to rise another 50 basis points to 2.35%, leaving the cash rate in a “neutral range”. He expects the RBA to then reduce the increase to 25 basis points per meeting until February 2023.

Australia’s NAB business confidence rose to 7, conditions rose to 20

Australia’s NAB business confidence rose from 2 to 7 in July. Trade conditions increased from 14 to 20. Trade conditions increased from 19 to 27. Profitability conditions increased from 13 to 17. Employment conditions increased from 11 to 17.

“Companies continue to report that conditions are really strong,” said Alan Oster, chief economist at NAB Group. “While some of the real-time data we are looking at shows signs of slowing down, there is no sign of this in the survey with demand at a very high level. It is important to note that the strength is showing across all sectors in terms of industries and across the country.”

“Confidence rebounded in July, which was a bit of a surprise,” Oster said. “Inflation and rising interest rates are clouding the outlook, and there are growing worries about the global economy, but companies seem to have a fairly positive outlook at the moment. Futures orders are also quite strong at +10 index points, which also supports the outlook.

Silver Extends Rally Above 20, Gold Still Struggles In Range

Silver’s rally from 6:13 p.m. resumes this week and breaks above the 20 mark. 26.93 to 18.27.

For now, a further rally is expected as long as 19.54 holds. The key resistance area is seen around 22.50, which is close to the 55-week EMA (now at 22.61), and a 38.2% retracement from 30.07 to 18.13 at 22.69. The reaction from there will reveal whether the rise from 18.13 is a corrective bounce or the start of an uptrend (the preferred case).

Gold is struggling in range for now, but further rally is expected as long as 1754.14 support holds. The break of 1794.68 will resume the rise from the 1680.83 low. The key resistance level lies at the 38.2% retracement from 2070.06 to 1680.83, which is near the 55-week EMA (now at 1826.89). A sustained break there will solidify the case that the entire corrective pattern from 2074.84 has completed three waves at 1680.83.

Look forward

The economic calendar is light today. US to release NFIB trade optimism. The United States will publish non-farm productivity and unit labor costs.

EUR/CHF Daily Outlook

Daily pivots: (S1) 0.9705; (P) 0.9756; (R1) 0.9792; After….

EUR/CHF remains in consolidation from 0.9697 and the intraday bias remains neutral. The firm break of 0.9697 will resume a larger downtrend at the 0.9650 long term projection level. Strong support could be seen there to provide a rebound. On the upside, break of 0.9799 minor resistance will turn the upside bias for a stronger rise to 0.9948 resistance. However, a firm break of 0.9650 will target a 100% projection of 1.1149 to 0.9970 from 1.0513 to 0.9334.

Overall, the long term downtrend from 1.2004 (2018 high) should target a 100% projection from 1.2004 to 1.0505 to 1.1149 to 0.9650. The firm break will target a projection of 138.2% at 0.9033. On the upside, a break of 1.0513 resistance is needed to indicate a medium term bottom. Otherwise, the outlook will remain bearish in the event of a strong rally.

Economic Indicators Update

GMT Ccy Events Real Provide Previous amended
23:50 JPY Money supply M2+CD Y/Y Jul 3.40% 3.30% 3.30%
01:30 USD NAB Business Trust Jul seven 1
01:30 USD NAB Terms of Trade Jul. 20 13
06:00 JPY Machine tool controls Y/Y Jul P 17.10%
10:00 USD July NFIB Business Optimism Index 89.5 89.5
12:30 USD Non-agricultural productivity Q2 P -4.50% -7.30%
12:30 USD Unit wage costs Q2 P 9.50% 12.60%