BOJ concerns over recent market volatility

BOJ deputy Governor Uchida during his remarks earlier on today downplayed the possibility of near-term hikes, with Reuters citing the Deputy Governor having said that “We won’t raise interest rates when financial markets are unstable”, implying that the recent market volatility is not favorable for the bank. The comments made by Deputy Governor Uchida could be perceived as dovish in nature, and thus may aid the Yen, should further policymakers re-iterate the same concerns, as it may imply that the bank may withhold from raising interest rates until the markets have calmed down. In China, the country’s trade balance figure for July was released earlier on today and of of particular interest was the nation’s import rate which vastly exceeded expectations by coming in at 7.2% versus the expected 3.5%. The better-than-expected import rate may have also aided the Aussie given their close economic ties, as it may imply that demand for raw materials stemming from Australia could have increased during the month of July. Over in the US the Atlanta Fed GDPNow preliminary rate for Q3 came in at 2.9% versus the expected rate of 2.5%, implying a greater than expected expansion of the US economy, which in turn may alleviate market-wide concerns of a slowdown in economic activity in the US. The better-than-expected preliminary GDP rate for Q3 may provide the Fed with some leeway should they adopt a wait and see mentality up until their next monetary policy meeting in September. On a political level, Vice President Harris announced Minnesota Governor Walz as her running mate.

GBP/USD appears to be moving in a downwards fashion. We opt for a bearish outlook for the pair and supporting our case is the RSI indicator below our chart which currently registers a figure near 40, implying  a bearish market sentiment. For our bearish outlook to continue, we would require a clear break below the the 1.2680 (S1) support level with the next possible target for the bears being the 1.2615 (S2) support line.On the flip side, for a sideways bias we would require the pair to remain confined between the 1.2680 (S1) support level and the 1.2775 (R1) resistance line. Lastly, for a bullish outlook we would require a clear break above the 1.2775 (R1) resistance level with the next possible target for the bulls being the 1.2855 (R2) resistance line.

WTICash appears to be moving in a downwards moving fashion. We continue to maintain our bearish outlook for the commodity and supporting our case is the RSI indicator below our chart which currently registers a figure near 30 implying a bearish market sentiment, in addition to the downwards moving trendline which was incepted on the 18^th of July. For our bearish outlook to continue, we would require a clear break below the 71.50 (S1) support line with the next possible target for the bears being the 64.10 (S2) support line. On the flip side for a bullish outlook, we would require a clear break above the 78.00 (R1) resistance line, with the next possible target for the bulls being the 83.45 (R2) resistance level. Lastly, for a sideways bias we would require the commodity to remain confined between the 71.50 (S1) support line and the 78.00 (R1) resistance level.

Other highlights for the day

Today in the European session, we get Germany’s industrial output rate and trade data for June, followed by the UK’s Halifax house prices rate for July. In the American session, we get Canada’s Ivey PMI figure for July and the US EIA weekly crude oil inventories figure. In tomorrow’s Asian session, we get China’s trade for July. On a monetary level, we note the speeches by ECB Rehn and ECB board member McCaul in today’s late European session, whereas in tomorrow’s Asian session we get the BOJ’s summary of opinions from its July monetary policy meeting followed by a speech from RBA Governor Bullock later on in the session.

GBP/USD 4H Chart

• Support: 1.2680 (S1), 1.2615 (S2), 1.2525 (S3)
• Resistance: 1.2775 (R1), 1.2855 (R2), 1.2945 (R3)

WTICash Daily Chart

• Support:  71.50 (S1), 64.10 (S2), 57.30 (S3)
• Resistance: 78.00 (R1), 83.45 (R2),  89.50 (R3)

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