Technical Analysis

The GBP is the strongest and the JPY is the weakest as the NA session begins

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The GBP is the strongest and the JPY is the weakest as the NA session begins. The major currencies are all scrunched together.

Chinese real estate giant, Country Garden, has halted trading in over ten of its onshore bonds, leading to a decline in its shares and affecting other stocks linked to China’s struggling property sector. Reports suggest that Country Garden, previously China’s top developer by sales, is considering debt restructuring following a warning of significant losses in the first half of 2023. This situation mirrors the challenges faced by Evergrande, which reported losses exceeding $81 billion for 2021 and 2022.

China’s property sector is facing increased difficulties due to a liquidity crisis and decreased buyer demand, impacting the country’s post-pandemic economic recovery. Despite the challenges in the property sector, the Chinese government has not intervened, prompting calls for more support from Beijing.

As a result of the crisis, Chinese indexes declined. Hong Kong’s Hang Seng lost -1.6%, while the Shanghai Composite fell -0.3%. Meanwhile, Japan’s Nikkei 225 fell -1.3% and South Korea’s Kospi lost -0.8%. US indices are higher in pre-market trading.

Traders will be anticipating earnings reports this week from big retailers including:

  • Home Depot (NYSE:HD) on Tuesday.
  • Target (NYSE:TGT) on Wednesday.
  • Walmart (NYSE:WMT) on Thursday.

These earnings will give traders – and the markets – more insights into the current financial health of U.S. consumers and the economy. The markets will get a sniff of the US consumer when retail sales for July are reported on Tuesday with expectations for growth of 0.4% for both the headline and the core measure. PS the Atlanta Fed GDP estimate 4.1% with the next estimate after the retail sales on Tuesday (no slowdown there).

Other earnings this week will include:

  • TJX on Wednesday
  • Cisco on Wednesday
  • Applied Materials on Thursday
  • John Deere on Friday

Key economic releases and events this week include:

  • Mon, Aug 14:

    • 9:30pm: AUD Monetary Policy Meeting Minutes (No Forecast or Previous provided).
    • 9:30pm: AUD Wage Price Index q/q (Forecast: 0.9%, Previous: 0.8%).
    • 10:00pm: CNY Industrial Production y/y (Forecast: 4.3%, Previous: 4.4%).

  • Tue, Aug 15:

    • 2:00am: GBP Claimant Count Change (Forecast: 25.7K, Previous: Not provided).
    • 8:30am: CAD CPI m/m (Forecast: 0.3%, Previous: 0.1%).
    • 8:30am: CAD Median CPI y/y (Forecast: 3.7%, Previous: 3.9%).
    • 8:30am: CAD Trimmed CPI y/y (Forecast: 3.5%, Previous: 3.7%).
    • 8:30am: USD Core Retail Sales m/m (Forecast: 0.4%, Previous: 0.2%).
    • 8:30am: USD Empire State Manufacturing Index (Forecast: -0.3, Previous: 1.1).
    • 8:30am: USD Retail Sales m/m (Forecast: 0.4%, Previous: 0.2%).
    • 10:00pm: NZD Official Cash Rate (Forecast: 5.50%, Previous: 5.50%).
    • 10:00pm: NZD RBNZ Monetary Policy Statement (No Forecast or Previous provided).
    • 10:00pm: NZD RBNZ Rate Statement (No Forecast or Previous provided).
    • 11:00pm: NZD RBNZ Press Conference (No Forecast or Previous provided).

  • Wed, Aug 16:

    • 2:00am: GBP CPI y/y (Forecast: 6.8%, Previous: 7.9%).
    • 2:00pm: USD FOMC Meeting Minutes (No Forecast or Previous provided).
    • 9:30pm: AUD Employment Change (Forecast: 15.2K, Previous: 32.6K).
    • 9:30pm: AUD Unemployment Rate (Forecast: 3.6%, Previous: 3.5%).

  • Thu, Aug 17:

    • 8:30am: USD Unemployment Claims (Forecast: 240K, Previous: 248K).

Speaking of the economy Goldman Sachs economists anticipate the Federal Reserve to begin cutting interest rates by the end of next June, with subsequent gradual reductions every quarter. The investment bank predicts that the U.S. central bank will not increase rates in its upcoming September meeting. By November, due to moderated inflation, they expect the Fed to deem a final rate hike unnecessary. Recent data indicates that the annual growth in consumer prices for July was lower than expected, supporting a shift away from the tightening cycle initiated in March 2022. Although headline inflation has decreased since last summer, it remains above the Fed’s 2% target.

A snapshot of the markets as the NA session gets underway shows:

  • Crude oil is trading down -$0.45 or -0.55% $82.73. The price moved to a high of $84.89 last week before rotating back to the downside on Thursday and closing mostly higher Friday.
  • Spot gold is trading up $0.87 or 0.05% at $1913.86
  • Spot silver is trading unchanged at $22.67
  • Bitcoin is trading at $29,370. The high price from Saturday reached a high of $29,465. The low today reached down to $29,086

In the US premarket for US stocks:

  • Dow Industrial Average is trading up 43.6 points after Friday’s 105.25 point rise
  • S&P index is trading up 6.5 points after Friday’s -4.78 point decline
  • NASDAQ index is trading up 24 points after Friday’s -93.14 point decline

In the European equity markets, the major indices are trading mixed

  • German DAX, up 0.36%
  • France’s CAC, up 0.03%
  • UK’s FTSE 100, down -0.50%
  • Spain’s Ibex, up 0.08%
  • Italy’s FTSE MIB, +0.63% (delayed)

In the Asian Pacific today, equity markets closed higher:

  • Japan’s Nikkei 225, -1.27%
  • China’s Shanghai Composite, -0.34%
  • Hong Kong’s Hang Seng, -1.58%
  • Australia’s S&P/ASX 200, -0.86%

In the US debt market, yields are mixed. The shorter and today is higher while the longer and is modestly lower

  • 2-year yield, 4.935%, +4.0 basis points
  • 5-year yield, 4.324%, +1.6 basis points
  • 10-year yield, 4.171% +0.4 basis points
  • 30-year yield, 4.265% -0.7 basis points

In the European debt market, benchmark 10-year yields are mostly lower

This article was written by Greg Michalowski at www.forexlive.com. Source