DAILY MARKET ANALYSIS 31-08-2022

The inflation rate in the eurozone rose further in August from 8.9% to 9.1%. Economists at Nordea now expect the European Central Bank (ECB) to hike by 75 bps next week – even if new staff projections for growth are approaching the downside scenario – lifting the euro.ECB likely to deliver 75 bps in September.

Stocks

Risk sentiment continues to sour with the FTSE 100 also under pressure as the index breaks below 7300. I mentioned previously that around the recent range top (7600-50) had been a good area to look for a pullback in the index, particularly as China slowdown risks had been picking up.

Currencies

• EUR/USD sheds some ground following Tuesday’s 2-day tops in the 1.0050/55 band.Further consolidation looks the most likely scenario in EUR/USD for the time being, always within the 1.0100-0.9900 range. The pair is expected to keep this theme unchanged in the next couple of sessions, or at least until the key publication of US Nonfarm Payrolls (Friday).

• GBP/USD is trading on the back foot in the European session, undermined by an impressive rebound staged by the US dollar across its major rivals.

•  USD/JPY bears tighten the grip as they refresh the daily bottom around 138.30 during early Wednesday morning in Europe. In doing so, the yen pair snaps the three-day uptrend while reversing from the highest levels since early July.

•  AUD/USD is paring back gains towards 0.6850, turning south following a rejection above the 0.6900 round figure. Bears are fighting back control amid strengthening risk-off flows in the European session.

Cryptos

Bitcoin and other cryptocurrencies were lower Wednesday as the largest digital asset struggled above a key level, with crypto traders facing a tough choice over whether prices are now at attractive levels or just poised to tumble even further.

Commodities

Gold: After having spent the Asian session fluctuating in a relatively tight channel above $1,720, gold turned south during the European trading hours and fell to its lowest level in a month below $1,715.

Up Ahead – Thursday 01-08-2022

•          CHF    CPI m/m

•          USD   ISM Manufacturing PMI

*The information presented above is intended for informative and educational purposes, should not be considered as investment advice, or an offer or solicitation for a transaction in any financial instrument and thus should not be treated as such. Past performance is not a reliable indicator of future results.