Cautious trade ahead of US inflation
Gold => The commodity falls to1720
FTSE => The index falls towards 7450
BTC/USD => The cryptocurrency holds over 22k
Gold edges lower with CPI in focus
Gold rose 0.5% in the previous session, extending gains from the last week, and testing a key resistance ahead of US inflation data. The weaker US dollar helped the precious metal rise, and with no US data and Federal Reserve speakers’ attention was firmly on today’s US consumer price index data. CPI is expected to slow again in August for a second straight month as prices at the pump lowered and interest rate hikes start to take effect. However, it is worth noting that core inflation which strips out more volatile items such as food and fuel, is expected to tick higher, providing mixed messages to the Fed ahead of the FOMC meeting. The Fed is unlikely to be swayed from a 0.75% rate hike in September. However, cooler inflation could see the market temper hawkish Fed bets, pulling the USD lower and boosting Gold.
| US CPI YoY August | Expected: 8% (0.5%) | Previous: 8.5% |
Where next for Gold?
Gold trades within a multi-month descending channel, below its 20& 50 sma. After rising off 1690 last week, the recovery has run into resistance around 1735 the 20 sma. The RSI remains below 50, but only slightly. If bears continue to defend the 20 sma, sellers could take the price back towards 1690 with a break below here, opening the door to 1680. Meanwhile, a break above 1735 exposes horizontal resistance at 1765 the late August high, and 1805 the August high. A move over here creates a higher high.
BTC/USD pauses from breath ahead of US CPI
BTCUSD rose for a sixth straight day, in line with US equities, which also ended the day higher. While BTC/USD rose, ETH/USD diverged, ending the session lower just three days ahead of the Merge. Bitcoin rose 2%, testing resistance around £22k as risk appetite rose. Meanwhile, Ether fell 2% to just above 1700 as investors eye the overhaul coming on Thursday, which will see the shift to a more efficient proof of stake. It would appear that Bitcoin is benefiting from pre-Merge nerves, causing the selloff in ether.
September is typically a weak month for BTC/USD. However, the crypto is being lifted by a general risk-on mood in the market amid optimism that inflation will continue falling and the Federal Reserve could start to tone down its hawkish stance after the September FOMC.
News that Fidelity is considering allowing individual brokerage customers to trade BTC is the latest evidence that the cryptocurrency is becoming more widely accepted, including with more traditional financial services firms. A wider acceptance can only be good news for the cryptocurrency.
FTSE edges lower ahead of jobs data
The FTSE closed 1.6% higher yesterday despite weaker than forecast UK GDP data. Instead, retailers and housebuilders led the index higher on hopes of a stronger economic outlook with the government’s energy relief package. The UK economy recorded growth in Q2, but the rebound was slower than forecast as industrial production and construction shrank. Today attention is on UK jobs data as unemployment is forecast to hold steady and the claimant count is set to fall again. Average earnings excluding bonuses are set to rise 5%, which could unnerve the BoE as higher wages create inflationary pressures. A strong jobs market could lift sentiment boosting the FTSE.
| UK GDP MoM JulyUK unemployment | Actual: 0.2 (0.8%) Expected: 3.8 (0) | Previous: -0.6%Previous: 3.8% |
Support can be found at 7390 (20 sma) and 7350 (20 sma).
Resistance for the index can be seen at 7500 (round number) and 7640 (June high).
