US consumer confidence and UK retail sales up next
Gold => The commodity falls to a 2022 low
ETH/USD => The cryptocurrency falls below 1500
GBP/USD => The pair falls below 1.1500
Gold falls to new 2022 lows
Gold has had a week that it would rather forget. The precious metal plunged 1.8% in the previous session, breaking below the 2022 low of 1681, to 1660 a level last seen in March 2020 when the pandemic hit. Gold fell following the release of stronger-than-expected US retail sales and jobless claims. Stronger consumer spending and jobless claims at a four-month low support a more aggressive path to rate hikes from the Fed. The prospect of higher interest rates for longer hits gold twofold; firstly because gold is non-yielding and, secondly, due to the stronger dollar. Today the precious metal has stabilized and is looking ahead to the release of US consumer confidence data. Morale is expected to have risen as prices at the pump fall. However, improving consumer confidence could be interpreted as another reason for the Federal Reserve to hike rates, which essentially means that strong data is gold negative.
| US retail salesUS consumer conf | Actual: 0.3% (0.7%) Expected: 60 (2) | Previous: -0.4%Previous: 58.2 |
Where next for Gold?
Technically, Gold provides no reason to be bullish. The precious metal has been breaking through one support level after another. Gold continues to trade within a falling channel. It has taken out support at 1681, the 2022 low, and is steadying at 1664. The RSI supports further downside while it remains out of the oversold territory. The new support level can be seen at 1650, the psychological level ahead of 1617, and the lower band of the falling channel. Buyers will look for a move over 1681, the previous 2022 low, and 1690 the August low, ahead of the 1700 round number.
Ether Merge: sell the news
Ether held steady immediately following the long-awaited Merge before the “sell the news” phenomenon set in, and Ether, along with other major cryptos, tumbled lower.
ETH/USD fell 8% across the past 24 hours, slipping below the psychological level of 1500. Ether has lost around a quarter of its value from 2000 high reached earlier in the month on merge euphoria, but it is still up 50% from mid-June.
Some weaknesses could be attributed to short sellers closing out hedging positions placed for protection in preparation for the merge. Or, quite simply, this could be a buy the rumor sell the news play.
While the Merge was the headline event in the crypto space, the broader macros climate continues to drag on the likes of ETH/USD and BTC/USD. Risk sentiment soured dramatically again yesterday after better than expected US retail sales and jobless claims raised fears of a more hawkish Federal Reserve next week. BTC/USD trades below 20k, and the Nasdaq lost 1.4% putting losses this week for the tech dominant index at 4.6%.
With recession fears rising in Asia, sentiment risk is set to continue. Cryptos are likely to continue the downward trend.
GBP/USD falls ahead of UK retail sales
GBP/USD fell 0.6% in the previous session and was among the worst performing of the G10 major currency pairs. The pound was out of favor after consumer confidence fell to its lowest level since the depths of the pandemic and as the BoE’s forward-looking inflation expectations index rose to its highest level since records started over two decades ago. This suggests that inflation expectations are becoming embedded and could concern the UK central bank. Today attention is on UK retail sales, which are forecast to decline as the cost of living crisis deepens. Weak sales could raise concerns over the UK falling into recession and pull the pound lower.
Support can be found at 1.1407 (2022 low) and 1.1330 (falling trendline support).
Resistance for the stock can be seen at 1.1500 (round number) and 1.1620 (20 sma).
