US durable goods orders and Nvidia earnings in focus

Nvidia => The stock trades down 44% this year

USD/JPY => The pair falls 136.50

Oil => The commodity steadies over $93p/b

Nvidia Q2 earnings preview.

Nvidia is due to report Q2 earnings after the close. Earnings come as the share price trades down 44% this year due to global headwinds. The gaming business has seen a sharp drop in revenue (down 44% QoQ), and sales from the data center are expected to see a slowdown in growth due to supply chain disruptions. The chip maker has already cut revenue guidance for the quarter to $6.7 billion from $8.10 billion, while EPS is expected to be $0.51, down from $1.04 in the same period the year before. This comes amid weaker demand for gaming, and amid weaker GPU demand as the crypto market struggles, EPS is expected to be

Where next for Nvidia?

Nvidia trades caught between its 50 and 100 dma, so a breakout trade could be on the cards, although the pre-release could reduce the chances of a big surprise. With a bearish crossover forming on the MACD, sellers could look for a break below the 50 dma at $170 to open the door to a deeper selloff to $140, the 2022 low. Buyers could look for a move over the 100 dma at $185 to open the door to $195 and create a higher high before bringing $230 into target the April 7 high.

USD/JPY falls ahead of US durable goods data

USD/JPY fell 0.5% yesterday to a low of 135.80 after dire US PMI data. The data showed that business activity in the US contracted in August to its weakest level in 27 months, with services seeing substantially weaker demand as inflation remained elevated and interest rates rose. The weak data doesn’t bode well for economic growth in the third quarter. Today the pair is edging lower as the focus shifts to US durable goods orders, which are expected to see growth slow. Meanwhile, yen bulls have capitalized on the risk-off mood. However, they could have trouble pushing the yen too much higher after dovish comments from BoJ Chief Economist, who considers that any tightening of policy in Japan could still be years away.

US Composite PMI July            Expected: 45 (2.7)             Previous: 47.7

Oil steadies after a 4% jump

Oil rose 3.8% yesterday and is holding steady today after Saudi Arabia floated the possibility of a supply cut to support the market after recent declines. The price of oil rose to $147 at the start of the Russia – Ukraine war but has since fallen to around $90 as recession fears hurt the demand outlook. In July and August, OPEC+ has ramped up production to 648k barrels per day extra, although a recent report suggests that OPEC+’s total production was 2.8 million barrels a day off its monthly target. Still, the output cut is unlikely to be imminent and is likely to coincide with the return of Iranian oil to the market, should sanctions be removed and the nuclear deal revived. EIA inventory data is due later.

Support can be found at 91.05 (20 sma) and 88.50 (July low).

Resistance for the index can be seen at 97.50 (50 sma) and 100.00 (psychological level).

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