Bank of England’s Interest Rate Update Set to Make Waves in Volatile Market.

Introduction

In the wake of the US shares’ response to the Fitch downgrade, Asian stock markets are poised to start the day on a cautious note. The Nasdaq led the downward charge, plummeting by 2.17% during the day’s trading. Following suit, the S&P fell 1.38%, and the Dow experienced a 0.98% drop. This resulted in all three major US indices ending the day in the red. Moreover, the benchmark 10-year Treasury yield surged to levels last seen in November, and the dollar gained strength against major currencies, particularly the antipodean ones. Additionally, oil prices took a breather, with WTI and Brent both recording declines of 1.9% and 1.64%, respectively, after recent price hikes.

Focus on the Bank of England Today

With volatility intensifying in recent sessions, today’s scheduled events are expected to maintain the market’s intensity. In Asia, traders will eagerly await the release of the latest Caixin Services PMI figure after Australia’s Trade Balance data hit the market. Meanwhile, the Bank of England’s most recent interest rate update will be a pivotal moment later in the day. Europe will also witness the release of key Swiss inflation data, including their CPI number, further influencing the market. Simultaneously, the US will see the typical weekly employment claims figures, the ISM Services PMI data release, and significant profit reports from Apple and Amazon, all contributing to the day’s market dynamics.

What Happened in the Asia Session?

During the Asia session, the dollar index (DXY) showed significant movement, surging sharply this morning while gold dipped towards the $1,930/oz range.

What Does It Mean for the Europe & US Session?

Today, all eyes will be on the Bank of England as it is likely to increase the Official Bank Rate by 25 basis points to 5.25%. The rate hike comes amidst headline CPI registering at 7.9% YoY in June, signaling a slow decline in UK inflation over the past months while remaining historically high. This rate increase is expected to impact the pound’s performance throughout the European session.

Additionally, the US employment claims have been trending lower for the past three weeks and came in below predictions, indicating a robust labor market. Coupled with the strong ADP NFPs report, this is likely to further bolster the DXY’s position.

The Dollar Index (DXY)

Key News Events Today

• Unemployment Claims
• ISM Services PMI

The DXY is expected to benefit further from the favorable employment claims data and a series of positive economic indicators. The ongoing expansion in the US services industry is likely to contribute to a rise in the ISM Services PMI for the seventh time this year.

Central Bank Notes

• The federal funds rate target range will be 5.25% to 5.50%.
• The Committee is strongly committed to returning inflation to its 2.0% target.
• The Committee will adjust monetary policy if risks emerge that could hinder achieving its goals.
• Various factors will be considered, including labor market conditions, inflation pressures, inflation expectations, and international and financial developments.
• The next meeting runs from 19 to 20 September 2023.

Next 24 Hours Bias

Medium Bullish

The Euro (EUR)

Key News Events Today

• Composite PMI

What Can We Expect from EUR Today?

Today’s announcement of the Composite PMI’s final reading is expected to indicate an expansion in the Eurozone’s services sector. However, the reading for July may also signal slower growth until 2023. With strong US job data pressuring the Euro, it may continue to experience downward pressure.

Central Bank Notes

• The ECB raised the three key interest rates by 25 basis points.
• Economic growth projections have been slightly lowered.
• The Governing Council will ensure interest rates are sufficiently restrictive to achieve the inflation target and keep them at those levels as long as needed.
• Rate decisions will be data-dependent, considering inflation outlook, economic data, underlying inflation dynamics, and monetary policy transmission strength.
• The next meeting is on 14 September 2023.

Next 24 Hours Bias

Medium Bearish

The Pound (GBP)

Key News Events Today

• Composite PMI
• BoE Official Bank Rate Statement
• BoE Gov Bailey Speaks

What Can We Expect from GBP Today?

Today’s focus will be on the Bank of England, expected to increase the Official Bank Rate by 25 basis points to 5.25%. With headline CPI gradually declining but still historically high at 7.9% YoY in June, this rate increase is likely to impact the pound’s performance during the European session.

Central Bank Notes

• The Bank of England’s Monetary Policy Committee (MPC) voted to increase the Bank Rate by 0.5 percentage points to 5.00%.
• Two members preferred to maintain the Bank Rate at 4.50%.
• CPI inflation is expected to fall significantly due to developments in energy prices.
• The updated projections show that CPI inflation is expected to decline slightly above 1.0% at the two and three-year horizons, below the 2.0% target.
• The next meeting is on 3 August 2023.

Next 24 Hours Bias

Medium Bearish

Global Markets

Asian Stock Markets

• Nikkei is down 2.27%
• Shanghai Composite is down 0.90%
• Hang Seng down 2.41%
• ASX down 0.58%

European Equities

• DAX futures are down 1.26%
• CAC 40 down 1.27%
• FTSE down 0.88%

US Stock Market

• Dow Jones up 0.20%
• S&P 500 down 0.27%
• Nasdaq 100 is down 0.43%

Commodities

• Gold at $1936.73 (+0.16%)
• Silver at $23.55 (-0.62%)
• Brent Oil at $82.53 (-0.79%)
• WTI Oil at $78.88 (-0.79%)

News & Data

• (CHF) CPI (MoM) (Jul) Actual –0.1%, Forecast –0.2%, Previous 1.7% at 12:00
• (GBP) BoE Interest Rate Decision (Aug) Forecast 5.25%, Previous 5.00% at 16:30
• (GBP) BoE MPC Meeting Minutes at 16:30
• (USD) Initial Jobless Claims Forecast 227K, Previous 221K at 18:00
• (USD) Service PMI (Jul) Forecast 52.4, Previous 54.4 at 19:15
• (USD) ISM Non-Manufacturing PMI (Jul) Forecast 53.0, Previous 53.9 at 19:30

GBPUSD: Technical Analysis Suggests a Sell Sentiment

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 1.2713, indicating a Sell sentiment.
• EMA 20: The 20-day EMA displays 1.2794, reinforcing a Sell indication.
• EMA 50: With a value of 1.2834, the 50-day EMA aligns with a Sell recommendation.

Simple Moving Average

• SMA 5: The 5-day SMA shows 1.2715, suggesting a Sell sentiment.
• SMA 20: The 20-day SMA records 1.2817, supporting a Sell stance.
• SMA 50: The 50-day SMA stands at 1.2908, signifying a Sell indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, displays a reading of 30.10, suggesting a Negative signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Neutral condition.

Resistance And Support Levels

• Resistance: The resistance level is identified at 1.2752.
• Support: The support level is observed at 1.2668.

Summary And Trade Suggestions

Based on the technical analysis, GBP/USD presents a Sell outlook. Traders may consider entering a short position, considering the indicators, moving averages, and oscillators.

Trade Suggestion:

• Entry Point: 1.2604
• Take Profit: 1.2485
• Stop Loss: 1.2701

EURUSD: Indicators Point Towards a Sell Sentiment

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 1.0939, indicating a Sell signal.
• EMA 20: The 20-day EMA is at 1.0996, signaling a Sell sentiment.
• EMA 50: The 50-day EMA currently sits at 1.1029, suggesting a Sell indication.

Simple Moving Average

• SMA 5: The 5-day SMA shows a value of 1.0945, reinforcing the Sell recommendation.
• SMA 20: With a value of 1.1017, the 20-day SMA also supports a Sell sentiment.
• SMA 50: The 50-day SMA registers at 1.1097, affirming a Sell indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 31.83, signifying a negative signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Negative stance.

Resistance And Support Levels

• Resistance: The resistance level is observed at 1.0958.
• Support: The support level is identified at 1.0910.

Summary And Trade Suggestions

In summary, the technical analysis of EURUSD points towards a Sell sentiment. Considering the indicators, moving averages, and oscillators, it seems favorable for traders to enter a short position.

Trade Suggestion:

• Entry Point: 1.0842
• Take Profit: 1.0737
• Stop Loss: 1.0918

AUDUSD: Technical Analysis Indicates a Sell Sentiment

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 0.6547, indicating a Sell signal.
• EMA 20: The 20-day EMA is at 0.6638, signaling a Sell sentiment.
• EMA 50: The 50-day EMA currently sits at 0.6692, suggesting a Sell indication.

Simple Moving Average

• SMA 5: The 5-day SMA shows a value of 0.6545, reinforcing the Sell recommendation.
• SMA 20: With a value of 0.6661, the 20-day SMA also supports a Sell sentiment.
• SMA 50: The 50-day SMA registers at 0.6739, affirming a Sell indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 28.01, signifying a Bearish signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Neutral stance.

Resistance And Support Levels

• Resistance: The resistance level is observed at 0.6550.
• Support: The support level is identified at 0.6499.

Summary And Trade Suggestions

In summary, the technical analysis of AUDUSD points towards a Sell sentiment. Considering the indicators, moving averages, and oscillators, it seems favorable for traders to enter a short position.

Trade Suggestion:

• Entry Point: 0.6456
• Take Profit: 0.6386
• Stop Loss: 0.6504

USDJPY: Buy Sentiment Based on Technical Analysis

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 142.47, indicating a Buy signal.
• EMA 20: The 20-day EMA is at 141.45, signaling a Buy sentiment.
• EMA 50: The 50-day EMA currently sits at 140.56, suggesting a Buy indication.

Simple Moving Average

• SMA 5: The 5-day SMA shows a value of 142.42, reinforcing the Buy recommendation.
• SMA 20: With a value of 140.63, the 20-day SMA also supports a Buy sentiment.
• SMA 50: The 50-day SMA registers at 141.23, affirming a Buy indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 57.99, signifying a Buy signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Positive stance.

Resistance And Support Levels

• Resistance: The resistance level is observed at 143.75.
• Support: The support level is identified at 142.09.

Summary And Trade Suggestions

In summary, the technical analysis of USDJPY points towards a Buy sentiment. Considering the indicators, moving averages, and oscillators, it seems favorable for traders to enter a long position.

Trade Suggestion:

• Entry Point: 144.85
• Take Profit: 148.35
• Stop Loss: 142.55

S&P 500: Technical Analysis Suggests a Sell Sentiment

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 4559.38, indicating a Sell signal.
• EMA 20: The 20-day EMA is at 4544.38, signaling a Sell sentiment.
• EMA 50: The 50-day EMA currently sits at 4449.78, suggesting a Buy indication.

Simple Moving Average

• SMA 5: The 5-day SMA shows a value of 4575.79, reinforcing the Sell recommendation.
• SMA 20: With a value of 4551.04, the 20-day SMA also supports a Sell sentiment.
• SMA 50: The 50-day SMA registers at 4441.98, affirming a Buy indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 50.13, signifying a positive signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Negative stance.

Resistance And Support Levels

• Resistance: The resistance level is observed at 4553.49.
• Support: The support level is identified at 4520.91.

Summary And Trade Suggestions

In summary, the technical analysis of the S&P 500 points towards a Sell sentiment. Considering the indicators, moving averages, and oscillators, it seems favorable for traders to enter a short position.

Trade Suggestion:

• Entry Point: 4497.46
• Take Profit: 4446.64
• Stop Loss: 4532.64

WTI CRUDE OIL: Technical Analysis Indicates a Sell Sentiment

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 79.70, indicating a Sell signal.
• EMA 20: The 20-day EMA is at 79.75, signaling a Sell sentiment.
• EMA 50: The 50-day EMA currently sits at 77.84, suggesting a Buy indication.

Simple Moving Average

• SMA 5: The 5-day SMA shows a value of 80.09, reinforcing the Buy recommendation.
• SMA 20: With a value of 80.06, the 20-day SMA also supports a Buy sentiment.
• SMA 50: The 50-day SMA registers at 77.67, affirming a Buy indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 44.10, signifying a Buy signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Negative stance.

Resistance And Support Levels

• Resistance: The resistance level is observed at 79.86.
• Support: The support level is identified at 78.67.

Summary And Trade Suggestions

In summary, the technical analysis of WTI Crude Oil points towards a Sell sentiment. Considering the indicators, moving averages, and oscillators, it seems favorable for traders to enter a short position.

Trade Suggestion:

• Entry Point: 77.99
• Take Profit: 75.72
• Stop Loss: 79.92

GOLD: Technical Analysis Suggests a Sell Sentiment

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 1939.13, indicating a Sell signal.
• EMA 20: The 20-day EMA is at 1950.28, signaling a Sell sentiment.
• EMA 50: The 50-day EMA currently sits at 1959.52, suggesting a Sell indication.

Simple Moving Average

• SMA 5: The 5-day SMA shows a value of 1939.10, reinforcing the Sell recommendation.
• SMA 20: With a value of 1953.97, the 20-day SMA also supports a Sell sentiment.
• SMA 50: The 50-day SMA registers at 1959.39, affirming a Sell indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 38.14, signifying a negative signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Neutral stance.

Resistance And Support Levels

• Resistance: The resistance level is observed at 1945.24.
• Support: The support level is identified at 1928.95.

Summary And Trade Suggestions

In summary, the technical analysis of gold points towards a Sell sentiment. Considering the indicators, moving averages, and oscillators, it seems favorable for traders to enter a short position.

Trade Suggestion:

• Entry Point: 1923.62
• Take Profit: 1901.25
• Stop Loss: 1942.49

BITCOIN: Technical Analysis Indicates a Sell Sentiment

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 29269.79, indicating a Sell signal.
• EMA 20: The 20-day EMA is at 29550.43, signaling a Sell sentiment.
• EMA 50: The 50-day EMA currently sits at 29800.27, suggesting a Sell indication.

Simple Moving Average

• SMA 5: The 5-day SMA shows a value of 29325.01, reinforcing the Sell recommendation.
• SMA 20: With a value of 29606.911, the 20-day SMA also supports a Sell sentiment.
• SMA 50: The 50-day SMA registers at 29849.21, affirming a Sell indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 37.99, signifying a negative signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Negative stance.

Resistance And Support Levels

• Resistance: The resistance level is observed at 29388.80.
• Support: The support level is identified at 28950.90.

Summary And Trade Suggestions

In summary, the technical analysis of Bitcoin points towards a Sell sentiment. Considering the indicators, moving averages, and oscillators, it seems favorable for traders to enter a short position.

Trade Suggestion:

• Entry Point: 28634.63
• Take Profit: 27953.45
• Stop Loss: 29194.18