Japan’s Economic Triumph: GDP Skyrockets 6%, Surpassing All Expectations.

In this market update, we’re witnessing a powerful surge in tech stocks, propelling the Nasdaq to a remarkable 1% gain. Despite a somewhat subdued trading day yesterday, the US stock markets are off to a robust start this week. Among the standout performers is AI company Nvidia, experiencing a noteworthy rebound. While the Dow barely managed to finish just above flat, the S&P had an impressive day, closing with a 0.57% gain. However, it was the Nasdaq that took the lead, soaring up by 1.05%. Additionally, the benchmark 10-year Treasury yield has reached levels last observed in November. Treasury yields are continuing their upward trajectory against major currencies, alongside notable developments in the commodity landscape.

Mega-Tuesday Trading Day: Buckle Up for the Ride

Today marks a pivotal event in the trading calendar, and traders should brace themselves for an exciting rollercoaster ride as the market becomes flooded with an avalanche of data releases. Kicking off the Asian time zone is the release of the RBA’s Monetary Policy Minutes, swiftly followed by the unveiling of key economic indicators including the Australian Wage Index data and the Chinese Industrial Production and Retail Sales figures. Meanwhile, in the European session, the UK employment data takes center stage, preceding the most recent German ZEW attitude reading. The New York market opening is a catalyst for further excitement, marked by simultaneous releases of the Empire State Manufacturing Index, US Retail Sales, and Canadian CPI data.

Insights from the Asia Session

Early this morning, Japan unveiled its preliminary GDP data for the second quarter of 2023, revealing a remarkable increase in the country’s economy to 6.0% YoY, surpassing the previous quarter’s 1.3% YoY growth. This impressive improvement not only outperformed expectations but also exceeded the projected 3.2% YoY growth rate.

China’s central bank took the markets by surprise today, announcing an unexpected reduction in key policy rates for the second time in three months. This move provides further evidence of the government’s heightened efforts to ease monetary policy, aiming to accelerate what can only be described as a sluggish economic recovery. Despite this dovish trend and lingering concerns about the Chinese economy, the dollar index (DXY) is still on a downward trajectory, indicating a waning demand for the US dollar.

Implications for the Europe & US Session

The declining trend of the Dollar Index (DXY) during the Asia session may pave the way for potential advancements of the Euro and the Pound. Should the upcoming employment-related statistics for the Pound outperform expectations, these currencies could make significant gains, riding the wave of DXY’s retreat.

Dollar Index (DXY) Outlook

Key News Events Today:

• Retail Sales
• Empire State Manufacturing Index

What to Expect from DXY Today: In contrast to June’s growth of 0.2%, July’s figure is projected to rise by 0.4% MoM. This suggests that retail sales in the US are still experiencing gradual growth. Over the past two months, manufacturing activity in New York has consistently exceeded expectations. Another strong figure for August could signify the stabilization of this industry in the state. Such robust data could potentially serve as a bullish stimulus for the Dollar Index (DXY).

Central Bank Notes

• The federal funds rate target range: 5.25% to 5.50%.
• Strong commitment to returning inflation to its 2.0% target.
• Will adjust monetary policy in response to emerging risks.
• Factors considered: labor market conditions, inflation pressures, expectations, and international developments.
• The next meeting is scheduled for September 19-20, 2023.

Gold (XAU) Forecast

Key News Events Today:

• Retail Sales
• Empire State Manufacturing Index

What Gold Could Face Today: US retail sales continue to exhibit steady growth, with July’s reading anticipated to rise by 0.4% MoM, a step up from June’s 0.2% gain. Manufacturing activity in New York has been a pleasant surprise over the last two months. A stronger-than-expected reading for August could suggest the sector’s stabilization in the state. Such positive data might serve as a bullish catalyst for the Dollar Index (DXY), subsequently influencing gold prices.

Japanese Yen (JPY) Insights

Key News Events Today:

• GDP

What’s in Store for JPY Today: Japan’s early-morning revelation of preliminary GDP data for Q2 2023 was a highlight. The data indicated a significant surge in the country’s economy to 6.0% YoY, surpassing the previous quarter’s 1.3% YoY growth. This remarkable improvement not only outpaced expectations but also exceeded the projected 3.2% YoY growth rate.

Central Bank Notes

• Continued commitment to QQE with Yield Curve Control to achieve a 2.0% price stability target.
• Measures include yield curve control with a negative interest rate of -0.1% on policy-rate balances and the purchase of Japanese government bonds to maintain 10-year JGB yields of around +0.5%.
• Inflation is expected to temporarily decelerate, followed by a moderate acceleration supported by improved output gap and inflation expectations.
• Gradual economic recovery is expected.
• The next meeting is scheduled for September 22, 2023.

Global Market Snapshot

Asian Stock Markets:

• Nikkei is down 0.56%
• Shanghai Composite is down 0.20%
• Hang Seng down 0.80%
• ASX down 0.32%

European Equities:

• DAX futures up 0.46%
• CAC 40 up 0.12%
• FTSE down 0.23%

US Stock Market:

• Dow Jones up 0.07%
• S&P 500 up 0.58%
• Nasdaq 100 up 1.05%

Commodity Outlook

Commodities:

• Gold at $1905.56 (-0.10%)
• Silver at $22.62 (+0.10%)
• Brent Oil at $86.53 (+0.37%)
• WTI Oil at $82.77 (+0.29%)

Notable News & Data

• (JPY) GDP (QoQ) (Q2): Actual 1.5%, Forecast 0.8%, Previous 0.7% at 05:20
• (AUD) RBA Meeting Minutes at 07:00
• (CNY) Industrial Production (YoY) (Jul): Actual 3.7%, Forecast 4.4%, Previous 4.4% at 07:30
• (CAD) Core CPI (MoM) (Jul): Forecast 0.4%, Previous –0.1% at 18:00
• (USD) Retail Sales (MoM) (Jul): Forecast 0.4%, Previous 0.2% at 18:00
• (USD) Core Retail Sales (MoM) (Jul): Forecast –0.3%, Previous 0.2% at 18:00

Exploring Forex and Commodity Trading: Technical Analysis and Trade Suggestions

GBP/USD: Riding the Waves of Moving Averages

EMA 5: Buy Sentiment Persists

The 5-day Exponential Moving Average (EMA) for GBP/USD stands at 1.2695, echoing a Buy sentiment. This short-term outlook indicates potential opportunities for traders to consider long positions.

EMA 20 vs. EMA 50: Mixed Signals

Comparing the 20-day EMA (1.2712) with the 50-day EMA (1.2759) reveals an interesting dynamic. While the former leans towards a Buy indication, the latter aligns with a Sell recommendation. This contrast highlights the importance of carefully assessing multiple indicators.

SMA 5: Supporting the Buy Stance

The Simple Moving Average (SMA) for the last 5 days (1.2683) reinforces the Buy sentiment for GBP/USD. This suggests a potential trend in favor of bullish positions.

EUR/USD: Navigating Contrasting Signals

EMA 5: A Gleam of Positivity

With a value of 1.0928, the 5-day EMA for EUR/USD sparks a Buy signal. This offers a glimmer of positivity amid contrasting signals from other indicators.

SMA 20: Selling Sentiment Lurks

However, the 20-day SMA (1.0964) sends a Sell signal, seemingly at odds with the EMA 5. Such discrepancies highlight the nuanced nature of trading decisions.

AUD/USD: Facing Negative Trends

EMA 50: A Consistent Sell Indication

The 50-day EMA for AUD/USD (0.6588) consistently points towards a Sell indication. This prolonged bearish trend serves as a cautionary signal for traders.

RSI: A Negative Undercurrent

With an RSI of 37.15, calculated over a 14-day period, a Negative signal looms over AUD/USD. This underscores the challenges this currency pair currently faces.

USD/JPY: A Buy Signal Takes the Stage

SMA 50: Supporting a Bullish Perspective

The 50-day Simple Moving Average for USD/JPY (142.58) lends support to a Buy indication. This suggests potential opportunities for those considering long positions.

Stochastic Oscillator: Mixed Signals

While the %K value of the Stochastic Oscillator leans towards Neutral, the RSI’s Buy signal (73.86) adds an interesting layer of complexity.

FTSE 100: Grappling with Sell Sentiment

EMA 5 vs. SMA 20: A Harmonious Message

Both the 5-day EMA (7471.89) and the 20-day SMA (7532.41) align with a Sell sentiment for the FTSE 100. This unified message underscores the importance of multiple indicators.

RSI: A Strong Sell Signal

With an RSI of 31.01, the FTSE 100 resonates with a strong Sell signal. This emphasizes the bearish undertone surrounding this market.

Brent Crude Oil: Straddling Buy and Sell

EMA 50: An Unexpected Buy Signal

An intriguing dynamic arises with the 50-day EMA for Brent Crude Oil (84.32), which suggests a Buy indication. This counters the prevailing Sell sentiment in other indicators.

RSI: A Balanced Perspective

An RSI of 49.54 conveys a balanced perspective, reflecting the mixed signals within Brent Crude Oil’s technical analysis.

Silver: Navigating the Sea of Sell Signals

SMA 50: A Unanimous Sell Indication

The 50-day Simple Moving Average for Silver (23.67) aligns with a resounding Sell signal. This unanimous sentiment warrants careful consideration.

Support and Resistance Levels: Critical Markers

Resistance at 22.67 and support at 22.34 serve as crucial markers for Silver traders, guiding potential entry and exit points.

Litecoin: Echoing the Sell Sentiment

SMA 20: Reinforcing a Bearish Outlook

The 20-day SMA (83.01) lends further reinforcement to the prevailing Sell sentiment surrounding Litecoin. This underscores the challenges this cryptocurrency faces.

Trade Suggestions: Navigating the Storm

In light of these analyses, traders must tread carefully, considering the array of signals presented by different indicators. Based on the technical analysis, entry points, take-profit levels, and stop-loss markers have been outlined for each scenario. These suggestions offer guidance but should be viewed as part of a holistic trading strategy.

conclusion

In conclusion, the current market landscape is characterized by the resounding success of tech stocks, particularly driving the Nasdaq to an impressive 1% gain. The stage is set for an eventful Mega-Tuesday, with a plethora of data releases that have the potential to reshape market dynamics. Key indicators from Asia, including Japan’s GDP growth and China’s monetary policy adjustments, are already setting the tone for the day. The dollar’s trajectory, coupled with gold’s outlook, underscores the interconnectedness of global markets. As the trading day unfolds, investors and traders are advised to closely monitor these developments, which hold the promise of significant market movements in the hours ahead.