US retail sales rate due out today

The US retail sales rate for June is set to be released in today’s American session. Economists are currently anticipating the rate to slow down to 0% from 0.1% on a month-on-month basis, which may imply a reduction in consumer spending. Such a scenario could potentially weigh on the greenback. However, should it come in higher than expected it may provide support for the dollar.

Fed Chair Powell yesterday stated that “we’ve had three better readings, and if you average them, that’s a pretty good place”, implying that recent inflation readings may be providing the Fed with greater confidence that inflation is returning to the bank’s 2% target. As such, Fed Chair Powell’s comments could be interpreted as relatively dovish in nature, as the bank may be preparing to ease its monetary policy stance.

Canada’s CPI rates for June are set to be released in today’s American session. Should the CPI rates imply easing inflationary pressures, it may increase pressure on the BoC to continue easing their monetary policy stance, which may weigh on the CAD. On the flip side, should the CPI rates come in higher than the prior rates, it could imply that inflationary pressures in the Canadian economy are persistent or may even be accelerating. In such a scenario, it could increase pressure on the BoC to adopt a more hawkish stance which could aid the Loonie. In the US equities market, Morgan Stanley (#MS) is set to release their earnings later on today.

EUR/USD appears to be moving in an upwards fashion. We maintain a bullish outlook for the pair and supporting our case is the RSI indicator below our chart which currently registers a figure of 60, implying a bullish market sentiment, in addition to the upwards-moving trendline which was incepted on the 2nd of July. For our bullish outlook, to continue we would require a clear break above the 1.0920 (R1) resistance line with the next possible target for the bulls being the 1.0980 (R2) resistance level. On the flip side, for a sideways bias we would require the pair to remain confined between the 1.0865 (S1) support level and the 1.0920 (R1) resistance line. Lastly, for a bearish outlook, we would require a clear break below the 1.0865 (S1) support level, with the next possible target for the bears being the 1.0810 (S2) support base.

XAU/USD appears to be moving in an upwards fashion, with its next target being its all-time high figure. We opt for a bullish outlook for the commodity and supporting our case is the RSI indicator below our chart which currently registers a figure of 70 implying a bullish market sentiment, in addition to the upwards moving trendline which was incepted on the 11th of July. For our bullish outlook to continue, we would require a clear break above the 2449 (R1) resistance level, with the next possible target for the bulls being the 2480 (R2) resistance line. On the flip side for a bearish outlook, we would require a clear break below the 2417 (S1) support level, with the next possible target for the bears being the 2390 (S2) support level. Lastly, for a sideways bias, we would require the precious metal to remain between the 2417 (S1) support level and the 2449 (R1) resistance line.

Other highlights for the day

Today in the European session, we note that Bank of France and ECB policymaker De Galhau is to make statements, while we also note the release of Germany’s ZEW indicators for July. In the American session, we get Canada’s number of House Starts and CPI rates, while from the US we get the retail sales growth rate all being for June. Oil traders on the other hand, may be more interested in the release of the API weekly crude oil inventories figure. On the monetary front, we note that Fed Board Governor Kugler is scheduled to speak. During tomorrow’s Asian session, we get New Zealand’s CPI rates for Q2 and from Japan the Reuters Tankan indexes for July.

EUR/USD 4H Chart

• Support: 1.0865 (S1), 1.0810 (S2), 1.0745 (S3)
• Resistance: 1.0920 (R1), 1.0980 (R2), 1.1047 (R3)

XAU/USD 4H Chart

• Support: 2417 (S1), 2390 (S2), 2355 (S3)
• Resistance: 2449 (R1), 2480 (R2), 2355 (R3)

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