USD gains slightly ahead of Jackson Hole summit

The USD had some marked gains against a number of its counterparts on Friday and during today’s Asian session as investor’s attention has started to turn towards the Fed’s Jackson Hole summit, especially after the release of the Fed’s last meeting minutes the previous week. It should be noted that the meeting is to take place virtually this year. The summit is to kick off on Thursday, with the Fed’s Chair Jerome Powell and is expected to discuss monetary policy, while the whole event is expected to provide further clues on the outlook of the US monetary policy. The Fed’s policy of advanced quantitative easing has filled the financial markets with dollars, weighing on the greenback’s direction. Its characteristic how worries about a possible slowdown of the US economic recovery continue to exist among analysts, yet the overall sentiment seems to be improving. On Friday, all the US preliminary PMI’s for August outperformed market expectations, implying that increased economic activity was present across sectors of the US economy for the month. GBP/USD dropped on Friday breaking the 1.3210 (R2) and the 1.3150 (R1) support lines, both now turned to resistance, while continued lower, stabilizing at the 1.3085 (S1) support level. We maintain a bias for a sideways motion currently as the pair seems to find considerable support at the prementioned level. Be advised though that the current direction seems to remain fragile and fundamentals at both sides for the pair could play a key role here, especially in the absence of major financial releases today. Should a selling interest be displayed by the market, we could see the pair breaking the 1.3085 (S1) support line and aim for the 1.3015 (S2) level. Should the pair find buying orders along its path, we could see it aiming if not breaking the 1.3150 (R1) line and if R1 is broken aim for the 1.3210 (R2) resistance level.

Gold steadies as COVID 19 treatment hopes rise

Gold prices seemed to steady after consecutive drops, as hopes for COVID 19 treatments tended to be on the rise and risk sentiment seemed to improve. The U.S. Federal Drug Agency (FDA) authorized the use of blood plasma from recovered COVID 19 patients as a treatment option. Also media report that the Trump administration is considering by-passing normal U.S. regulatory standards to fast-track an experimental coronavirus vaccine from the UK for use in America ahead of the presidential election, improving market sentiment. On the flip side, US stock indexes were on the rise by the news, Tesla surpassed the psychological threshold of $2000 and Apple share prices rallied as well, with both companies preparing for a stock split. Gold’s prices dropped slightly since Friday morning, remaining below the 1950 (R1) resistance line. We tend to maintain our bias for a sideways motion, yet a possible further strengthening of the USD and fuelling of hopes for a vaccine could call the bears in for the precious metal. Should the bears actually take charge, we could see it breaking the 1900 (S1) support line aiming for lower grounds. Should the bulls take over, we could see the precious metal breaking the 1950 (R1) line and aim for the 2000 (R2) level.

Other economic highlights today and early tomorrow

It’s expected to be a quiet Monday today as no major financial releases are expected.

As for the rest of the week

On Tuesday, we get Norway’s GDP rate for Q2, as well as Germany’s August Ifo indexes and from the US the consumer confidence for August. On Wednesday, the US durable goods orders growth rates for July are released. On Thursday, Australia’s capital expenditure for Q2 and from the US the weekly initial jobless claims figure and 2nd estimate of the GDP growth rate for Q2 are due out. On a busy Friday, we get France the preliminary CPI (EU Norm.) rate for August, Switzerland’s KOF indicator for August, Sweden’s GDP for Q2, and in the American session the US consumption rate for July, the US Core PCE Price index for July, Canada’s GDP for June and the final US Uni. Michigan Sentiment for August.

GBP/USD 4 Hour Chart

Support: 1.3085 (S1), 1.3015 (S2), 1.2945 (S3)
Resistance: 1.3150 (R1), 1.3210 (R2), 1.3285 (R3)

XAU/USD 4 Hour Chart

Support: 1900 (S1), 1845 (S2), 1795 (S3)
Resistance: 1950 (R1), 2000 (R2), 2050 (R3)

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