USD weakens after Powell’s comments

USD retreated on Friday as Fed Chairman Powell stated at the Jackson Hole summit that the bank could start tapering its QE program by the end of the year, easing market worries for a quicker tightening of the Fed’s monetary policy. Powell may have signaled that the decision on tapering the Fed’s QE program would be independent from its decision on raising interest rates and the bank seems in no hurry to start hiking rates, given the latest dot plot released. Also, it should be noted that US stockmarkets closed higher with S&P 500 and Nasdaq reaching new record highs, while gold prices also rose benefitting from the weaker greenback. WTI prices were on the rise on Friday and opened with a positive gap today yet corrected a bit lower during today’s Asian session as storm Ida was upgraded to a hurricane and has reached the US setting oil rigs at the Gulf of Mexico out of production. We tend to review the phenomenon, as a temporary issue, with little affect fundamentally on oil prices given also the low price action until now. We expect the USD to maintain the initiative over other currencies, yet financial releases could also spur EUR, CHF and AUD today.
AUD/USD was on the rise on Friday, breaking he 0.7265 (S1) resistance line, now turned to support. We tend to maintain a bullish outlook for the pair given that the RSI indicator below our 4-hour chart is at the reading of 70, which confirms that the bulls are in charge currently yet, may also imply that a correction lower is possible. Should the bulls maintain control over the pair’s price action, we may see the AUD/USD breaking the 0.7335 (R1) resistance line and aim for the 0.7420 (R2) level. Should the bears take over we may see the pair breaking the 0.7265 (S1) support line and aim for the 0.7200 (S2) support level.
WTI prices also tended to be on the rise aiming for the 69.35 (R1) resistance line, yet today dropped a bit after opening with a positive gap. We tend to maintain a bullish outlook for the commodity’s price as long as it remains above the upward trendline incepted since the 23rd of August. Also, the RSI indicator below our 4-hour chart is at the reading of 70 confirming the buying interest of the market yet may also imply that the commodity is at overbought levels. Should the buying interest continue to characterize WTI’s direction, we may see it breaking the 69.35 (R1) resistance line which capped the commodity’s’ upward price action on the 12th of August and aim for the 70.10 (R2) resistance level. Should sellers take over, we may see WTI prices reversing course, breaking the prementioned upward trendline, the 66.00 (S1) support line and aim for the 64.00 (S2) support level.

Other economic highlights today and the following Asian session:

Today, we get Switzerland’s KOF indicator August and Germanys’ preliminary HICP rate for the same month. During tomorrow’s Asian session, we get Chinas’ NBS PMI figures for August, while from Australia, we get the building approvals growth rate for July and the current account balance for quarter two.

As for the rest of the week

On Tuesday we note the release of France’s final GDP rate for Q2 as well as the preliminary CPI (EU Normalised) rate for August, Eurozone’s preliminary HICP rate for August, Canada’s GDP rate for Q2 and the US consumer confidence for August. On Wednesday we get Australia’s GDP rate for Q2, China’s Caixin manufacturing PMI for August, UK’s Nationwide house prices for August, the US ADP employment figure for August and the US ISM manufacturing PMI for August. On Thursday we get Australia’s trade balance for July, Switzerland’s CPI rate for August, the US weekly initial jobless claims figure, Canada’s trade balance for July and the US factory orders growth rate for July. On Friday we get Turkey CPI rates, the US employment report and the US ISM non-manufacturing PMI figure, all being for August.

AUD/USD H4 Chart

Support: 0.7265 (S1), 0.7200 (S2), 0.7115 (S3)
Resistance: 0.7335 (R1), 0.7420 (R2), 0.7495 (R3)

WTI H4 Chart

Support: 66.00 (S1), 64.00 (S2), 61.75 (S3)
Resistance: 69.35 (R1), 70.10 (R2), 74.65 (R3)

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