Japan’s CPI rates due out tomorrow

In tomorrow’s Asian session, Japan’s CPI rates for July are set to be released. According to expectations by economists, the inflation print on a core level is expected to showcase easing inflationary pressures in the Japanese economy. In turn should such a scenario materialize it may weigh on the JPY, as pressure on the BOJ to continue on their rate hiking path may ease.The Fed’s last meeting minutes were released yesterday. In the bank’s last meeting minutes, it was stated that “A majority of participants judged the upside risk to inflation as the greater of these two risks” showcasing that a majority of policymakers are more concerned over the upside risk to inflation over the downside risk to employment. Therefore, with the majority considering inflation to be the higher risk of the two, it may imply that policymakers may opt for a more cautionary approach in their next meeting, rather than proceed with a rate cut. Therefore such a scenario may be perceived as hawkish in nature, which in turn may have provided support for the dollar.On a monetary level, President Trump yesterday stated on his TruthSocial account that Fed Board Governor Lisa Cook should “resign now” following allegations that she may have violated the law. In return the Board Governor stated per Bloomberg “I have no intention of being bullied to step down from my position because of some questions raised in a tweet”. Overall, the continued attacks on the Fed by the US President may raise some concern that the bank’s independence may be chipped away piece by piece regardless of whether the accusations against Cook are true or not.

XAU/USD appears to be moving in a sideways fashion, with the commodity having remained within our sideways moving channel which was incepted on the 30th of April, despite some breakouts. Nonetheless, we opt for a sideways bias for gold’s price and supporting our case is the RSI indicator below our chart which currently registers a figure near 50, implying a neutral market sentiment. For our sideways bias to be maintained we would require gold’s price to remain confined between the 3240 (S1) support level and our 3385 (R1) resistance line. On the other hand for a bearish outlook we would require a clear break below the 3240 (S1) support level with the next possible target for the bears being the 3115 (S2) support line. Lastly, for a bullish outlook we would require a clear break above our 3385 (R1) resistance line with the next possible target for the bulls being the 3500 (R2) resistance level.

USD/JPY appears to be moving in a sideways fashion. We opt for a sideways bias for the pair and supporting our case is the RSI indicator below our chart which currently registers a figure near 50, implying a neutral market sentiment. For our sideways bias to be maintained we would require the pair to remain confined between our 146.25 (S1) support level and our 148.50 (R1) resistance line . On the other hand for a bullish outlook we would require a clear break above the 148.50 (R1) resistance line with the next possible target for the bulls being the 150.75 (R2) resistance level. Lastly, for a bearish outlook we would require a clear break below our 146.25 (S1) support level with the next possible target for the bears being the 144.35 (S2) support line.

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Today we get the Norway’s GDP rate for Q2, France’s preliminary services PMI figure, Germany’s preliminary manufacturing PMI figure, the Eurozone’s preliminary manufacturing PMI figure, the UK’s manufacturing and services preliminary PMI figures all for the month of August, followed by the US weekly initial jobless claims figure, the US Philly Fed Business index figure for August, the US S&P preliminary manufacturing PMI figure and preliminary services PMI figure both for August and ending the day is the Zone’s preliminary consumer confidence figure for August.. In tomorrow’s Asian session we note Japan’s CPI rates for July.