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Morning Market Review


EURUSD
The European currency shows mixed trading dynamics, consolidating near 0.9960. Market activity remains low ahead of US Federal Reserve Chairman Jerome Powell's speech at the annual symposium in Jackson Hole. It is expected that the official may speak in favor of raising the interest rate in September by another 75 basis points (for the third time in a row), which will provide moderate short-term support to the US currency. Investors have no doubt that the regulator will continue a rather tight monetary policy, so the whole question is only in the pace of this tightening. Also, traders would like to hear updated forecasts regarding the prospects for economic growth. The global economy continues to show a steady downtrend, and the widespread increase in interest rates is only exacerbating the situation caused by rising energy prices. In particular, it became known that a number of large industrial enterprises in Europe (zinc and aluminum plants) were forced to temporarily close due to a sharp increase in electricity tariffs. In turn, the euro was moderately supported yesterday by optimistic macroeconomic statistics from Germany. The revised indicator of Gross Domestic Product (GDP) reflected the growth of the German economy in the second quarter by 0.1% (previously, zero dynamics were assumed), and excluding seasonal fluctuations, GDP in annual terms grew by 1.7% against the previous estimate of 1.4%. In turn, the index of Economic Expectations from the IFO in August fell by only 0.1 points to 80.3 points, while forecasts suggested a fall to 79.0 points.​

GBPUSD
The pound is trading with a downtrend, testing the level of 1.18 for a breakdown. The British currency slightly strengthened the day before, which, however, was caused only by technical factors, as well as expectations that the Bank of England will continue to tighten its monetary policy. The Governor of the regulator, Andrew Bailey, announced his readiness to adjust the interest rate to fight inflation, despite the fact that as early as the fourth quarter, the national economy could enter a recession, the risks of which increase against the backdrop of an intensifying energy crisis, which could turn into a full-fledged industrial one. Due to high prices, many enterprises are forced to reduce production rates or temporarily close, while with the onset of cold weather, conditions can worsen even more. The situation is aggravated by the uncertainty brought about by the forthcoming elections of the British Prime Minister scheduled for autumn.​

NZDUSD
The New Zealand dollar shows a moderate decline, correcting after an attempt to grow the day before, which led to a short-term update of local highs from August 19. The uptrend was not hindered by weak macroeconomic data from New Zealand, released yesterday. Retail Sales fell 2.3% in the second quarter, after falling 0.9% in the prior period, and Retail Sales excluding Autos fell 1.6% after falling 0.3% a quarter earlier. At the same time, the statistical picture from the USA turned out to be mixed. Revised annual data on Gross Domestic Product (GDP) in the second quarter showed a decline of 0.6%, which was significantly better than the previous estimate of –0.9%. At the same time, the Gross Domestic Product Price Index for the same period was revised upward from 8.9% to 9.0%, while the forecast was for a decrease to 8.7%. This means that inflationary risks in the country remain high, and therefore the US Federal Reserve may continue to tighten monetary policy at a record pace. The instrument is slightly supported today by the statistics from New Zealand: the ANZ Roy Morgan Consumer Confidence in August rose noticeably from 81.9 points to 85.4 points, which turned out to be better than the average analysts' expectations.​

USDJPY
The US dollar shows weak growth, consolidating above 136.8. The American currency is trying to win back the corrective losses incurred the day before; however, investors are in no hurry to open new positions ahead of the speech of US Federal Reserve Chairman Jerome Powell at the annual symposium of representatives of leading central banks in Jackson Hole. Moderate support for the yen today is provided by optimistic macroeconomic statistics from Japan. Tokyo Consumer Price Index in August accelerated from 2.5% to 2.9%, while analysts expected the same growth rates to be maintained. CPI excluding Fresh Food accelerated from 2.3% to 2.6%, 0.1% ahead of market forecasts. Excluding Food and Energy prices, the index rose from 1.2% to 1.4%, falling short of the expected 1.5%. Thus, the situation in a country accustomed to deflationary phenomena in the economy may soon change. Rising consumer prices potentially mean that the Bank of Japan may reduce the pace of stimulus, and in the longer term, even decide to raise interest rates.​

XAUUSD
Gold prices practically do not change, consolidating near 1755. The day before, the instrument made an attempt to grow, and the XAUUSD pair managed to update local highs from August 18, but failed to consolidate at new levels. Investors tend to stay out of the market until comments from US Federal Reserve Chairman Jerome Powell, who will give a speech at the annual symposium in Jackson Hole today. The official is expected to confirm a further increase in the interest rate by 75 basis points. If the pace of monetary tightening is reduced to 50 basis points, this may put short-term pressure on the positions of the US currency, and will also mean that the regulator is concerned about the risks of a recession in the national economy, which could provoke an increase in alarming sentiment across the entire spectrum of the market.​

 
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Morning Market Review

EURUSD
The European currency is falling, again testing the level of 0.9900 for a breakdown and returning to the previous local lows, updated at the beginning of last week. The euro is again under pressure from the rising dollar, which received an impetus to grow on Friday after the speech of the Chair of the US Federal Reserve, Jerome Powell. The official emphasized the regulator's resolute readiness to continue the policy of high interest rates, even if this leads to a slowdown in the national economy. Thus, the majority of analysts (approximately 75%) are again counting on a correction of the value by 75 basis points during the September meeting of the Fed. In turn, the euro reacts negatively to the prospects for the European economy in the face of a sharp rise in energy costs. Natural gas quotes are once again updating record highs, and electricity suppliers are warning consumers about higher prices for their services. In Germany, the basic electricity tariff for 2023 exceeded 800 euros per MWh, a new record high. In addition, the country is still experiencing a sharp drop in consumer confidence: the September Gfk Consumer Confidence index fell from –30.9 points to –36.5 points, while analysts had expected a decline to –31.8 points.


GBPUSD
The British pound is trading down, building on the "bearish" momentum that was formed last Friday. The GBP/USD pair is making new 40-year lows, testing 1.1650 for a breakdown, below which the instrument last traded in March 2020. The pound, like many other risky assets, is reacting to a noticeable strengthening of the US currency after the "hawkish" comments of the Chair of the US Federal Reserve, Jerome Powell, who spoke in favor of further raising interest rates at a record pace. The official urged to maintain a tight monetary policy, seeking to bring under control the high inflation rates that are still observed in the US economy. Thus, traders have revised their forecasts for the September meeting of the regulator: at the moment, most analysts expect a 75 basis point increase in interest rates, while earlier the chances of adjusting the value by 50 basis points and 75 basis points were estimated to be about the same. Meanwhile, the pound remains under pressure amid record inflation in the EU and the UK due to a sharp rise in energy prices. Ahead of the cold weather and the beginning of the heating season, politicians are trying to prepare their voters for an increase in tariffs for heat and electricity, which leads to a noticeable decrease in consumer activity and the level of confidence.


AUDUSD
The Australian dollar is noticeably declining, developing the downward momentum formed at the end of last week. The instrument showed active negative trend, having reacted to the speech of the Chair of the US Federal Reserve Jerome Powell at the annual symposium in Jackson Hole. As expected, the official advocated further tightening of monetary policy in order to control the inflation rate in the country. In addition, despite receiving the first evidence of some slowdown in consumer prices in the US, the Fed is clearly concerned about the current situation. This is an extremely negative signal for the entire global economy, as the overall picture is complicated by a further rise in energy prices and the onset of cold weather in the northern hemisphere. Today, the instrument practically does not react to the publication of optimistic macroeconomic statistics from Australia. Thus, Retail Sales in July increased by 1.3% after an increase of 0.2% a month earlier, although analysts' forecasts suggested a slight correction of the indicator by 0.3%.


USDJPY
The US dollar is actively adding in value during morning trading, testing the level of 138.80 for a breakout. The USD/JPY pair is approaching its previous record highs, updated in mid-July, while the US currency received a new impetus, reacting to the comments of US Federal Reserve Chairman Jerome Powell on the need to maintain a "hawkish" monetary policy. The official is convinced that raising interest rates will help bring record inflation under control, even if it means sacrificing economic growth. In turn, macroeconomic statistics from the US, published on Friday, put some pressure on the dollar. In particular, the Personal Income in July slowed down from 0.7% to 0.2%, which turned out to be noticeably worse than market expectations at the level of 0.6%, and Personal Spending decreased from 1.0% to 0.1%, with the forecast at 0.4%. Additional pressure on the position of the yen today is exerted by statistics from Japan: the Coincident Index in June fell from 99.0 points to 98.6 points, and the Leading Economic Index for the same period fell from 101.2 points to 100.9 points, while forecasts assumed a fall to 100.6 points.


XAUUSD
Gold prices are noticeably declining, developing a "bearish" trend of the end of last week. On Friday, the US dollar received a powerful impetus to growth, reacting to statements by the Chair of the US Federal Reserve, Jerome Powell, about the need to continue high interest rates. In fact, the official confirmed the possibility of an additional 75 basis points correction in the value, which would negatively affect non-interest bearing gold. Recall that the target inflation rate is still at 2.0%. In turn, in July, consumer price growth in the US slowed down somewhat and receded from the record high at around 9.1% to 8.5%, which is still well above the target levels.
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Morning Market Review


EURUSD
The European currency shows mixed trading dynamics, consolidating just below the psychological level of 1. The day before, the instrument managed to show a restrained growth; however, the "bulls" are still showing weak activity, and the dollar still dominates the market in terms of recession risks. At the end of last week, the Chair of the US Federal Reserve, Jerome Powell, confirmed the regulator's resolute readiness to further raise interest rates in order to curb inflation. At the same time, the Fed accepts the risks of a possible slowdown in the US economy, up to the onset of a deep recession, but this, according to the official, is inevitable. The situation with rising consumer prices is aggravated as the energy crisis in the EU develops, and market participants expect decisive steps from the European Central Bank (ECB). August data on inflation in Germany will be published today, which will help to navigate the vector of further monetary policy of the European regulator. Forecasts suggest a slowdown in monthly consumer prices from 0.8% to 0.4%, while annual inflation could reach record highs, rising above 8.7%. In addition, statistics on the level of Economic Sentiment in the eurozone for August will be released during the day.​

GBPUSD
The British pound is trading with mixed dynamics, holding close to 1.17. The GBPUSD pair started trading the new week uncertainly and quickly updated the record lows of March 2020. Later, the "bulls" tried to restore their positions, but the pound cannot yet enter the "green" zone. Strengthening the risks of the energy crisis in the EU and the UK continues to exert significant pressure on the position of the British currency. In addition, the US dollar reacts positively to the willingness of the US Federal Reserve to continue raising interest rates at a record pace. Following "hawkish" comments from the Chair of the Fed Jerome Powell last week, analysts revised their forecasts for a September correction and now again expect a 75 basis point rate hike. The Bank of England also announced its readiness to continue tight monetary policy; however, unlike the US Federal Reserve, the British regulator expects a recession in the national economy in the fourth quarter.​

AUDUSD
The Australian dollar shows a slight decline after an uncertain corrective growth the day before. The AUDUSD pair is testing the level of 0.6880, retreating under the pressure of the American currency and expectations of the continuation of the "hawkish" policy of the US Federal Reserve on the issue of raising the interest rate. Rather strong macroeconomic statistics from Australia gave moderate support for the instrument the day before. Retail Sales added 1.3% after rising 0.2% a month earlier, although analysts had expected the dynamics to accelerate to only 0.3%. Macroeconomic statistics released today showed a sharp decline in the number of Building Permits issued in July by 17.2% after a decline of 0.6% in the previous month, while analysts' forecasts assumed a value of 2.0%, and in annual terms negative dynamics accelerated from –17.2% to –25.9%. In turn, the Reserve Bank of Australia (RBA) is preparing for further tightening of monetary policy, but the pace of interest rate increases may slow down. After three 50 basis point corrections in value, a slowdown to 25 basis points is expected in September. However, the regulator plans to bring the value to 2.10% by the end of this year and to 2.50% by mid-2023, and now the interest rate is at 1.85%.​

USDJPY
The US dollar shows a slight decrease, slightly correcting from local highs of July 21, updated the day before. USD/JPY is testing 138.40 for a breakdown, waiting for new drivers to appear on the market. The US dollar approached the beginning of the week with fairly strong positions. The buying sentiment for the instrument was supported by the speech of the Chair of the US Federal Reserve, Jerome Powell, at the annual symposium in Jackson Hole at the end of last week. The official confirmed the regulator's determination to continue fighting inflation through a sharp increase in interest rates. The Fed is likely to adjust the value by another 75 basis points in September for the third time in a row. The macroeconomic statistics released today from Japan does not particularly affect the dynamics of the instrument: the Unemployment Rate in July remained unchanged at a minimum of 2.6%, and the Jobs / Applicants Ratio increased from 1.27 to 1.29.​

XAUUSD
Gold prices are consolidating around 1735. Quotes of XAUUSD showed a moderate decline the day before, having updated local lows from July 27, but closer to the end of the daily session, the "bulls" managed to win back almost all the losses. So far, such growth can only be called corrective, since there are no noticeable prospects for the development of upward dynamics for the instrument. The positions of the precious metal remain under pressure amid investors' expectations of a more active increase in interest rates by the world's leading central banks in September, in particular, the US Federal Reserve. Last Friday, the Chair of the US regulator, Jerome Powell, confirmed the Fed's readiness to tighten monetary parameters at a record pace, which led to a revision of analysts' main forecasts. Now the market is inclined to expect a third correction of the value by 75 basis points. This week, the US will release macroeconomic statistics, the centerpiece of which will be the August report on the labor market, which will be published on Friday. Among other things, analysts expect a sharp slowdown in the growth in Nonfarm Payrolls from 528.0 thousand to 285.0 thousand, as well as a slight decrease in the Average Hourly Earnings from 0.5% to 0.
​
 
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​
Morning Market Review​


EURUSD
The European currency shows moderate growth, developing a weak "bullish" signal formed at the beginning of the week. The EURUSD pair is again trying to consolidate above the psychological level of 1.0000, taking advantage of some weakening of the positions in the US currency. Quotations are also supported by expectations of an imminent tightening of monetary policy by the European Central Bank (ECB), and the rate of increase in interest rates may be higher than planned, given the record level of inflation in the countries of the region. The next meeting of the regulator is scheduled for September 8 and at the moment analysts expect a correction in the value in the range of 25 basis points to 50 basis points. In July, the ECB raised rates by 50 basis points for the first time since 2011. Meanwhile, inflation in Germany, according to data released yesterday, accelerated from 7.5% to 7.9% in annual terms, while the monthly rate slowed down from 0.9% to 0.3%. The Harmonized CPI for the same period increased from 8.5% to 8.8%, which coincided with analysts' forecasts. Some of the decline was due to cheaper gasoline, while food and energy prices continue to rise. Today, investors expect the publication of August statistics on consumer inflation in the eurozone. The annual rate is expected to rise to a new all-time high of 9.0%.


GBPUSD
The British pound shows an uptrend in trading, retreating from record lows, updated the day before. The GBPUSD pair is preparing to test 1.17 for a breakout, taking advantage of the growth of corrective sentiment for the dollar. American investors temporarily cover long positions, waiting for the publication of data on the US labor market for August. On Wednesday, ADP will report on Nonfarm Payrolls, followed by the release of official statistics by the Department of Labor on Friday. The forecasts are quite strong, and therefore the US Federal Reserve is likely to keep its course for a further increase in interest rates at a record pace of 75 basis points. Macroeconomic statistics released yesterday in the UK did not provide significant support to the British currency. Consumer Credit in the country in July slowed down from 1.781 billion pounds to 1.425 billion pounds. Analysts' forecasts suggested a decline to only 1.500 billion pounds. At the same time, the number of Mortgage Approvals in July increased from 63.726 thousand to 63.77 thousand, while investors expected a decrease to 61.725 thousand.


NZDUSD
The New Zealand dollar shows weak growth, recovering from another decline the day before. At the moment, the NZDUSD pair is again testing 0.615 for a breakout, receiving extremely weak support from the macroeconomic background from New Zealand and China. ANZ Business Confidence rose from -56.7 points to -47.8 points in August, with a forecast of only -55.0 points. ANZ Activity Outlook for the same period corrected from -8.7% to -4.0%, while analysts expected the indicator to worsen to -8.9%. The number of Building Permits issued in New Zealand increased by 5.0% in July after falling by 2.2% a month earlier. The real dynamics turned out to be much better than the average forecasts of analysts. In turn, Chinese data reflected a weak increase in NBS Manufacturing PMI in August from 49.0 points to 49.4 points, while the forecast was at 49.2 points. Non-Manufacturing PMI for the same period fell from 53.8 points to 52.6 points, which was only slightly better than the expected 52.2 points.


USDJPY
The US dollar shows a slight decline, retreating from local highs, updated the day before. The USDJPY pair is testing 138.4 for a breakdown, reacting to the publication of relatively optimistic macroeconomic statistics from Japan. Retail Sales in July showed a moderate increase of 0.8% after falling by 1.4% a month earlier, while analysts had expected a contraction of 0.5%. In annual terms, sales accelerated from 1.5% to 2.4%, beating market forecasts at 1.9%. At the same time, Industrial Production in July slowed down from 9.2% to 1.0%, while analysts expected a reduction of 0.5%. In annual terms, the dynamics of Industrial Production improved from -2.8% to -1.8%, while the forecast was -2.6%. In turn, the Consumer Confidence index in August strengthened from 30.2 points to 32.5 points, which was slightly better than the expected 31 points.


XAUUSD
Gold prices continue a moderate decline since the end of the last trading week, updating new local lows from July 27. Quotes are testing the level of 1720 for a breakdown, retreating amid expectations of further tightening of monetary policy from leading central banks. First of all, the pressure is exerted by the "hawkish" comments of the US Federal Reserve; however, both the European Central Bank (ECB) and the Bank of England are also preparing to raise interest rates at the next meetings in September. The fight against inflation remains a key issue for leading regulators, while the threat of a recession in the economy is still in the background. This week, macroeconomic statistics on the US labor market for August is expected to be released. The forecasts of analysts and the US Federal Reserve are quite optimistic and assume that the indicators will remain stable. If expectations come true, this will allow the regulator to concentrate on fighting inflation by all available means.
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Key releases


USD is strengthening against EUR and GBP but has ambiguous dynamics against JPY.

Yesterday, August data on the index of consumer confidence in the US were released: the figure rose from 95.3 points to 103.2 points, which is significantly higher than the forecasted 97.9 points, so American consumers maintain demand that provides support to the economy. In July, the number of open vacancies in the labor market reached 11.239K and exceeded the June figure of 11.040M. Today, employment data from the Automatic Data Processing (ADP) company for August were published, which are considered ahead of the federal statistics, which will be released on Friday: the value increased by 132.0K, which is less than the forecasted 288.0K but more than the July figure of 128.0K, and the state of the US labor market remains stable. Cleveland Federal Reserve Chairman Loretta Meister said interest rates would rise significantly before the regulator can ease inflation control measures and rise above 4.0% in the coming months.​

EUR strengthens against GBP but weakens against JPY and USD.

Investors are focused on the publication of preliminary August data on inflation in the EU countries: the consumer price index rose from 0.1% to 0.5% MoM instead of 0.4% and reached 9.1% instead of 9.0% YoY expected. Core inflation also increased from 0.1% to 0.5% MoM and from 4.0% to 4.3% YoY, bolstering investor confidence that the European Central Bank (ECB) will significantly raise the rate at the September meeting, perhaps immediately by 75.0 percentage points. The July import price index in Germany increased from 1.0% to 1.4% MoM and decreased from 29.9% to 28.9% YoY, and inflationary pressure in the European economy continues to grow. Additionally, the weakening of the euro's position is facilitated by the temporary suspension of Russian gas supplies via the Nord Stream 1 gas pipeline, and consumers fear a new increase in gas prices.​

GBP is weakening against its main competitors – EUR, JPY, and USD.

Today, data on August's retail price index from the British Retail Consortium (BRC) was published. The rate rose from 4.45% to 5.1% due to higher food costs, adding pressure to households struggling to cope with the prospect of even higher electricity and fuel prices expected in the fall and winter, which will put pressure on demand and will increase the risks of a recession in the national economy.​

JPY is strengthening against GBP and EUR but has ambiguous dynamics against USD.

According to preliminary data, in July, the volume of industrial production rose by 1.0% instead of the expected decline of 0.5% due to an increase in the sector of cars and trucks. Retail sales for the same period increased by 2.4% instead of an expected improvement of 1.9%. Japanese consumer demand continues to recover despite a serious increase in domestic inflation, but the outlook for the national economy remains uncertain due to the global economic crisis. Bank of Japan board member Junko Nakagawa warned that further increases in the cost of living could hurt household spending, stressing the need to maintain a super-loose monetary policy.​

AUD strengthens moderately against GBP and EUR but has ambiguous dynamics against USD and JPY.

Today, data on Q2 completed construction works were published: the indicator fell immediately by 3.8% instead of the expected growth of 0.9%, that is, the national construction market is under pressure due to a significant increase in costs and tightening of monetary policy by the Reserve Bank of Australia (RBA).​

Oil quotes continue to correct downwards.

Prices are under pressure from poor macroeconomic statistics: in August, the Manufacturing PMI of China amounted to 49.4 points and remained in the stagnation zone, while Service PMI fell from 53.8 points to 52.6 points. The Chinese economy is showing signs of a slowdown, which may cause a decrease in oil demand from the world's largest consumer. According to the American Petroleum Institute (API) report, US energy reserves rose by 0.593M barrels instead of the expected reduction of 0.633M barrels. Today, investors are waiting for the publication of a corresponding report from the Energy Information Administration of the US Department of Energy (EIA), and according to forecasts, the value will decrease by 1.483M barrels, which may support oil quotes.
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Morning Market Review


EURUSD
The European currency shows a slight decrease, testing the level of 0.99 for a breakdown. The EURUSD pair is holding near record lows, updated on August 23, and remains under pressure from pessimistic economic forecasts for the region. Inflation in the EU is held at record levels, while decisive action by the European Central Bank (ECB), aimed at tightening monetary policy, is leading to a recession in individual economies of the eurozone. However, the monetary policy of the European regulator can hardly be called aggressive so far, because interest rates have been raised only once. The next meeting of the ECB will be held on September 8 and it is expected that the regulator will adjust the value by another 50 basis points to 1.00%. Meanwhile, European countries are also forced to look for a solution to the energy problem. Gas prices remain at record levels, and given disruptions in supplies from Russia, they may increase in the near future. At present, the bloc members have agreed on the introduction of a ceiling on prices for oil and oil products from December, but the supply of "blue fuel" remains a more painful issue. In early September, PJSC Gazprom suspended the operation of the only turbine on the Nord Stream gas pipeline for technical reasons. There was no further information about the timing of the possible resumption of work.​

GBPUSD
The British pound is trading with a downtrend, developing a strong "bearish" momentum, formed at the end of August. The GBP/USD pair is testing the level of 1.1450, continuing to update record lows of March 2020, when the UK economy faced the challenges of the COVID-19 pandemic. The depreciation of the British currency is due to increased inflation with a simultaneous deterioration in economic forecasts. The UK, like the EU, is facing a sharp increase in the cost of living amid rising prices for gasoline, gas, electricity and food. The Bank of England is trying to curb inflation and hastily raises interest rates, but so far the trend has not been reversed. In addition, investors are waiting for the announcement of the results of the election of the head of the Conservative Party of Great Britain and the new Prime Minister, who will have to look for ways to resolve the difficult economic situation. Specifically, Liz Truss is promising to freeze electricity prices, which could ease the burden on consumers but would require an additional 100.0 billion pounds to be found.​

NZDUSD
The New Zealand dollar shows a weak growth, keeping close to the local lows of July 15. NZD/USD is testing 0.6100 for a breakout. At the beginning of the week, trading activity remains restrained, due to closed markets in the US and Canada due to the Labor Day. Meanwhile, investors are evaluating the report on the US labor market for August published at the end of last week. The statistics showed an increase in the Nonfarm Payrolls by 315.0 thousand, which turned out to be 15.0 thousand better than market expectations. In July, the increase in new jobs amounted to 526.0 thousand. At the same time, Average Hourly Earnings in August slowed down from 0.5% to 0.3%, while the forecast was 0.4%. The Unemployment Rate for the same period unexpectedly accelerated sharply from 3.5% to 3.7%, although analysts did not expect any changes. The released report cannot be called unambiguously strong, but it is unlikely to influence the decision of the US Federal Reserve on the interest rate. The next meeting of the regulator will be held on September 21, and it is expected that the value will be adjusted by another 75 basis points.​

USDJPY
The US dollar shows weak growth, holding above the psychological level of 140. The positions of the American currency are still supported by the expectations of further tightening of monetary policy by the US Federal Reserve, while the Bank of Japan is forced to keep rates unchanged, trying to accelerate its deflationary economy. The next meeting of the American regulator will be held on September 21 and it is expected that the interest rate will be increased in the range from 50 basis points to 75 basis points. In the meantime, investors are analyzing macroeconomic statistics published in the US. Published on Friday, the August report on the US labor market reflected an increase in Nonfarm Payrolls by another 315.0 thousand after an increase of 526.0 thousand a month earlier; however, statistics also recorded acceleration in the Unemployment Rate from 3.5% to 3.7% with a neutral forecast of analysts. The yen is now slightly supported by statistics from Japan: Jibun Bank Manufacturing PMI strengthened from 49.2 points to 49.5 points in August, while experts did not expect any changes at all.​

XAUUSD
Gold prices show mixed dynamics, holding around 1700.00. At the end of last week, the quotations of the instrument managed to show weak growth and retreated from local lows of July 21, reacting to the publication of not the strongest report on the US labor market for August, which reflected an increase in Nonfarm Payrolls by 315.0 thousand after increase by 526.0 thousand a month earlier. At the same time, the released data indicated a slowdown in the Average Hourly Earnings, and also reflected an increase in the Unemployment Rate from 3.5% to 3.7%. All this somewhat reduced the likelihood of an interest rate hike by the US Federal Reserve by 75 basis points at the September meeting, but so far it is premature to draw unambiguous conclusions. Markets in the US are closed today for Labor Day, so noteworthy data is expected on Tuesday, when S&P and ISM business data for August are released.
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Morning Market Review

EURUSD
The European currency shows weak growth, retreating from new record lows, updated at the opening of trading the day before. The EUR/USD pair is testing 0.9950 for a breakout; however, the positions of the "bulls" remain extremely vulnerable, and the growth of the instrument is mainly due to technical factors. The market is still dominated by worries about the prospects for the European economy and the energy crisis that has erupted. While the European Central Bank (ECB) is only planning a second interest rate hike to curb inflation, the region's economy is close to recession and high electricity and gas tariffs leave no doubt that households will need more bailouts and subsidies to pay their bills this winter. Macroeconomic statistics released yesterday in the EU turned out to be negative again. The S&P Global Services PMI in Germany in August fell from 48.2 points to 47.7 points with neutral forecasts, and the same index for the eurozone fell from 50.2 points to 49.8 points. Retail Sales in the euro area in July showed a weak increase of 0.3% after a sharp fall of 1.0% a month earlier. In annual terms, the rate of decline in sales slowed down from –3.2% to –0.9%, while the forecast was –0.7%.​

GBPUSD
The British pound is trading with the uptrend, building on the corrective momentum formed the day before, when the GBP/USD pair again updated record lows of March 2020. At the moment, the instrument is trying to consolidate above the level of 1.1560, taking advantage of the fact that the markets in the US were closed at the beginning of the week on the occasion of Labor Day. Meanwhile, there are few real reasons for the growth of the British currency. The economic situation in the country remains difficult against the backdrop of record inflation and attempts by the Bank of England to bring price growth under control through a systematic increase in interest rates. An additional factor of uncertainty is the policy of the new British Prime Minister Liz Truss, who was previously the head of the Foreign Office. The official will have a rather tense start to her post as the national economy is in dire need of support and the population is counting on additional subsidies to pay for skyrocketing electricity and heating bills. Meanwhile, the UK Services PMI from S&P Global fell from 52.5 points to 50.9 points in August with a neutral outlook.​

AUDUSD
The Australian dollar shows multidirectional dynamics, consolidating near 0.6800. The AUD/USD pair is trying to develop an upward momentum in the ultra-short term, but today the "bulls" are facing significant resistance after the publication of the decision of the Reserve Bank of Australia (RBA) to raise the interest rate. As expected, the Australian regulator decided to adjust the value by another 50 basis points to 2.35%, explaining this by the desire to return inflation to the target range of 2–3%. Representatives of the regulator, as before, noted the existing risks due to the slowdown in the global economy, the rise in energy prices and the persistence of threats from COVID-19. Current RBA forecasts suggest that by the end of 2022, inflation will be approximately 7.5%, next year it is expected to slow down sharply to 4.0%, and in 2024 prices may fall to the upper limit of the target range of 3%. Yesterday's inflation data from TD Securities showed a 0.5% decline in August after rising 1.2% a month earlier, and in annual terms, the pace slowed down from 5.4% to 4.9%. In turn, the Commonwealth Bank Services PMI in August increased from 49.6 points to 50.2 points with a neutral forecast.​

USDJPY
The US dollar shows moderate growth, testing another resistance at around 141.00. Support for the US currency is still provided by the expectations of traders regarding a further increase in interest rates by the US Federal Reserve. At the same time, investors are still confident in the strength of the US economy, which can withstand such a sharp increase in the cost of borrowing. Meanwhile, the policy of the Bank of Japan remains wait-and-see: the growth rate of consumer prices still did not reach the target levels of the Bank of Japan, which has been struggling with deflationary phenomena for a long time. Macroeconomic statistics released today did not support the yen. Overall Household Spending in July slowed down from 3.5% to 3.4% while analysts had expected it to rise to 4.2%, and the Labor Cash Earnings in July fell from 2.2% to 1.8%, with an optimistic forecast about an increase of up to 2.5%.​

XAUUSD
Gold prices show moderate growth, testing the level of 1720.00. Investors are in no hurry to open long positions, fearing a new cycle of tightening monetary policy by global regulators, which was launched by the Reserve Bank of Australia (RBA) on Tuesday, raising its interest rate by 50 basis points. The meeting of the European Central Bank (ECB) is also expected this week, and there is practically no doubt that the regulator will also correct the value by 0.50% to 1.00%. In addition, the Bank of Canada may raise interest rates on Wednesday by 75 basis points at once to 3.25%. In turn, the UK will hold a hearing on the inflation report this week, where representatives of the Bank of England, and, in particular, its Governor, Andrew Bailey, will speak.

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Morning Market Review


EURUSD
The European currency is trading with a weak downtrend, testing the level of 0.9880 for a breakdown and remaining in the area of record lows updated the day before. Investors are in no hurry to open new positions, preferring to wait for the publication of data on the dynamics of Gross Domestic Product (GDP), as well as on Employment Rate. According to the first estimates, the growth rate of the region's economy in the second quarter amounted to 0.6% in quarterly terms and 3.9% in annual terms. Tomorrow, the European Central Bank (ECB) decision on interest rates is expected to be published, accompanied by a press conference and a speech by the President of the regulator, Christine Lagarde. The ECB is expected to correct the value by 50 basis points to 1.00%, and also continue to tighten monetary policy in an attempt to curb inflation. At the same time, traders would like to hear further comments from the ECB on the prospects for a recession, given the widespread decline in business activity and a sharp increase in energy prices, provoking a full-fledged energy crisis in Europe.​

GBPUSD
The British pound is moderately declining, leveling the attempts of the "bulls" to show corrective growth at the beginning of the week. The GBP/USD pair is testing the level of 1.1450 for a breakdown, approaching the all-time lows of March 2020, updated last Monday. Support for the US currency was provided by strong macroeconomic statistics from the US, published the day before. The ISM Services Employment Index in August strengthened from 49.1 points to 50.2 points, while the forecast was for a decline to 48.2 points, and the ISM Services PMI over the same period increased from 56.7 points to 56.9 points against the background of preliminary estimates of experts on the decline to 55.1 points. In turn, the ISM Services New Orders Index corrected from 59.9 points to 61.8 points, while analysts had expected a reduction to 57.0 points. The data again reflected the resilience of the US economy, which allows the US Federal Reserve to continue the "hawkish" monetary policy to combat high inflation, especially given the further rise in energy prices. Today, the focus of investors will be hearing the report on inflation, as well as a number of speeches by representatives of the Bank of England, including its Governor Andrew Bailey.​

AUDUSD
The Australian dollar shows negative dynamics, developing the "bearish" momentum formed the day before, when the AUD/USD pair came under pressure after the decision of the Reserve Bank of Australia (RBA). The instrument is testing the level of 0.6710 for a breakdown, updating local lows from July 14. The Australian regulator raised the interest rate by 50 basis points to 2.35%, which coincided with the main market forecasts, and in the accompanying statement it was noted that the main risks for the economy remain, and the RBA will continue to tighten monetary policy to stabilize the situation with inflation. At the same time, the regulator did not comment on the threat of an impending recession, noting only that the trajectory of the correction of the value may change. The macroeconomic data released today in Australia provide a weak support for the AUD/USD pair. AiG Performance of Services Index strengthened from 51.7 points to 53.3 points in August, which turned out to be better than the average forecasts. Australian GDP in the second quarter increased by 0.9% after rising by 0.8% over the previous period, although analysts had expected 1.0%, and in annual terms, the figure accelerated from 3.3% to 3.6%, ahead of forecasts at the level of 3.5%.​

USDJPY
The US dollar shows strong growth, updating record highs over the past 24 years. The USD/JPY pair is testing 144.00, receiving support amid expectations of further tightening of monetary policy by the US Federal Reserve. Macroeconomic statistics published recently confirms investors' expectations regarding the stability of the US economy, the recession threshold of which is much further than in the economies of Europe or the UK. Meanwhile, the Bank of Japan is still taking a wait-and-see attitude, without launching a cycle of raising interest rates due to low inflation in the country. Moreover, the regulator has repeatedly stated its readiness to resort to additional support measures, if necessary. On Thursday, Japan will release data on the dynamics of GDP for the second quarter, as well as statistics on the volume of Bank Lending. The economy is expected to accelerate in the second quarter from 0.5% to 0.7% QoQ and from 2.2% to 2.9% YoY.​

XAUUSD
Gold prices are moderately declining, developing the "bearish" momentum formed the day before. The XAU/USD pair failed to consolidate on Tuesday at its local highs of August 30, reacting to the publication of positive macroeconomic statistics from the US. In particular, the data showed an increase in ISM Services PMI in August from 56.7 points to 56.9 points, while analysts had expected it to decline to 55.1 points. At the same time, S&P Global Services PMI fell in August from 45.0 points to 44.6 points with neutral forecasts. One way or another, investors are confident in the stability of the US economy, especially against the background of the energy crisis and recession risks in Europe. Today, the publication of a monthly report from the US Federal Reserve, the so-called "Beige Book", is expected. In addition, the Bank of Canada will announce its decision on interest rates. Forecasts suggest an increase in value immediately by 75 basis points to 3.25%. Tomorrow, the European Central Bank (ECB) will also hold a meeting on monetary policy, and it is assumed that the regulator will adjust interest rates by 50 basis points to 1.00%.
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Morning Market Review

EURUSD
The European currency is correcting slightly after the EUR/USD pair showed the strongest growth in recent weeks the day before, supported by upbeat macroeconomic statistics from Europe, which gave investors hope that a recession could be avoided (or at least the timing of its occurrence will be shifted). According to the results of the second quarter, the growth rate of the Gross Domestic Product (GDP) of the Eurozone increased by 0.8%, while analysts expected growth of only 0.6%. In annual terms, the index accelerated from 3.9% to 4.1%. The Employment Rate added 0.4% QoQ and 2.7% YoY, while analysts expected 0.3% and 2.4%, respectively. Pretty solid results on the dynamics of the economy increased the likelihood that the European Central Bank (ECB) may decide on a more severe increase in interest rates than expected. The next meeting of the regulator will take place today, and at the moment, analysts predict a correction in the value in the range of 50–75 basis points.​

GBPUSD
GBPUSD is trading with a downtrend, testing the level of 1.1500 for a breakdown. The pound, remaining strongly oversold in the short term, is trying to show corrective growth, limited by weak performance, which the UK economy shows. Inflation in the country exceeds record levels since 1982 at the level of 10.1%, while further forecasts are also very pessimistic. The Bank of England expects the economy to enter recession in the fourth quarter and not be able to return to growth until 2024. At the same time, the British regulator is still set to further increase the interest rate at a meeting to be held next Thursday. Correction of the value in the range of 25-50 basis points is expected. Another factor of uncertainty for the pound and the British economy remains the policy of the new Prime Minister Liz Truss. In particular, the official is considering the possibility of fixing prices for electricity and gas for households by increasing budget spending and government loans.​

AUDUSD
The Australian dollar shows a confident decline, returning to fall after an attempt at corrective growth the day before. AUDUSD was moderately supported yesterday by macroeconomic data from Australia. In the second quarter, the Australian economy grew by 0.9% from 0.7% in the previous period, while forecasts assumed a value of 1.0%. The AiG Services PMI corrected from 51.7 points to 53.3 points in August, beating analysts' average expectations. The development of "bullish" dynamics for the instrument was also facilitated by the publication of a not very confident report from the US Federal Reserve (the so-called Beige Book), which showed that economic activity in the country has not changed much since the beginning of July, while expenses remain quite high, and revenues of the households are steadily declining. In addition, almost all regions of the United States also noted a significant increase in prices for food, services and utility bills.​

USDJPY
The US dollar shows a slight increase, once again testing 144.00 for a breakout, above which the USD/JPY pair tried to consolidate; however, closer to the end of the day session, the "bulls" lost a significant part of their gains. The pressure on the yen continues to come from the prospect of the Bank of Japan maintaining an ultra-loose monetary policy, while the US Federal Reserve intends to continue its aggressive approach in raising interest rates to fight inflation that has reached forty-year highs, while leaving recession risks moderate. Representatives of the American regulator are likely to correct the value by 75 basis points already at the September meeting. In addition, investors drew attention to the speech of Japanese Finance Minister Sunichi Suzuki, who expressed concern about the unilateral sharp fall in the national currency and announced his readiness to intervene in the markets if the situation requires it. However, official comments were not enough to win back the fall of the yen against the background of the active strengthening of the dollar. In turn, the macroeconomic statistics released today provides moderate support to the yen. The Japanese economy showed growth in the second quarter by 0.9% after an increase of 0.5% a month earlier, while analysts expected an increase of only 0.7%. In annual terms, the pace of Gross Domestic Product (GDP) accelerated from 2.2% to 3.5%, which was significantly better than market forecasts of 2.9%.​

XAUUSD
Gold prices are consolidating today near the level of 1715.00, waiting for the emergence of new drivers on the market. The day before, XAU/USD showed a noticeable growth of almost 1.0%, having received support from the correctional sentiment for the US currency. In addition, markets reacted to the decline in US Treasury yields. In turn, further growth of the precious metal quotes was restrained by an increase in interest rates by the Bank of Canada by 75 basis points, which once again confirmed investors' confidence in a similar decision by the US Federal Reserve. The upcoming meeting of the European Central Bank (ECB), which will be held today at 14:15 (GMT+2), brings uncertainty to the market. After the publication of optimistic macroeconomic data from the euro area the day before, investors expect a 75 basis point increase in interest rates, but a more cautious correction of 50 basis points is also possible. In addition, during the day there will be speeches by the heads of the US Federal Reserve and the ECB.
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