Weekly Market Commentary | 19.08 - 25.08

Monday:

• The week kicks off on a quiet note, with no Tier 1 data on the calendar. This gives traders a chance to position themselves ahead of the more significant events later in the week. Markets are likely to remain calm as participants await key data and central bank insights.

Tuesday:

• Things start to heat up, especially for the Canadian dollar, with the release of the Canadian inflation data. The Consumer Price Index (CPI) on a monthly basis is expected to come in at 0.4%. This figure will be closely watched, as it could influence expectations for future monetary policy moves by the Bank of Canada. A higher-than-expected CPI could strengthen the CAD, while a lower number might weaken it.

Wednesday:

• Surprisingly, Wednesday is relatively quiet on the fundamental front, with no Tier 1 data scheduled. The main focus will be on the release of the FOMC meeting minutes from the U.S. These minutes will be dissected for any clues on the Federal Reserve’s future policy moves, especially regarding interest rates and inflation concerns. Although not a major data release day, the minutes could still stir market sentiment.

Thursday:

• By far the busiest day of the week, Thursday will be packed with market-moving data. We’ll get PMI readings from major economies, including France, Germany, the Eurozone, the UK, and the U.S. As is often the case, services PMIs are expected to remain above 50, indicating expansion, while manufacturing PMIs are likely to stay below 50, signaling contraction. An exception is the UK’s manufacturing PMI, where a reading of 52.1 is anticipated, suggesting growth in the sector. Adding to the action, Thursday also marks the start of the Jackson Hole Symposium, a key event where central bankers and economists gather to discuss the global economy.

Friday:

• The week wraps up with retail sales data from New Zealand and Canada, both expected to show negative numbers. These figures could weigh on the NZD and CAD if they come in as expected or worse. The main event on Friday will be the continuation of the Jackson Hole Symposium. Jerome Powell, the Fed Chair, is scheduled to speak at the end of the European session. His speech is highly anticipated and could provide significant market direction, particularly for the USD. Later in the day, Bank of England Governor Andrew Bailey will also deliver remarks, rounding off a busy day for central bank watchers.

Setups for This Week:

Gold

• Primary View: The price recently broke above a significant horizontal resistance in the long term, signaling a strong buy opportunity. This breakout is particularly important because it confirms the ascending triangle pattern that has been forming over the past few months. As long as the price remains above the orange area, the sentiment stays positive.

• Alternative View: If the price breaks below the orange support, it will trigger a sell signal, indicating a potential shift in sentiment.

EUR/AUD

• Primary View: The price has completed a head and shoulders pattern, marked with yellow rectangles, and has broken below the red neckline. This is a clear sell signal, suggesting further downside potential.

• Alternative View: Should the price move back above the green resistance and the red neckline, it would invalidate the head and shoulders pattern, turning into a buy signal.

USD/CAD

• Primary View: The price is currently testing a long-term uptrend line, marked in blue. Given the influence of the recent false breakout, indicated by the red rectangle, the likelihood of a bearish breakout is quite high. The initial target is the green horizontal support.

• Alternative View: If the price bounces off the blue uptrend line, it will provide a short-term buy signal, with the target set on the orange resistance level.