Fed Chair Warsh’s speech front and center

USD about to end the week higher

The USD continued to edge higher yesterday and in today’s Asian session. Market focus is expected to be placed on Fed Chair Warsh’s speech at the Jackson Hole symposium. Market analysts will be searching for clues regarding the bank’s intentions, and should the Fed Chairman choose to adopt a more hawkish approach, given also the failure of the PCE rates to slow down in the past month, we may see some support for the USD, as market expectations for a tightening of the Fed’s monetary policy may be enhanced. North of the US border CAD traders seem to digest the fundamentals of the tensions in the US-Canadian trade relationship and are focusing on the release of Canada’s GDP Rate for Q2.

US equities continue to be cautious

US equities sent mixed signals yesterday with Dow Jones edging lower while S&P 500 and Nasdaq ended their day in the greens, yet the movements remain subtle on both sides. Nevertheless, the release of NVIDIA’s earnings report tended to improve the market sentiment as expected, yet today the market’s focus is on Fed Chair Warsh’s speech, and a possibly hawkish tone could weigh on US equities and vice versa. 

Oil prices edge higher

Oil prices are about to end the week lower as market worries for the situation in the Middle East are easing. Negotiations for a possible reopening of the Strait of Hormuz are ongoing. Developments enhance the optimism for the supply side of the oil market. Yet the situation remains fragile and could reverse, with a possible renewal of tensions being able to push oil prices higher again.

Volatility on Gold’s price remains low

Gold’s price tended to remain relatively stable yesterday and during today’s Asian session. The negative correlation between the USD and gold’s price seems to be blurred, as for the week the USD is gaining ground while gold’s price remains stable. Today we expect Fed Chair Warsh speech to be a market mover for the precious metal’s price. A possibly hawkish tone given the inflationary pressures in the US economy, could weigh on gold’s price, while a dovish tone could lift gold’s price.

Other highlights for today

Today we get Sweden’s and  France’s final GDP rates for Q2, France’s preliminary HICP rates for August, Euro Zone’s Business climate indicators and the final US UoM consumer sentiment for August, while ECB Board Member Schnabel speaks. In Monday’s Asian session, we get Japan’s industrial output for Jule and China’s NBS PMI figures for August.

Charts to keep an eye out

USD/CAD corrected lower yesterday after hitting a ceiling at the 1.3880 (R1) resistance line. The RSI indicator also corrected lower, being allready below 50, signalling an intensifying bearish market sentiment. Yesterday’s caution seems to be verified thus we maintain our sideways motion bias for the pair, between the S1 and R1. Should the bulls take over, we may see USD/CAD breaking the 1.3880 (R1) resistance line and start aiming for the 1.3990 (R2) resistance level. Should the bears be in the driver’s seat, USD/CAD’s may break the 1.3770 (S1) support line and start aiming for the 1.3550 (S2) support level.  

Gold’s price edged lower nearing the 4550 (S1) support line. We intend to maintain our bullish outlook for the gold’s price as long as the upward trendline guiding it remains intact. Should the bulls lead gold’s price, we may see it start aiming for the 4890 (R1) resistance level. Should the bears take over, we may see gold’s price to break the 4550 (S1) line, break also the upward trendline guiding it, signalling an interruption of the upward movement was interrupted and start aiming for the 4275 (S2) support level.

Calendar follows

USD/CAD daily chart

• Support: 1.3770 (S1), 1.3550 (S2), 1.3420 (S3).
• Resistance: 1.3880 (R1), 1.3990 (R2), 1.4125 (R3). 

XAU/USD daily chart

• Support: 4550 (S1), 4275 (S2), 3960 (S3).
• Resistance: 4890 (R1), 5245 (R2), 5600 (R3).