#Market Review

▫️ In the FX market, safe havens have returned to early August extremes;

▫️ #USDJPY is back near 142, forming a death cross;

▫️ #USDCHF was in uncomfortable territory for the NBS, forcing further rate cuts;

▫️ #USDCNH has moved into the safe haven category.

FxPro News

Forex - Further Unwinding of Carry Trade | Market Overview

The unwinding of the carry trade in the FX market continues, with the major safe havens returning to the extremes seen against the dollar in early Au...

#Crypto

▫️ The crypto market is once again cheaper than $2 trillion, failing to push back from that mark;

▫️ #Bitcoin slipped below $56K despite several bounces, a weaker dollar and a stronger dollar;

▫️ Mining profitability hit a record low, leading to a 15% fall in public miners' capitalisation.

FxPro News

Forex - Bitcoin pressured by risk-off mood | Crypto Review

Market Picture The pressure on risk assets continues, pushing the crypto market capitalisation back below the bi milestone of $2 trillion. This le...

#WaveAnalysis

▫️#AUDUSD reversed from support level 0.6700;

▫️ Likely to rise to resistance level 0.6800.

**?Trade responsibly with** fxpro.com

FxPro News

Forex - AUDUSD Wave Analysis 5 September 2024 | Technical analysis

- AUDUSD reversed from support level 0.6700 - Likely to rise to resistance level 0.6800 AUDUSD currency pair recently reversed up from the ...

At the same time, gloomy thoughts about the US economy are tempered by an impressive 0.9% jump in industrial production for May. This is more than twice as strong as expected. The industrial production index rose to its highest level since October 2022 and is only 0.8% below its historical peak reached in September 2018.

In summary, today's package of statistics points to a consumer shift towards a savings model but also refutes the most pessimistic expectations of a recession with a strong gain in manufacturing. This combination of data favours extending current rate levels, providing no food for either hawks or doves.

**?Trade responsibly with FxPro**

Jump in US manufacturing and consumer caution
US retail sales rose 0.1% in value for May, worse than the 0.3% rise expected after a 0.2% decline a month earlier. Total sales were 2.5% higher than a year earlier, lagging the 3.3% inflation over the same period.

In other words, there was a decline in consumption in real terms. At first glance, this is surprising given that wages are adding at a 4.0% y/y rate, and employment is growing steadily. However, adding to the equation the soaring cost of servicing credit card debt and a very low savings rate by historical standards, things start to look up.

We don't see a decline in consumption as we do in times of crisis, but a clear slowdown that may precede it.

Potential buyers are probably better off waiting for AUDUSD to break above 0.67, where we saw a reversal last month. It would also break the sequence of lower local highs seen over the past three years and at an even higher level since 2011.

A reversal in the tone of monetary policy has the potential to feed AUDUSD buying, adding to the local positive picture. The ability to break the long-term downtrend could attract even more buyers, launching a rally.

**?Trade responsibly with FxPro**

Inflation in America came out weaker than expected, actualising the question of a key rate cut. This is negative news for the dollar, which at the same time fuels appetite for equities.

The Consumer Price Index was virtually unchanged last month, showing 0.0% m/m and slowing on an annualised basis to 3.3% y/y. Average forecasts had expected to see figures 0.1 percentage point higher. However, market reaction shows that some traders were tuning in for an "upside surprise".

The core CPI, which excludes changes in food and energy prices, showed an even more significant decline. It rose 0.2% m/m (the lowest since October 2023) and slowed to 3.4% y/y (the lowest in three years).

The fresh data is a sigh of relief for the Fed, which will put interest rate cuts back on the near-term agenda. The markets will probably get stronger in expectations of 2 rate cuts this year, soon joining other G7 central banks that have already started easing. The probability of a rate cut in September has risen from 53% to 69% today.

Thus, we may be seeing the beginning of the formation of one of the significant downtrends in oil, capable of being on par with the 2014-2016 or 2020 sell-offs. In this case, the price may roll back to the $30 area—the price area where most oil production projects lose profitability.

However, the bulls still have a significant support area of around $65-$70 per barrel. This was the resistance area in 2019 and the support area in the last three years.