The US Dollar (USD) should be vulnerable to profit-taking these first few days of the week as traders have mulled the Jackson Hole speech from US Fede
. Although the speech did not hold any surprises, the repetition of the content was enough to dampen any hopes for an early Goldilocks scenario and saw yields spiking higher and rate cuts being pushed further down the line to mid-2024 at the earliest. Traderswill focus on the coming macroeconomic data points for any sudden contractions that might urge the Fed to rethink its strategy and still cut sooner.
Equities are jumping higher in Asia with the Japanese Topix index up 1.47% and the Hong Kong Hang Seng Index up 1.31%. The Hang Seng would have been higher if it had not been forced to drag along the 80% decline from construction group Evergrande, which is set to default anytime now. European markets are not applauding the moves in Asia as they are synthetically pushed higher because of the rate cuts and lower taxes from the Chinese finance ministry on stock trading.
On the upside, 104.69, the high of May 31, comes into play as the level to beat to the upside. Once that level is broken and consolidated, look for a surge to 105, where 105.110 is an ideal candidate for a double top. Should the Greenback be on a tear, expect then at least a test at 105.88 – the 2023 peak from March 8.
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