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• AUD/USD remains depressed at YTD low after five-week losing streak.
• Weekend news from China pauses further downside of Aussie pair ahead of top-tier data/events.
• PBoC is expected to cut benchmark rates after trimming other rates earlier in August.
• Aussie/US PMIs, Jackson Hole Symposium eyed for clear directions.

AUD/USD holds lower grounds near 0.6400, struggling for clear directions after refreshing the yearly low during a five-week downtrend. The Aussie pair’s latest inaction could be linked to the hopes of more stimulus from China and the cautious mood ahead of the People’s Bank of China’s (PBoC) Interest Rate Decision. More importantly, the market’s consolidation ahead of the August month Purchasing Managers Indexes (PMIs) and Jackson Hole Symposium prods the risk-barometer pair.

During the weekend, China’s top-tier financial authorities gather to discuss the market’s concerns about the spillover effects from the nation’s reality sector debt crisis, as well as doubts about the local government bonds. Following the meeting, the officials showed readiness for more stimulus and put a floor under the riskier assets.

Previously, the People’s Bank of China (PBOC), surprised markets by lowering the one-year Medium-term Lending Facility (MLF) rate to 2.50% from 2.65% previous, as well as by cutting the Reverse Repo Rate to 1.8% from 1.9% previously. That said, the PBoC also cut Statutory Liquidity Financial Ratio (SLF) in the last week. It’s worth observing that China’s Retail Sales and Industrial Production disappointed and joined the fears of the debt market crisis, as well as the easing economic recovery, to weigh on the AUD/USD price.

That said, Australia’s headline employment data were disappointing for July and joined the downbeat Reserve Bank of Australia (RBA) Minutes to exert additional downside pressure on the Aussie pair. It’s worth noting that the softer readings of the quarterly Wage Price Index also favored the AUD/USD bears.

On the other hand, The upbeat US second-tier manufacturing activity numbers, Retail Sales and wage growth allowed the US Dollar to remain firmer for the fifth consecutive week, especially backed by the hawkish Fed Minutes. Also keeping the Greenback firmer was the risk-off mood and the upbeat Treasury bond yields. With this, US Dollar Index (DXY) grew in the last five consecutive weeks, to 103.40 at the latest.

Amid these plays, Wall Street closed mixed on Friday but marked a heavy weekly loss whereas the US Treasury bond yields retreat after a strongly negative week for the equities and the upbeat bound coupons.

Moving on, the PBoC Interest Rate Decision and the headlines about China may entertain the AUD/USD pair traders ahead of Wednesday’s preliminary PMIs for August and the late-week headlines from the Kansas Fed’s annual event for central bankers, namely the Jackson Hole Symposium.

Technical analysis

Unless providing a daily closing beyond a five-week-old descending resistance line, around 0.6490 by the press time, the AUD/USD pair remains on the seller’s radar.

• EUR/USD stays defensive at the lowest level since early July after declining for five consecutive weeks.
• Mixed EU data, risk aversion joined challenges to Fed policy pivot concerns to weigh on Euro pair.
• Preliminary readings of August PMI data for Eurozone, US will precede Jackson Hole speeches from central bankers to entertain traders.

EUR/USD grinds near 1.0880 as bears take a breather at the lowest levels in six weeks after dominating since late July in a row. That said, the Euro pair’s latest consolidation could be linked to the market’s preparations for this week’s top-tier data/events, especially amid a light calendar on Monday. However, the bearish bias remains intact as the latest EU/US data and market sentiment favors the Greenback.

The upbeat US second-tier manufacturing activity numbers, Retail Sales and wage growth allowed the US Dollar to remain firmer for the fifth consecutive week, especially backed by the hawkish Fed Minutes. Also keeping the Greenback firmer was the risk-off mood and the upbeat Treasury bond yields. With this, US Dollar Index (DXY) grew in the last five consecutive weeks and weighed on the EUR/USD.

On the other hand, the Eurozone Industrial Production and foreign trade numbers marked positive readings for June. That said, the second readings of the Eurozone Gross Domestic Product (GDP) for the second quarter (Q2) confirmed initial forecasts whereas the Employment Change eased for the said period. It’s worth noting that the final figures for July inflation, per the Harmonized Index of Consumer Prices (HICP) measures, also confirmed initial forecasts showing a receding price pressure in the Old Continent.

In addition to the data line that favored the US Dollar, the easing of the dovish bias about the Federal Reserve (Fed), backed by the latest Fed Minutes, also weighed on the EUR/USD price. The latest Fed Minutes showed that most policymakers preferred supporting the battle again the ‘sticky’ inflation, despite being divided on the imminent rate hike.

It’s worth noting that the market players started reassessing previous biases about the major central banks and added strength to the risk aversion, primarily fuelled by the China-linked woes. That said, investors anticipated that the end of the rate hike cycle is still unclear, which means more bearish pressure on riskier assets and a rush for the US Dollar. Furthermore, the Fitch Ratings’ downward revision of the 10 developed economies’ medium-term growth projections also spoiled the mood and allowed the Greenback to remain firmer.

While portraying the mood, Wall Street closed mixed and the US Treasury bond yields retreat after a strongly negative week for the equities and the upbeat bound coupons.

Looking ahead, a light calendar on Monday may allow the EUR/USD pair to consolidate the latest losses. However, cautious mood ahead of the August month Purchasing Managers Indexes (PMIs) will decorate the calendar on Wednesday amid the market’s cautious optimism. More important will be the Kansas Fed’s annual event for central bankers, namely the Jackson Hole Symposium, which will be watched for monetary policy clues.

Technical analysis

Although the nearly oversold RSI (14) line challenges EUR/USD bears, a convergence of the 100-day Exponential Moving Average (EMA) and a downward-sloping trend line from July 18, close to 1.0905–10 by the press time, guards immediate recovery of the Euro pair.

• NZD/USD remains on the defensive near 0.5925, up 0.25 on the day.
• New Zealand Trade balance recorded a deficit of $15,810B in July YoY compared with a deficit of $-16.11B.
• China would arrange financial support to resolve local government debt worries.
• New Zealand Retail Sales, Federal Reserve (Fed) Chairman Jerome Powell Speaks will be the focus for traders.

The NZD/USD pair breaks below the psychological round mark of 0.6000 and remains under pressure during the early Asian session on Monday. The pair bounces off the lowest level since November 2023 at 0.5903 and currently trades near 0.5926, gaining 0.27% for the day.

The latest data from Statistics New Zealand on Monday showed that the nation’s Trade balance recorded a deficit of $15.81B in July YoY compared with a deficit of $-16.11B in the previous month. Exports fell to $5.45bn in July from $6.18B in the previous month, while Imports expanded to $6.56B from $6.29B prior.

The Reserve Bank of New Zealand (RBNZ) kept the benchmark interest rates unchanged at 5.5%, as expected on Wednesday. RBNZ Governor Adrian Orr also offered a hawkish signal to rein in rising inflation expectations and stated that the interest rate will remain at a restrictive level for some time.

Furthermore, the People's Bank of China (PBOC) said on Sunday that China would arrange financial support to resolve local government debt worries, according to Reuters. Market participants will focus on the development of this headline. The positive development might alleviate the concern about the spillover effects of China’s debt crisis and real-estate woes. This, in turn, could limit the downside of the Kiwi and acts as a tailwind for the NZD/USD pair.

On the other hand, the stronger-than-expected US data last week strengthen the case for another interest rate rise by the Federal Reserve (Fed). FOMC Minutes emphasized on Wednesday that inflation remained unacceptably high and additional monetary policy tightening may be required to bring inflation to the target. The more hawkish stance from the Fed could lift the Greenback against its rival.

Looking ahead, the New Zealand Retail Sales will be due on Wednesday and the Federal Reserve (Fed) Chairman Jerome Powell will speak at the Jackson Hole Symposium on Friday. His speech will offer hints about further monetary policy guidance and give a clear direction for the NZD/USD pair. Meanwhile, risk sentiment remains the main driver for the pair.

As per the latest New Zealand (NZ) foreign trade numbers from the New Zealand Statistics, the headline Trade Balance drops to $-1,107.0M MoM in July versus $-111.0M prior (revised). However, the annual trade deficit improves to $15.81B for the said month versus $16.11B prior figures (revised from $15.98B).

Further details suggest that Exports ease to $5.45B during the said month versus $6.18B (revised) prior whereas Imports improves to $6.56B compared to $6.29B in previous readings.

Market reaction

NZD/USD fails to offer any meaningful reaction to the mixed NZ trade numbers for July while staying depressed around 0.5920 amid the early hours of Monday’s Asian. It’s worth noting that the Kiwi pair dropped in the last five consecutive weeks to refresh the yearly low to around 0.5900.

About New Zealand Trade Balance

The Trade Balance released by Statistics New Zealand is a measure of the balance amount between imports and exports, and it is published in New Zealand dollar terms. A positive value shows a trade surplus while a negative value shows a trade deficit. Any variation in the figures influences the domestic economy. If a steady demand in exchange for exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the NZD.

• Gold Price remains sluggish at five-month low after declining for four consecutive weeks.
• Firmer US Dollar, Treasury bond yields weigh on XAU/USD as key central bankers prepare for annual Jackson Hole event.
• China-inflicted markets woes, trade war fears also keep Gold sellers hopeful as August PMI figures loom.
• Falling wedge formation, oversold RSI make XAU/USD technical analysis interesting and challenge the bulls ahead of top-tier catalysts.

Gold Price (XAU/USD) marks an unimpressive start of the trading week around $1,890, after declining in the last four consecutive weeks. In doing so, the Gold Price licks its wounds at the lowest level since March while struggling to gain traction amid the market’s cautious mood ahead of this week’s top-tier data/events. That said, the firmer US Dollar, however, exerts downside pressure on the XAU/USD even if the technical analysis signals a corrective bounce in the prices. It’s worth noting that Wednesday’s preliminary readings of the August month Purchasing Managers Indexes (PMIs) for major economies will decorate the calendar ahead of the Kansas Fed’s annual event for central bankers, namely the Jackson Hole Symposium.

Gold Price drops on firmer US Dollar

Gold price marked a four-week downtrend in the last as the firmer US Dollar joined fears surrounding one of the world’s biggest XAU/USD customers, namely China. Additionally, concerns that the global central banks still have some room for the rate tightening spell and trade wars also contributed to the Gold Price weakness.

US Dollar Index (DXY) grew in the last five consecutive weeks and weighed on the Gold Prices.

The upbeat US activity numbers, Retail Sales and wage growth allowed the US Dollar to remain firmer for the fifth consecutive week, especially backed by the hawkish Fed Minutes. Also keeping the Greenback firmer was the risk-off mood and the upbeat Treasury bond yields.

That said, the latest Fed Minutes showed that most policymakers preferred supporting the battle again the ‘sticky’ inflation, despite being divided on the imminent rate hike.

It’s worth noting that the market players started reassessing previous biases about the major central banks and added strength to the risk aversion, primarily fuelled by the China-linked woes. That said, investors anticipated that the end of the rate hike cycle is still unclear, which means more bearish pressure on riskier assets and a rush for the US Dollar.

Talking about China catalysts, the nation’s second-large realtor, as well as the world's most heavily indebted property developer, Evergrande filed for protection from creditors in a US bankruptcy court on Thursday. The shockwave renewed market fears of 2021 pessimism when the same realtor defaulted on bond payments and shock equities. However, the concerns about Chinese policymakers’ readiness for more stimulus to defend the economy from debt woes, as well as revive the activity numbers, seems to have challenged the pessimists of late.

Elsewhere, the US imposed tariffs on Tin Mil Steel coming from China, Germany and Canada in a surprise move on Thursday.

Furthermore, the global rating agency Fitch Ratings lowered medium-term Gross Domestic Product (GDP) projections for 10 developed economies in its quarterly Global Economic Outlook. Among those nations are the US, the UK, Japan and Germany. It’s worth noting that the rating giant kept growth forecasts for Australia, Canada and Switzerland unchanged among others.

Alternatively, the People's Bank of China (PBOC) announced on Sunday, per Reuters, “China will coordinate financial support to resolve local government debt problems.” It’s worth noting that the PBoC met with the Chinese financial regulator and the securities regulator late last week amid concerns about the spillover effects from the nation’s reality sector debt crisis, as well as doubts about the local government bonds.

Against this background, Wall Street closed mixed and the US Treasury bond yields retreat after a strongly negative week for the equities and the upbeat bound coupons.

PMIs will entertain XAU/USD traders before Jackson Hole

Moving on, month Purchasing Managers Indexes (PMIs) for major economies will decorate the calendar on Wednesday amid the market’s cautious optimism of late, which in turn may allow the Gold Price to consolidate recent losses. On the other hand, the Kansas Fed’s annual event for central bankers, namely the Jackson Hole Symposium, will be important to watch for the XAU/USD traders as major central bankers will speak between August 24 and 26 to suggest the optimum path for future monetary policies, which in turn can entertain the market players.

Also read: Gold Price Weekly Forecast: XAU/USD looks fragile heading into Jackson Hole week

Gold Price Technical Analysis

Gold Price remains on the back foot at the lowest level since mid-March.

However, the falling wedge bullish chart formation joins oversold conditions of the Relative Strength Index (RSI) line, placed at 14, to suggest bottom-picking of the XAU/USD, which in turn suggests a corrective bounce in prices.

As a result, the stated wedge’s bottom line surrounding $1,880 appears an immediate challenge for the Gold bears to tackle before approaching the 6.5-month-old horizontal support zone surrounding $1,860.

On the contrary, a daily closing beyond the $1,900 threshold will confirm the bullish chart formation suggesting a theoretical target of $1,990.

That said, the 200-DMA and 50-DMA, surrounding $1,907 and $1,935 in that order, will act as the additional upside filters for the Gold buyers to cross before approaching the $1,990 mark.

It’s worth noting that a downward-sloping resistance line from early May, close to $1,955, appears the last defense of the XAU/USD.

Overall, Gold Price is likely to portray a bearish consolidation but the buyers have a long and bumpy road to travel before taking control.

Gold Price: Daily Chart

Trend: Limited downside expected

News flow from the weekend appeared light with headlines from China and Japan being the only ones that gained major attention, apart from the wildfires in British Columbia.

That said, the People's Bank of China (PBOC) announced on Sunday, per Reuters, “China will coordinate financial support to resolve local government debt problems.”

It’s worth noting that the PBoC met with the Chinese financial regulator and the securities regulator late last week amid concerns about the spillover effects from the nation’s reality sector debt crisis, as well as doubts about the local government bonds.

"Financial support to the real economy must be strong enough" while major banks should increase lending, the statement of the joint meeting mentioned by Reuters.

On the other hand, Japan's Central Minimum Wages Council, an advisory body to the Minister of Health, Labor, and Welfare, advised the weighted average minimum hourly wage by ¥41 in fiscal 2023, from ¥31 in the last fiscal year. The same will boost the minimum wage to ¥1,002, the highest since the record-keeping began.

Japan’s push for higher wages could be linked to the recently upbeat inflation data from the nation.

Market reaction

The news fails to offer any major notable reaction on the markets as most currency pairs began the trading week with fewer changes. However, NZD/USD slumped the most, down 0.15% intraday to 0.5930 at the latest, as the Kiwi pair traders brace for July’s foreign trade numbers.

Also read: Forex Today: Pound outperforms; Turn for central bankers to speak