The Forex Market Insight Report shows charts on different major currencies and commodities, with brief commentaries on how new data releases and news cause movements in the market.

Headline:

  • Risk appetite strengthens on China data, Jackson Hole hopes; financial stocks see sharp reversal
  • Gold sees largest fall in a year; drops close to US$100 in 24 hours
  • FX market reflects improvement in risk as AUD, EUR and GBP all improve
  • USD/JPY and USD/CHF both post gains as safety trade eases
  • Dow ends more than 322 points higher despite weak housing and manufacturing data
  • US economic data, including durable goods, and German Ifo survey in focus tonight

AUD/USD
The Aussie broke above 1.0480 overnight and that sets up a move to 1.0600. The overnight strength in equities has also been a positive for the AUD/USD. Any pullback to 1.0480 is likely to be seen as buyable. A break above 1.0600 will be seen as a major continuation of the long term bull market.

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XAU/USD
Gold finally paused overnight, pulling back almost $100, but traders will be looking to use this pullback as an opportunity to take new longs. This selldown came as risk appetite improved and was reflected in gains in the USD/CHF and USD/JPY. At the moment, this pullback appears fairly natural, with gold finding support near the recent swing high at 1815. A move back to test the highs seems likely.

EUR/USD
The Euro managed moderate gains overnight as it struggled to break above 1.4500. Traders will focus on the downside until we see a clear break of 1.4500, a move that seems increasingly likely.

GBP/USD
No real change on the GBP/USD with the pair still above the all-important 1.6450 level. The pair has formed a clear range between 1.6450 and 1.6600. While we hold above 1.6450, the market will remain focused on the long side.

USD/JPY
The USD/JPY continues to trade in the broad range between 76.30 on the downside and 77.20 on the upside. Traders will continue to play the range until we see a decisive break in either direction. Selling at 77.00/20 is likely to remain the favoured strategy.

SILVER
Silver suffered from the same selldown as we saw in gold overnight, and this was also reflected in the gains seen in the USD/JPY and USD/CHF. However, silver broke below an important level of support – at 42.00 – and this could be a sign for caution. That said, the market will remain on the bullish side for now.

USD/CHF
The USD/CHF trade continues to be dominated by the neutral symmetrical triangle and the market will be focused on the likely break from this pattern. The reversal in gold, silver and the yen could signal part of an overall reduction in the fear trade; but for the moment, we’ll continue to follow the long term downtrend. A break above 79.40 will be bullish.

GBP/JPY
The GBP/JPY continues to be unable to break above 127.00 and traders will be looking for new shorts around that level. While the pair is dominated by the downtrend, a move bullish pattern is being produced below 127.00 and a break above that level will be bullish.
AUD/JPY
As per our most recent reviews, the AUD/JPY is in a clear neutral pattern and needs a break above 81.20 to be bullish or a break below 79.00 to become bearish.

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OIL
Oil has tried to push higher overnight, but the gains were capped at 86.40. Traders will be waiting for a move above 86.40 before taking new longs, while shorts around 86.20 provide good risk/return.
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