1. Global Market Outlook
To US Economic side:
From recent US Inflation and Core Inflation data released, the US inflation has been cooling down after US FED raised interest rate upto 5.50%; However, the Inflation data is hold at 3.0% to 3.2% in July & August 2023, which it is yet to meet FED final target of 2.0%.
Meanwhile, the US labor data shows the US employment is strong and well maintained as low as 3.5% for Unemployment Rate. So, we are expecting the FED would monitor more incoming economic datas, at least from now till next October 2023, the chances for any further action on monetary like Interest Hikes intention is very less.
This might be End of Tightening Cycle on FED monetary decision. Thus USD hard to move stronger in my expectation.
2. To China economic outlook:
To China market, we could understand China market also slowdown in its domestic markets for manufacturing / industrial sectors, and the China Loan Growth keeps on decreasing in report.
To China trade market, the Exports (y/y) & Imports (y/y) also show a slowdown data. This means the slowdown economic from China would deeply impact the global markets’ demand and economic growth, market might speculate the “Recession” theme onwards
3. Technical Analysis Overview:
Above is the US Bond Yield Spreads Weekly Chart (US10Y-US02Y), from the chart we would see there was yield spreads dropped deeply since May 2022, which was the FED early started on Interest Hikes. Until recently FED raises interest up to 5.25%, there is yield spreads starts to form 1st key reversal with Gaps up, and when FED intent to raise interest rate to 5.5%, the yield spreads reversed 2nd time with nice reversal pattern again.
So, from technical analysis picture overview, the market price has formed 2 times key
reversals with double bottom rejection, it is likely to see the US Yield Spreads going up in higher
odds.
From fundamental expectation, seeing the market speculates on FED going to end of its
monetary tightening, the market institution likely to outflow the US bond purchase, a Recession
theme is on speculation track, so we would see the US Yield spreads on curve reversal.
While we look at USD Index Daily chart, current price at $102.723. From the Daily chart movement, it is likely to move downside in big picture, which match with fundamental analysis ( FED is on end of tightening, a recession picture on coming, which USD starts to soften).
But while market waiting for FED further decision, market would likely to move sideways which it currently on retracement and likely to upside to challenge the Resistant level in chart.
Now there is one trading opportunity which is higher odd through my observation while market waiting for US FED decision, USD would have retracement upside; So from USDCHF Daily chart (market price is 0.87624), seeing there is huge ERC down in previous, and now there are two times rejection at bottom level, and there is one key reversal appeared again in last 2 days, thus my bias for USDCHF more odds to upside, the price might up till 0.8900 level is possible.