FED: Beige Book: Improved Activity, But Labor And Price Concerns Linger (1/3)
The Fed's latest Beige Book pointed to a slightly improved assessment of current economic activity in August versus the prior edition in July, with selling price pressures remaining modestly/moderately to the upside. However, expectations were for future price increases (in part due to tariffs), and the latest edition suggests that labor market conditions have weakened. The table below summarizes the region-by-region findings.
- Economic Activity: Most regional banks reported little or no change in activity vs the July report, with four noting slight declines in activity (New York, Atlanta, Minneapolis, San Francisco), two unchanged (St Louis, Kansas City), two "slight" growth (Boston, Cleveland) and four "modest" expansion (Philadelphia, Richmond, Chicago, Dallas).
- This is actually slightly more upbeat than July's report in which just one (Richmond) Fed reported "modest" growth, with the majority (7) reporting unchanged activity.
- The national summary notes that "across Districts, contacts reported flat to declining consumer spending because, for many households, wages were failing to keep up with rising prices. Contacts frequently cited economic uncertainty and tariffs as negative factors."
- While the reported sector-by-sector dynamics were mixed, the consumer demand story was largely downbeat, leading firms to cut prices, offer promotions, and/or adopt automation via AI.
- As for the outlook, "overall, sentiment was mixed among the Districts. Most firms either reported little to no change in optimism or expressed differing expectations about the direction of change from their contacts."
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USDJPY TECHS: Break of 20-day EMA
- RES 4: 152.31 High Feb 19
- RES 3: 151.62 61.8% retracement of the Jan 10 - Apr 22 bear leg
- RES 2: 151.21 High Mar 28
- RES 1: 150.92 Intraday high
- PRICE: 147.20 @ 17:18 BST Aug 4
- SUP 1: 147.06 Low Aug 4
- SUP 2: 146.80 50% retracement Jul - Aug Upleg
- SUP 3: 146.51 50-day EMA
- SUP 4: 145.86 Low Jul 24
USDJPY reversed sharply from Friday’s intraday high and this is allowing a short-term overbought condition to unwind. While the pullback in prices Friday may have been corrective, the break and close below 147.63, the 20-day EMA, is a concern. A clear break of this support zone would undermine the recent bull theme. A break of last week’s 150.92 high would resume the uptrend.
US: Fed Senior Loan Officer Opinion Survey on Bank Lending Practices for July
- The Fed Board has released the Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) for July. Link: SLOOS
- "Regarding loans to businesses over the second quarter, survey respondents reported, on balance, tighter lending standards and weaker demand for commercial and industrial (C&I) loans to firms of all sizes. Furthermore, banks generally reported tighter standards and weaker demand for commercial real estate (CRE) loans."
- "For loans to households, banks reported basically unchanged lending standards and weaker demand for residential mortgage loans, on balance. In addition, banks reported tighter lending standards and stronger demand for home equity lines of credit (HELOCs). For consumer loans, standards tightened for credit card loans and remained basically unchanged for auto and other consumer loans. Meanwhile, demand weakened for credit card and other consumer loans and strengthened for auto loans."
EURGBP TECHS: Rebound Signals A Bullish Turn
- RES 4: 0.8835 High May 3 2023
- RES 3: 0.8800 Round number resistance
- RES 2: 0.8781 2.236 pro of the Mar 3 - 11 - 28 price swing
- RES 1: 0.8735/8769 High Aug 3 / High Jul 27 and the bull trigger
- PRICE: 0.8704 @ 17:17 BST Aug 4
- SUP 1: 0.8611 Low Jul 31
- SUP 2: 0.8587 50-day EMA
- SUP 3: 0.8540 Low Jun 30
- SUP 4: 0.8508 Low Jun 27
The trend set-up in EURGBP is bullish and the latest recovery from Thursday's low signals the end of the short corrective pullback between Jul 28 - 31. Moving average studies remain in a bull-mode position highlighting a clear uptrend. Key resistance and the bull trigger is at 0.8769, the Jul 27 high. On the downside, support to watch lies at the 50-day EMA 0.8587. A clear break of it would strengthen a bear threat.
