GOLD TECHS: Bullish But The Trend is Overbought

An early blip higher in Bunds fades through the old futures open.

• Futures trade as high as 129.22 before fading back to 129.10, then stabilising.
• Bulls remain in technical control at this stage.
• Initial resistance located at the September 8 high (129.33), which protects key resistance at the August 5 high (129.50).
• Conversely, initial support comes in at the 20-day EMA (128.58)
• French political and fiscal matters continue to garner plenty of attention after President Macron appointed ally Lecornu as the new PM. While immediate uncertainty has reduced, structural political headwinds remain intact. Meanwhile, public demonstrations threaten to severely restrict France’s travel network today.
• In wider geopolitics, Israel has received criticism from both the U.S. & Germany after striking Hamas leaders in Doha on Tuesday.
• Little of note on the European macro calendar today, leaving focus on cross-market matters and set up ahead of tomorrow’s ECB decision.
• Our full ECB preview is here.
• On the supply front, Germany will come to market with EUR2.5bln of 15-Year paper (EUR1.0bln Jul-40 & EUR1.5bln May-41), Portugal will sell EUR1.0-1.25 across the Jun-35 and Apr-42 lines and Luxembourg will likely hold a syndication for a new 10-Year line.
• Also note that Eurex’s EU bond future launches today.

• RES 4: 177.08 2.000 proj of the Feb 28 - Mar 18 - Apr 7 price swing 
• RES 3: 175.43 High Jul 11 ‘24 and a key medium-term resistance
• RES 2: 174.86 1.764 proj of the Feb 28 - Mar 18 - Apr 7 price swing
• RES 1: 173.97 High Jul 28 and the bull trigger 
• PRICE: 172.63 @ 07:17 BST Sep 10
• SUP 1: 171.20 50-day EMA
• SUP 2: 169.73/45 Low Jul 31 / 23.6% of the Feb 28 - Jul 28 bull leg
• SUP 3: 168.46 Low Jul 1  
• SUP 4: 167.46 Low Jun 23   

The trend set-up in EURJPY is unchanged, it remains bullish and sights are on key resistance and the bull trigger at 173.97, the Jul 28 high. Clearance of this level would confirm a continuation of the bull phase. Note that moving average studies are in a bull-mode position too, highlighting a primary uptrend. A break of 173.97 would open 174.86, a Fibonacci projection. Key support to watch lies at the 50-day EMA at 171.20.

Contained reaction in NOKSEK following this morning’s Scandi data. The cross hovers close to the 50-day EMA, currently at 0.9409 (+0.1% today).

• Norwegian August CPI-ATE was 3.1% Y/Y (vs 2.9% cons, 3.1% prior). Although Norges Bank projected 3.1% Y/Y in the June MPR, this August reading should be considered a little stronger-than-expected. That’s because the reduction to Child daycare prices (presented in the Revised National Budget) was not accounted for in the June MPR projections.
• Some analysts had thought this reduction in daycare prices would shave 0.2-0.3pp off annual CPI-ATE inflation. So a 2.8-2.9% Y/Y reading would have actually been “in line” with Norges Bank forecasts after accounting for this policy.
• At first glance, the inflation data alone shouldn’t be enough to derail a September rate cut. However, a hawkish set of readings in tomorrow’s Q3 Regional Network Survey could make the decision a closer call than currently implied in market pricing.
• Meanwhile, Swedish July GDP was estimated at -0.2% M/M. Note that the upward revision to June (1.4% M/M vs 0.5% initial) was already known information since the Q2 GDP print was revised to 0.5% Q/Q (vs 0.1% flash). Household consumption rose 0.2% M/M, while private sector production gave back some of June’s gains (-1.7% M/M vs an upwardly revised 2.7% prior).