GOLD: USD & Yields in Driver's Seat for Gold, FED Speak Key to Next Move

The BBDXY has had a range today of 1192.30 - 1193.25 in the Asia-Pac session; it is currently trading around 1193.The US Dollar’s attempt at a bounce stalled very quickly and is back under pressure. The price action in Gold & Bitcoin stands out as a return to the popular “debasement trade” is again being widely touted. Last night US yields extended lower thanks to the move in Oil adding to their weight. With the market positioned quite short it would be interesting if the US 30-Year has a look back below the 5.05%-5.10% area where I suspect stops could initially be lurking. Should this play out it would obviously have a cascading effect on the mounting pressure seen on the USD. The currency has broken below its pivotal 1195-1200 area, which has just added to its already mounting headwinds. The price action is pretty bearish for the moment and If the USD does not quickly reverse this move I suspect the risk is that the USD bears could return en masse. I had been skewed toward fading this dip but if this break is sustained which it looks to be doing for the moment, then I would have to concede the period of USD outperformance might be behind us for now. Let's see how the market reacts to US GDP/PCE tonight and Jackson Hole to end the week. If there is no key reversal by then, then it would not bode well for the greenback.

• EUR/USD -  Asian range 1.1663-1.1677, Asia is currently trading 1.1663. The pair's upward momentum has stalled for the first time in a couple of days toward the 1.1700 area. I am paying close attention to see if this break lower in the USD builds into something more substantial. I have been skewed in favour of fading this rally in the EUR, with this pivotal weekly 1.1600 area back in play but the price action in the US Dollar is forcing me to concede the probability of this playing out is diminishing. On the day, Initial support lies toward 1.1620-1.1650, which proved solid overnight at the first time of asking. The USD bears would be looking for this move above 1.1600 to potentially build into something more significant as the “debasement trade” gathers momentum. 
• GBP/USD - Asian range 1.3634-1.3651, Asia is currently dealing around 1.3635. The pair is stalling for the moment as it tests the 1.3600-1.3650 area. On the day, the resistance is in the 1.3600-1.3650 area. I have been skewed toward the move topping out and turning lower again at some point, but unless this happens soon this move higher could extend even higher as the USD’s headwinds seem to be mounting. It looks like we are firmly back to chopping around aimlessly within the wider 1.3000-1.3800 range that has captured the last 15 months of trading.   
• Data: US MBA mortgage applications, US July Personal Spending, US 2Q GDP, US 2Q Personal Consumption, US 2Q PCE

Fig 1: US 30-Year Yield Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

The NZD/USD had a range today of 0.5955-0.5980 in the Asia-Pac session; it is currently trading around 0.5955, -0.32%. The pair seems to be stalling toward the 0.6000 area again as it consolidates its recent gains. The US Dollar is back under pressure thanks to the move in Oil adding to the weight in US yields. The price action for the NZD continues to look constructive and I will be watching to see how the US Dollar continues to trade as a market caught short NZD looks to have potentially now begun to react. On the day, the first support again lies toward 0.5940-5950 which held overnight and then the 0.5885-0.5915 area. The pair looks to be building for a test of the 0.6000-0.6030 resistance. The 0.6000-0.6100 area has proved to be solid resistance for well over a year now though and I suspect it remains a big ask to convincingly break above here before Jackson Hole.

• “Oil fell as Iran and Oman discussed an “interim framework” to resume shipping through the Strait of Hormuz.” - BBG
• Options : Closest significant option expiries for NY cut, based on DTCC data:  0.5800(NZD613m). Upcoming Close Strikes : 0.5850(NZD300m Aug 27)- BBG
• The NZD/USD Average True Range for the last 10 Trading days: 36 Points

Fig 1: NZD/USD Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

The USD/JPY range today has been 158.88-159.26 in the Asia-Pac session, it is currently trading around 158.95, -0.15%. The pair seems to be doing some real work between 158.00 and 160.00. US yields look to have topped out and are under pressure again, the drop in Oil is just adding to their weight. CFTC Data shows leveraged funds rebuilding Yen shorts, I suspect USD/JPY sellers could still be around back toward the 160-161 area while the USD trades with a heavy bias. The USD has broken below some pivotal support and should this initial response hold and momentum for the so-called “debasement trade” build. Then this could help keep this pair capped for now. Should the BOJ be able to sufficiently signal it is more comfortable with raising rates at a quicker pace it could also add to the Yen’s current gentle tailwinds that are trying to emerge. Lets see if this breakdown in the USD is able to build into something more substantial, while this plays out it looks like a wide and choppy 155-161 range.  

• "Australia’s Pension Giant Makes Its Biggest Yen Bet in Years: Australia’s second-largest pension has built its biggest overweight position in the Japanese yen in years, betting that markets are underpricing Bank of Japan interest rate hikes." - BBG https://blinks.bloomberg.com/news/stories/TKAY0QT9NJLS
• MNI - Japan PPI Services Rises More Than Forecast, Points To Firmer CPI Outlook: Japan's July PPI services was stronger than forecast. The PPI y/y outcome has consistently been above market expectations in 2026. The weaker yen, upstream price pressures from commodities have been drivers of broader inflation trends in 2026. The PPI outcome is continuing to point to firmer headline CPI risks as we progress into the early parts of H2. This should add, marginally, to BoJ confidence around the inflation outlook, albeit with services inflation in the CPI remaining only a little above 1%y/y.
• “Japan will set up a study group to explore implementing a 24-hour blockchain-based settlement system for stocks and government bonds, the Nikkei reported.” - BBG
• Options : Close significant option expiries for NY cut, based on DTCC data: 159.00($936m), 160.00($621m), 161.00($844m). Upcoming Close Strikes : 155.00($1.26b Aug 28), 158.20($1.04b Aug 28), 159.00($1.25b Aug 31) - BBG.
• The USD/JPY Average True Range(ATR) for the last 10 Trading days: 72 Points

Fig 1 : USD/JPY Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P