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Silver (XAG/USD) oscillates in a narrow trading band, around the $28.80 region during the Asian session on Friday and remains below the weekly top touched the previous day. Traders now seem reluctant and prefer to wait for the release of the crucial US Nonfarm Payrolls (NFP) report before pacing fresh directional bets. 

Looking at the broader picture, the overnight failure to find acceptance above the $29.00 mark, or the 100-period Simple Moving Average (SMA) on the 4-hour chart, warrants some caution for bullish traders. Moreover, neutral oscillators on the daily chart make it prudent to wait for a sustained strength beyond the said handle before positioning for an extension of the XAG/USD's recent bounce from the $27.70 area, or a nearly three-week low set on Tuesday.

The subsequent move up has the potential to lift the white metal further towards the $29.65 intermediate hurdle en route to the $30.00 psychological mark. Some follow-through buying beyond the August monthly swing high, around the $30.20 region, will be seen as a fresh trigger for bulls and pave the way for a further appreciating move. The XAG/USD might then climb to the $30.80 horizontal resistance before aiming to reclaim the $31.00 round-figure mark.

On the flip side, immediate support is pegged near the $28.50 region, below which the commodity could accelerate the slide towards the $28.00 mark. This is followed by the weekly trough, around the $27.70 zone. A convincing break below the latter might prompt aggressive technical selling and drag the XAG/USD to the $27.20 intermediate support en route to the $27.00 round figure and the next relevant support near the $26.60 area.

Source: FXSTREET

The Japanese Yen (JPY) continues its winning streak for the fourth successive session as rising real wages in July fuel speculation that the Bank of Japan (BoJ) may introduce another interest rate hike before the end of 2024. Additionally, the USD/JPY pair has encountered headwinds due to a softer US Dollar (USD), driven by dovish comments from Federal Reserve (Fed) officials.

Bank of Japan (BoJ) Board Member Hajime Takata stated on Thursday that "if the economy and prices move in line with our forecast, we will adjust the policy rate in several stages." Takata also mentioned that the domestic economy is recovering moderately, despite some signs of weakness. While stock and FX markets have experienced significant volatility, he noted that the BoJ still sees the achievement of its inflation target within reach.

Traders are likely to await Friday's release of labor market data, including the US Nonfarm Payrolls (NFP), to gather further insights on the potential size of an anticipated rate cut by the Federal Reserve (Fed) this month.

Daily Digest Market Movers: Japanese Yen extends upside due to hawkish mood surrounding the BoJ

Chicago Fed President Austan Goolsbee said on Friday that the longer-run trend of the labor market and inflation data justify the Fed easing interest-rate policy soon and then steadily over the next year. FXStreet’s FedTracker, which gauges the tone of Fed officials’ speeches on a dovish-to-hawkish scale from 0 to 10 using a custom AI model, rated Goolsbee’s words as neutral with a score of 3.8.

ADP Employment Change showed on Thursday that private-sector employment increased by 99,000 in August, following July’s increase of 111,000 and below the estimate of 145,000. Meanwhile, the weekly US Initial Jobless Claims rose to 227,000 for the week ending August 30, compared to the previous reading of 232,000 and below the initial consensus of 230,000.

Japan’s Labor Cash Earnings grew by 3.6% year-on-year, a deceleration from June's 4.5% increase but the highest since January 1997, surpassing market expectations of 3.1%.

San Francisco Federal Reserve President Mary Daly stated on Wednesday that "the Fed needs to cut the policy rate as inflation is declining and the economy is slowing." Regarding the size of the potential rate cut in September, Daly noted, "We don't know yet." FXStreet’s FedTracker, which gauges the tone of Fed officials’ speeches on a dovish-to-hawkish scale from 0 to 10 using a custom AI model, rated Daly’s words as neutral with a score of 3.6.

Atlanta Federal Reserve President Raphael Bostic said that the Fed is in a favorable position but added that they must not maintain a restrictive policy stance for too long, per Reuters. FXStreet’s FedTracker, which gauges the tone of Fed officials’ speeches on a dovish-to-hawkish scale from 0 to 10 using a custom AI model, rated Bostic’s words as neutral with a score of 4.6.

Japan’s Chief Cabinet Secretary Yoshimasa Hayashi stated on Wednesday that he is "closely monitoring domestic and international market developments with a sense of urgency." Hayashi emphasized the importance of conducting fiscal and economic policy management in close coordination with the Bank of Japan (BoJ).

US JOLTS Job Openings dropped to 7.673 million in July, down from 7.910 million in June, marking the lowest level since January 2021 and falling short of market expectations of 8.10 million.

Jibun Bank Services PMI data on Wednesday. The index was revised to 53.7 in August from an initial estimate of 54.0. Although this marks the seventh consecutive month of expansion in the service sector, the latest figure remains unchanged from July.

Source: FXSTREET

Macro:

[Quick Facts]

[News Details]

[Today's Focus]

ISM Rises to Three-Month High

A run of lousy jobs market data has put the once all-but-assured soft landing in doubt, and while the services sector is not immune to the soft labor signals, activity there remains in good shape. In fact, it’s improving. The ISM services index rose modestly to 51.5 in August, and while service-providers also face their fair share of challenges, activity in the sector is merely moderating rather than declining as it is in wide swaths of manufacturing. That is giving way to a degree of measured…dare we say? optimism. (chart).

The select industry comments from purchasing manager respondents included mention of business being stable, good, strong or improving. Some others referenced high borrowing costs and elevated costs weighing on business activity, but the report remains consistent with an expanding sector, which quells some fear of stalling growth, for now.

Demand remains strong for services as new orders rose to 53.0 and eight industries reported an increase in orders in August (chart). Even as the measure of current conditions (business activity) pulled back in August, it remains consistent with expansion at 53.3 and only four of 18 industries reported a decline in activity last month.

For those parsing through the release on clarity of the jobs market, well it remains fuzzy. Sentiment was mixed as hiring continues in some industries while there are freezes in others.

It was the release of the July jobs report that sent financial markets into a tailspin just a few weeks ago. As the market awaits today’s full jobs report for August, the employment component of the ISM services index declined to 50.2 (chart). That means essentially, in aggregate, job growth is flat. Layoffs and attrition are roughly matching new-hires. In reality, the details are more mixed. Some respondents mentioned hiring declines to control costs, while others mention it’s hard to find talent even at a time when fewer jobs are available. This is not inconsistent with the separately reported slump in job openings reported.

Today’s report is key in determining by how much the FOMC will slash rates at its upcoming policy meeting on September 18. We forecast a partial rebound in August hiring and reversal of the unemployment rate from July’s increase. But if today’s job report were to come in weaker than in July, a 50 bps reduction in the federal funds rate would remain the base case.

Inflation is still on the mind of policymakers, even if the labor market has garnered more attention. We’ll get the consumer price index report next week for August, but the ISM services prices paid metric reported yesterday rose in August to a three-month high of 57.3. That may not be problematic for policymakers. For many services companies the biggest cost is labor, so the cooling in the labor market may lead to continued improvement in service prices, a key indicator for the Fed in this cycle.

Market Picture

The Asian session continues to be tough for cryptocurrencies. The total market capitalisation had risen to $2.05 trillion the previous evening, recovering from a drop earlier in the day. Still, selling prevailed again at the start of the new day on Thursday, bringing the capitalisation back to $2.0 trillion (+0.8% in 24 hours).

Bitcoin is down for the ninth day out of the last 11 as its attempt to consolidate above the 200-day average triggered an intensified sell-off. This pattern persists into Thursday morning as the price continues to test the lows of the last four months. Rising financial markets and a weaker dollar did not help Bitcoin gain strength. It is possible that the weakness in cryptocurrencies is a manifestation of a very limited risk appetite, and the rest of the markets may soon follow the lead of cryptocurrencies.

News Background

Kaiko noted a significant oversupply of Bitcoin in the crypto market amid a sell-off in government stocks and forced asset sales by bankrupt exchange MtGox.

Former BitMEX CEO Arthur Hayes acknowledged the continuation of Bitcoin’s correction to $50,000 ahead of the Fed’s September meeting. According to him, the pressure factor will remain the situation in the money market, where yields on overnight reverse repos with the central bank remain higher than on US Treasury bills.

The negative dynamics of BTC after the halving in April have ‘buried’ the four-year cycle previously associated with this event. Outlier Ventures reached this conclusion after analysing previous periods from a similar distance.

Based on an analysis of 5,000 collections and 5 million transactions of non-fungible tokens (NFTs), the NFT Evening specialists concluded that 96% of them are dead. The average lifespan of NFTs is 1.14 years, which is 2.5 times less than traditional crypto projects.

CoinDesk reported that Donald Trump’s sons announced the World Liberty Financial protocol, which will focus on credit and be built on the Ethereum blockchain and the Aave platform.