Trade ideas thread – European session 2 August 2023

<p>The big news so far today is that Fitch moved to cut US' credit rating from AAA to AA+ <a href="https://www.forexlive.com/news/fitch-downgrades-usa-long-term-credit-rating-to-aa-from-aaa-20230801/" target="_blank" rel="follow">here</a>. It's one for the record books as the last time this happened was 12 years ago. The natural reaction seems to be one of fear with stocks being marked down, but I shared some thoughts <a href="https://www.forexlive.com/news/a-more-cautious-mood-after-fitch-cuts-us-credit-rating-20230802/" target="_blank" rel="follow">here</a> about how this time around it might be different.</p><p>One spot I'm really liking is gold as it holds around the lows from last week near $1,942.50 and is now trading back up to near $1,949 on the day. There are still some technical challenges for buyers to reestablish themselves but I still favour the structural view on gold considering that major central banks are starting to pivot away from tighter policy.</p><p>Besides that, we've finally gotten that AUD/USD drop to 0.6600 with the lows today now touching 0.6580-90 – the lowest in two months. That may set up a test of 0.6500 next but the risk-reward of staying in shorts and chasing a further downside move isn't too favourable I would say. It's a good place to scale out after the drop from 0.6900 since mid-July.</p><p>The US jobs report on Friday is going to be a key focus and that could be one that impacts USD/JPY and Treasury yields heavily once again. The ADP employment data today will provide a bit of a teaser (not in terms of what it represents, but the market reaction perhaps) so just be mindful of that.</p><p>What are your views on the market right now? Share your thoughts/ideas with the ForexLive community here.</p>

This article was written by Justin Low at www.forexlive.com.