EURUSD
- EUR/USD Resilience: EUR/USD stands resilient to broad risk-aversion early Monday, as relentless US Dollar weakness outweighs the dour mood, supporting the pair.
- US Job Growth and Unemployment: Slower-than-expected job growth and a rising unemployment rate in the United States fueled fears of a broader economic slowdown and weighed on the US Dollar (USD) broadly.
- Federal Reserve Outlook: Despite some fear of recession in the US, Federal Reserve (Fed) Chair Jerome Powell noted last week that the central bank's confidence in the “solid” economy and easing inflation data is raising confidence that the Fed could cut rates soon.
- Eurozone Inflation and Growth: Across the pond, elevated inflation and steady growth in the Eurozone economy pushed back market expectations for more interest rate cuts this year.
- HICP numbers: The headline HICP rose to 2.6% YoY in July, above the economist’s consensus of 2.4%. The core HICP, which excludes volatile items such as food, energy, alcohol, and tobacco, grew steadily at 2.9% against expectations of 2.8%.
| SMA (20) | Slightly Rising |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: The EUR/USD pair is likely to remain buoyant due to the continued weakness of the US Dollar and strong economic indicators from the Eurozone. However, any significant shifts in economic data or policy stances from the Federal Reserve or European Central Bank could influence future movements in the pair. Traders should closely monitor upcoming economic releases and central bank communications for further cues.
GBPUSD
- GBP/USD Edges Lower: GBP/USD edges lower to around 1.2730 during the European session on Monday, which could be attributed to the downside of the US Dollar (USD).
- Challenges for the Greenback: The Dollar faces challenges due to increased expectations of the Federal Reserve (Fed) reducing interest rates in September.
- US Economic Data: This shift is attributed to disappointing US jobs market data and a larger-than-expected contraction in factory activity, as reflected by the ISM Manufacturing PMI, released on Friday.
- Pound Sterling Pressure: The Pound Sterling (GBP) faced challenges as the Bank of England (BoE) delivered a broadly expected 25-basis point rate cut at its August meeting held on Thursday.
- BoE Governor's Remarks: BoE Governor Andrew Bailey noted that the increase in the minimum wage has not been detrimental from their viewpoint.
| SMA (20) | Rising |
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| RSI (14) | Falling |
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| MACD (12, 26, 9) | Falling |
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Closing statement: The GBP/USD pair may continue to face downward pressure due to expectations of a Federal Reserve rate cut and recent economic data releases. However, any positive developments in the UK economy or further dovish signals from the Fed could provide support. Traders should keep an eye on upcoming economic indicators and central bank communications for additional guidance on future movements.
GOLD
- Gold Price Defensive: Gold price remains on the defensive for the third day in a row, kicking off the week cautiously early Monday.
- Risk-Off Sentiment: Despite risk-off sentiment in full swing in Asian trading on Monday, Gold price struggles to benefit, as markets resort to a ‘sell everything’ mode.
- US Nonfarm Payrolls Data: Nonfarm payrolls increased by 114,000 jobs last month after rising by a downwardly revised 179,000 in June, the US Bureau of Labor Statistics (BLS) said on Friday.
- Rising Unemployment Rate: The Unemployment Rate climbed to 4.3% from 4.1% in June, while the Labor Force Participation Rate advanced slightly to 62.7% from 62.6%.
- Cautious Trading: Traders now turn cautious and refrain from placing fresh bets on the bright metal in the lead-up to the ISM Services PMI data release while closely monitoring developments on the Middle East geopolitical tensions. The headline ISM Services PMI is set to rise to 51.0 in July from June’s 48.8.
Closing statement: Given the current defensive stance of gold prices and cautious trading ahead of the ISM Services PMI data, the XAU/USD pair may continue to experience subdued movements. However, significant geopolitical developments or changes in economic indicators could drive new trends in the gold market. Traders should remain vigilant and responsive to these potential catalysts.
CRUDE OIL
- WTI Crude Oil Price: West Texas Intermediate Crude Oil price trades around $72.60 per barrel, extending its losses to six-month lows on Monday.
- Geopolitical Tensions: The downside of the Oil prices could be limited due to rising supply risks from geopolitical tensions in the Middle East.
- National Security Council Meeting: US President Joe Biden will convene the National Security Council on Monday to discuss developments in the Middle East.
- Recession Fears: Crude Oil prices declined due to increased recession fears in the United States, the world’s largest Oil consumer. This drop was influenced by Friday's disappointing US jobs market data and a larger-than-expected contraction in factory activity, as indicated by the ISM Manufacturing PMI.
- OPEC+ Production Cuts: The Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia (OPEC+), are adhering to their plan to gradually end voluntary production cuts starting in October.
| SMA (20) | Slightly Falling |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Falling |
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Closing statement: With crude oil prices extending losses to six-month lows, market participants will closely monitor geopolitical developments and economic indicators for potential direction. Rising supply risks from Middle East tensions and upcoming OPEC+ production changes could influence crude oil price movements, potentially limiting further downside. Traders should stay attentive to these evolving factors.
DAX
- DAX Performance: On Friday, the DAX slid by 2.33%. Following a 2.30% loss from Thursday, the DAX ended the session at 17,797.
- Eurozone Services PMI: The Eurozone Flash HCOB Services PMI fell from 52.8 in June to 51.9 in July.
- Upcoming PMI Data: On Monday, finalized German and Eurozone Services PMI numbers will draw investor interest. Downward revisions to the flash PMIs could stoke fears of an economic recession, as services account for about 75% of the Eurozone economy.
- Infineon Earnings: On Monday, Infineon Technologies will release its earnings results. Weaker-than-expected earnings could negatively impact the broader tech sector as investors target the safe havens.
- US Services Sector: On Monday, the US services sector could influence the Fed rate path and market risk sentiment. Economists forecast the crucial ISM Services PMI to increase from 48.8 in June to 51.0 in July.
| SMA (20) | Slightly Falling |
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| RSI (14) | Falling |
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| MACD (12, 26, 9) | Falling |
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Closing statement: With the DAX experiencing significant declines, market participants will be closely monitoring upcoming PMI data and Infineon Technologies' earnings results. Downward revisions to PMIs or disappointing earnings could heighten recession fears and impact investor sentiment. The US ISM Services PMI will also be pivotal in shaping market expectations for the Fed's rate path and overall market risk sentiment. Traders should remain vigilant as these key indicators are released.