EURUSD
- EUR/USD is currently trading around the 1.0740 level during the Asian trading session on Thursday. The pair is attempting to recover from losses experienced in the previous session.
- Market focus is on the upcoming policy decision from the European Central Bank (ECB). Reports have indicated that the ECB may raise its inflation forecast for the current year during this monetary policy meeting, potentially setting the stage for a rate hike.
- The ECB faces a complex decision regarding its interest rate policy. The key question is whether to implement a 25-basis point rate hike or opt for a pause in the tightening cycle. While the economic outlook may suggest a pause, the presence of high and persistent inflation could prompt policymakers to take more aggressive action.
- Yesterday, the EUR/USD pair experienced a decline following the release of optimistic Consumer Price Index (CPI) data from the United States. The US CPI Year-over-Year figure increased to 3.7%, surpassing the previous rate of 3.2% and market expectations of 3.6% for August.
- In terms of technical analysis, the EUR/USD pair may find initial support around the weekly low at 1.0705, which is aligned with the psychological level of 1.0700. Further support could be encountered around the previous week's low at 1.0685.
| SMA (20) | Falling |
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| RSI (14) | Neutral | ||
| MACD (12, 26, 9) | Neutral |
Closing statement: The EUR/USD pair is in a crucial phase as traders eagerly await the ECB's policy decision. The central bank's approach to addressing inflation and its impact on the eurozone economy will likely have significant implications for the exchange rate. Additionally, the pair's performance may be influenced by technical support levels and future economic data releases.
GBPUSD
- GBP/USD is currently trading in a narrow range around the 1.2500 level during the European morning on Wednesday. The currency pair is consolidating within this range.
- GBP/USD is receiving support from a broad-based retreat of the US Dollar. The dollar's weakening, coupled with a positive market sentiment, is helping to underpin the currency pair.
- The British Pound (GBP) has been under pressure due to disappointing economic data. The Office for National Statistics reported that the UK's Gross Domestic Product (GDP) contracted by a more-than-expected 0.5% in July. This contraction indicates that the UK economy is losing momentum, partly attributed to a significant increase in borrowing costs, which has reignited concerns of a looming recession.
- In addition to the GDP contraction, there have been signs of a cooling UK labor market. These developments are reinforcing speculations that the Bank of England (BoE) may be approaching the end of its current rate-hiking cycle.
- Crucial economic data is expected to be released from the United States, including the Producer Price Index, Retail Sales figures, and Jobless Claims. These data releases have the potential to introduce volatility into the GBP/USD pair, potentially challenging its recent range-bound trading pattern.
| SMA (20) | Falling |
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| RSI (14) | Neutral | ||
| MACD (12, 26, 9) | Neutral |
Closing statement: GBP/USD is currently experiencing consolidation, supported by the weakening US Dollar. However, the pair faces headwinds from disappointing UK economic data and concerns about the country's economic performance. The upcoming US data releases are expected to be pivotal in determining the pair's direction and volatility in the short term.
GOLD
- Gold prices are making an attempt to recover after a two-day decline, edging higher and hovering around $1,910 per ounce during the Asian trading session on Thursday.
- The uptick in the headline CPI figures from the United States (US) has contributed to the rebound in gold prices. However, the overall CPI data met expectations, indicating that inflationary pressures in the US are beginning to ease.
- The CPI data did not provide significant support for Federal Reserve (Fed) hawks, as markets continue to anticipate a pause in Fed rate hikes at the upcoming meeting. There's currently a 40% probability of a rate increase in November, as per market sentiment.
- In response to the US inflation data, the US Dollar experienced a spike, along with a surge in US Treasury bond yields. This initial reaction caused gold prices to dip to three-month lows.
- Gold traders are closely monitoring the upcoming US economic data releases, particularly the Retail Sales and Producer Price Index (PPI) figures. These data points will influence fresh valuations of the US Dollar and subsequently impact the price of Gold.
Closing statement: Gold prices are attempting to recover from a recent decline, with the movement influenced by the US CPI data. While inflationary pressures in the US are showing signs of softening, the market is still uncertain about the Fed's rate hike path. The upcoming US economic data releases, along with the ECB decision, are expected to introduce volatility to gold trading.
CRUDE OIL
- Crude oil prices experienced a slight rise during Asian trading on Thursday. This uptick comes despite concerns over rising U.S. inflation, as traders focused on the potential for tighter supplies.
- Recent data revealed an unexpected increase in U.S. inventories for the week ending September 8. Gasoline and distillate inventories also rose, suggesting a winding down of fuel demand as the summer season ends. Additionally, U.S. production is approaching levels close to the 2020 record high.
- Despite these inventory figures, the market remains focused on the significant supply cuts announced by Saudi Arabia and Russia. These cuts are expected to tighten the oil market, supporting prices.
- Traders are awaiting upcoming economic data releases from both the U.S. and China. In China, industrial production and retail sales data are expected to provide insights into the world's largest oil importer. Despite some marginal improvements in Chinese economic readings, overall sentiment remains cautious as China grapples with a slowing economic recovery.
| SMA (20) | Rising |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: Crude oil prices have seen a modest increase, driven by expectations of tighter supplies. While U.S. inventory data showed unexpected growth and a decline in fuel demand with the end of summer, the impact of supply cuts by major producers like Saudi Arabia and Russia continues to be a significant factor. The upcoming economic data from China and the U.S. will likely influence oil market sentiment in the near term.
DAX
- The DAX index has experienced consecutive losses and closed at 15,654 on Wednesday, reflecting a 0.39% decline.
- Eurozone industrial production data for July revealed a significant decline of 1.1%, in contrast to a 0.4% increase in June. This drop exceeded economists' expectations of a 0.7% decline. These figures highlight ongoing economic challenges in the euro area and add to concerns of a potential euro area-wide recession.
- The focus now shifts to the upcoming European Central Bank (ECB) meeting, which is generating significant anticipation due to the lack of a clear consensus on potential actions. This uncertainty makes the ECB meeting a high-impact event that could trigger sharp market movements.
- The ECB's decision at this meeting will be of utmost importance. It could result in either a dovish interest rate hike or a hawkish decision to hold rates steady. The subsequent press conference with ECB President Christine Lagarde will provide additional context to the decisions made.
- Depending on the outcome, there are potential scenarios. If the ECB takes a hawkish stance, it could lead to a temporary rally in the Euro, although the sustainability of such a rally remains uncertain. However, downside risks for the DAX persist, particularly in light of the possibility of a euro area recession and a hawkish ECB stance, which tends to be bearish for stocks.
| SMA (20) | Neutral |
| RSI (14) | Neutral |
| MACD (12, 26, 9) | Neutral |
Closing statement: The DAX index has faced recent losses, reflecting concerns about Eurozone economic performance and the upcoming ECB meeting, which carries the potential for significant market volatility based on the central bank's decision and its subsequent communication.