EURUSD
- EUR/USD is persisting in its downward trajectory, with the pair trading lower around 1.0640 during the Asian session on Friday.
- The pair is approaching a crucial support level around the six-month low at 1.0616, which is closely aligned with the psychological level of 1.0600. This level was tested on the previous day as well.
- The dollar initially strengthened but later weakened following the release of US economic data. The data indicated a decline in Initial and Continuing Jobless Claims to their lowest levels since January, affecting the dollar's value.
- On Thursday, European Central Bank (ECB) policymakers expressed differing views. For example, Klaas Knot mentioned that he doesn't expect a rate hike at the next policy meeting, while Pierre Wunsch argued that it's premature to conclude that they have reached the terminal rate. Such conflicting statements can create uncertainty in the market.
- On Friday, the focus will be on the Purchasing Managers' Index (PMI) reports, which will provide preliminary insights into economic activity during September in both the Eurozone and the US. Given that central banks often base their decisions on economic data, these numbers will be closely watched.
| SMA (20) | Falling |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Neutral |
Closing statement: EUR/USD continues its decline, approaching a significant support level. The pair's movement is influenced by US economic data and differing views among ECB policymakers. The upcoming PMI data releases will be critical in assessing economic activity, potentially impacting the currency pair's direction.
GBPUSD
- GBP/USD remains close to a multi-month low set on Thursday. The British Pound (GBP) continues to underperform, primarily due to the Bank of England's (BoE) surprise decision to leave interest rates unchanged on Thursday.
- In contrast, the US Dollar (USD) is holding steady just below a six-month peak, benefiting from the Federal Reserve's (Fed) hawkish outlook. The Fed signaled the possibility of at least one more rate hike by the end of this year.
- From a technical standpoint, GBP/USD has been following a downward-sloping channel since the recent steep decline from the 1.3142 area, which was a 17-month high reached in July.
- The Office for National Statistics (ONS) published the latest UK Retail Sales data this morning, showing a 0.4% increase over the month in August. This figure was slightly below the 0.5% expected but marked an improvement from the previous month's -1.1% decline.
| SMA (20) | Falling |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: GBP/USD is hovering near a multi-month low, with the GBP struggling against the backdrop of the BoE's decision to keep interest rates unchanged. Meanwhile, the USD is benefiting from the Fed's hawkish stance. Technical analysis indicates a downward-sloping channel. The recent UK Retail Sales data, although slightly below expectations, showed a positive month-over-month change.
GOLD
- Gold price is rebounding from its weekly low of $1,914 as it faces a busy Friday marked by the release of preliminary global PMI data.
- From a technical perspective, gold is testing a critical level of resistance at $1,925, which coincides with the convergence of the 21- and 200-Daily Moving Averages (DMA). This level has acted as both support and resistance in the past.
- The US Dollar is retracing from its six-month highs against major currencies after the Bank of Japan (BoJ) maintained its steady policy stance. This development has brought a sense of calm to the markets, leading to a temporary weakening of the US Dollar.
- Market sentiment had been impacted by the Federal Reserve's (Fed) hawkish stance, indicating a willingness to maintain higher interest rates for an extended period.
- Later today, traders will be closely monitoring the release of business PMI data from the US, UK, and the Eurozone. These figures will provide insights into the current state of the global economy, particularly as major economies teeter on the brink of recession.
Closing statement: Gold price is recovering as it faces significant resistance at $1,925, where the 21- and 200-Daily Moving Averages converge. The recent correction in the US Dollar, driven by the BoJ's policy decision, has provided some support to gold. However, the Fed's hawkish stance continues to influence market sentiment. The forthcoming PMI data releases will be closely watched for further economic insights.
CRUDE OIL
- Western Texas Intermediate (WTI), the US crude oil benchmark, is extending its gains for the second consecutive day, currently trading around $90.00 per barrel in the Asian session on Friday.
- Market analysts are anticipating a gradual rise in crude oil prices, potentially reaching the $100 per barrel range in the coming months. This projection is based on expectations of constrained production from major oil-producing countries such as Saudi Arabia and Russia.
- Investors will closely monitor whether the OPEC+ production cuts are being adhered to as agreed and whether the recent increase in interest rates will lead to reduced oil demand.
- Russia has implemented a temporary ban on the export of gasoline and diesel to all countries outside a select group of four ex-Soviet states. This measure aims to stabilize the domestic fuel market. However, it has raised concerns about the potential impact of higher Fed rates on economic growth and fuel demand.
- Higher Fed rates have led to a stronger US dollar, reaching its highest level since early March. This currency strength can make commodities like oil more expensive for buyers using other currencies, potentially affecting demand.
| SMA (20) | Rising |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: WTI crude oil is experiencing continued gains, driven by expectations of constrained production from key oil-producing nations. The focus remains on OPEC+ compliance with production cuts and the potential impact of higher interest rates on oil demand. Additionally, the recent Russian fuel export ban has added uncertainty to the market. The strength of the US dollar is also a factor to watch as it can influence oil prices for international buyers.
DAX
- On Thursday, the DAX experienced a significant decline, sliding by 1.33%. This reversal followed a 0.75% gain from the previous day, with the DAX closing at around 15625.
- Eurozone Consumer Confidence figures reflected expectations of elevated interest rates amid a deteriorating macroeconomic environment. The Eurozone consumer confidence index dropped from -16.0 to -17.8, indicating concerns about the impact of rising interest rates on the economy.
- Today, investor attention will be on German and Eurozone private sector Purchasing Managers' Index (PMI) data for September. A more significant contraction in both the manufacturing and services sectors would likely dampen buyer appetite. The services sector, which contributes over 60% to the Eurozone economy, will be closely watched, as any marked contraction could further support concerns of a prolonged economic recession.
- The DAX currently faces headwinds due to a more hawkish Federal Reserve policy outlook and the possibility of higher interest rates in the Eurozone, which may persist for an extended period. These factors have left the DAX in a defensive position.
- The Euro area and US services’ PMIs are expected to play a significant role in influencing buyer sentiment. Any data indicating a pronounced contraction in the services sector could contribute to the ongoing bearish trend reversal.
| SMA (20) | Neutral | |
| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: The DAX experienced a notable decline, driven by concerns about rising interest rates and deteriorating consumer confidence. The forthcoming PMI data, especially in the services sector, will be crucial for assessing the potential impact on the DAX's near-term direction. The overall market sentiment remains cautious in light of these economic factors.