EURUSD
- The EUR/USD witnessed a reversal from its weekly peak, experiencing its first daily loss in three trading sessions as it retreated from around the 1.0870 level.
- A significant driver behind this reversal was a substantial correction in the US Dollar against a range of currencies. This correction was spurred by the release of US economic data as well as a decline in Treasury bond yields.
- Market attention is firmly fixed on key data releases from both Germany and the US, reflecting traders' positioning and sentiment regarding the upcoming economic indicators.
- Recently released data on Tuesday revealed a decline in the German GfK Consumer Confidence Survey, which dropped to -25.5 for September. This figure fell below market expectations, which had predicted a reading of -24.3.
- Looking ahead, Wednesday will play a pivotal role with the release of preliminary Consumer Price Index (CPI) figures from Spain and subsequently from Germany. These figures are expected to significantly influence the direction of the EUR/USD based on their outcomes.
| SMA (20) | Falling |
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| RSI (14) | Neutral | ||
| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: With traders closely monitoring economic indicators from both sides of the Atlantic, the fluctuations in the EUR/USD pair are being driven by a combination of US Dollar dynamics, Eurozone data, and broader market sentiment.
GBPUSD
- GBP/USD initially advanced above the 1.2600 mark during Asian trading hours on Monday. However, the pair later retreated below this level in the early European session.
- Over the weekend, Bank of England (BoE) Deputy Governor Ben Broadbent emphasized the need for policy to remain in a restrictive territory. He explained that the upward movement in wages due to rising prices is expected to persist longer than their initial emergence.
- Current market sentiment is indicated by the World Interest Rates Probabilities (WIRP) tool, which suggests a 75% probability of a 25-basis point rate hike by the Bank of England (BoE) in September.
- Key US data releases are on the horizon. Wednesday's focus will be on the ADP private employment report, leading up to Friday's highly anticipated Nonfarm Payrolls report. Additionally, Thursday will see close attention given to US consumer inflation data.
- Although the pair maintains a technically bearish stance, a potential positive shift in overall risk sentiment could assist in limiting losses for the Pound Sterling.
| SMA (20) | Slightly Falling |
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| RSI (14) | Neutral | |
| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: The GBP/USD pair continues to be influenced by a mixture of UK economic indicators, BoE policy expectations, and broader market risk sentiment. The upcoming data releases, especially from the US, will likely steer the short-term movements of the currency pair.
GOLD
- Gold prices have reached a three-week high and are holding steady, benefiting from a weaker US dollar. The dollar's decline was triggered by softer-than-expected US economic data, which is leading to speculations that the Federal Reserve's capacity to continue raising rates might be limited.
- While the dollar and Treasury yields had both experienced significant drops in the prior session due to disappointing job openings and consumer confidence data, they have steadied on Wednesday.
- The market's attention is now directed towards essential economic indicators. A revised reading of second-quarter economic growth is scheduled for later on Wednesday. On Thursday, the release of personal consumption expenditures data, which is the Fed's favored inflation measure, will be followed. The week is expected to conclude with the release of August nonfarm payrolls data on Friday.
- The market is particularly watching for the US ADP jobs figure today. A figure exceeding expectations would potentially discourage hopes for another Fed rate hike this year and could result in a fresh sell-off of the US Dollar.
- Currently, there is an 87% chance that the Fed will maintain its current stance at the upcoming meeting, as indicated by the CME FedWatch tool. Furthermore, market sentiment suggests a 53% probability of another pause at the November meeting, a notable increase from the previous day's 38% odds.
Closing statement: Gold's performance is intricately linked with the trajectory of US economic indicators and the Federal Reserve's rate hike expectations. As these key data points are revealed over the week, they will likely shape the near-term direction of XAU/USD.
CRUDE OIL
- Crude oil prices are on the rise, building on previous gains. These increases are attributed to multiple factors, including a substantial reduction in crude inventories in the US, the world's largest consumer of fuel, and concerns about the potential impact of a hurricane in the Gulf of Mexico on oil operations.
- Industry data indicated a substantial drawdown of about 11.5 million barrels in US crude stocks for the week ending on August 25. This draw in inventories is notably larger than anticipated and signals robust demand for oil in the market.
- Investors are showing increased interest in oil futures due to concerns related to Hurricane Idalia. The hurricane is active in the Gulf of Mexico and is positioned to the east of major oil and natural gas production sites. These concerns are impacting prices, as potential disruptions in production could lead to supply constraints.
- Analysts are predicting that the oil supply will remain tight in the coming period. This projection is partly based on the expectation that Saudi Arabia, the world's largest oil exporter, will extend its voluntary production cut into October. Such a decision would contribute to the ongoing balance between supply and demand in the global oil market.
| SMA (20) | Slightly Falling |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: The recent dynamics in the crude oil market, influenced by both supply and demand factors as well as external events like weather disruptions, highlight the complexities of the energy market. These factors are expected to continue shaping the trajectory of crude oil prices in the near term.
DAX
- European stock markets are poised for a higher opening on Wednesday, buoyed by the strong performance of Wall Street in the previous session. This optimism is set against the backdrop of forthcoming inflation reports from Germany and Spain.
- The DAX, Germany's premier stock index, continued its positive trend, marking a three-session winning streak. On Monday, the index surged by 0.88%, closing at 15,931 points, reflecting positive investor sentiment.
- All eyes are on the release of German inflation data, particularly the annual Consumer Price Index (CPI) rate. It is expected that the CPI rate for August has eased from 6.2% to 6%, which could signify a moderation in price pressures.
- Additionally, Eurostat is scheduled to release the Eurozone Business and Consumer Survey. This data will provide insights into business and consumer sentiment, which can influence market sentiment and decision-making.
- Germany's coalition government recently reached an agreement to implement corporate tax cuts amounting to 32 billion euros over a four-year period. This move is aimed at revitalizing the country's economy, which has been facing challenges.
| SMA (20) | Slightly Falling |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: This week holds crucial economic releases and developments that could shape the trajectory of the DAX and broader European markets. The interplay of economic data, policy decisions, and global economic dynamics will determine market trends and investor sentiment.