EURUSD
- Current Trading: EUR/USD has halted its three-day decline, trading around 1.1050 early on Monday. The pair's recovery comes as it attempts to stabilize, though gains are limited by ongoing support for the US Dollar.
- US PCE Index: The US Personal Consumption Expenditures (PCE) Index for July has bolstered the US Dollar, capping the potential upside for EUR/USD. This inflation gauge is closely watched by the Federal Reserve and has reinforced the Greenback's strength.
- Fed's Rate Cut Signals: Federal Reserve Atlanta President Raphael Bostic, a noted hawk, hinted last week that the Fed might consider rate cuts due to cooling inflation and a higher-than-expected unemployment rate, adding to market speculation of a more dovish Fed stance.
- ECB Rate Cut Expectations: In Europe, ECB Governing Council member François Villeroy de Galhau suggested there are "good reasons" for the ECB to consider cutting key interest rates in September, further influencing the EUR/USD dynamics.
- Market Sentiment: According to the CME FedWatch Tool, the market is now fully pricing in at least a 25-basis point rate cut by the Fed at its September meeting, which continues to shape expectations for the pair's movement.
| SMA (20) | Rising |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: EUR/USD may remain under pressure as market participants weigh potential rate cuts from both the Fed and ECB. The pair could see limited upside unless clear signals of a more aggressive rate cut emerge from the ECB, which might then prompt a stronger rally.
GBPUSD
- Current Trading: GBP/USD is trading around 1.3135 early Monday, recovering from a three-day losing streak as the pair gains ground, reflecting renewed optimism among traders.
- US PCE Data Impact: On Friday, the US Bureau of Economic Analysis reported that the headline Personal Consumption Expenditures (PCE) Price Index for July remained steady at 2.5% year-over-year. This was in line with the previous reading but slightly below the anticipated 2.6%, which has limited the US Dollar's strength and supported GBP/USD's rebound.
- Lack of UK Data: This week, the absence of significant economic data releases from the UK means that GBP/USD will primarily be influenced by US Dollar dynamics. Traders will focus on the broader market sentiment and any developments in the US economy.
- Fed's Rate Cut Signals: Fed Chair Jerome Powell hinted last week that a rate cut might be forthcoming due to concerns over the labour market, which has contributed to a softer US Dollar and provided some breathing room for GBP/USD.
- BoE Rate Expectations: Investor sentiment around the Bank of England (BoE) is growing more positive, with expectations that any policy easing will be gradual. This cautious approach by the BoE may continue to lend support to the Pound Sterling.
| SMA (20) | Rising |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Rising |
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Closing statement: GBP/USD could maintain its upward momentum if the US Dollar remains subdued, particularly in the absence of strong UK economic data. However, any signs of aggressive rate cuts from the Fed could further bolster the pair, while a cautious BoE approach might prevent significant downside.
GOLD
- Current Trading: Gold price continues to slide, reaching a six-day low below $2,500 early Monday as the US Dollar strengthens amid cautious market sentiment and light trading volumes.
- Technical Indicators: On the daily chart, gold remains above the key 100-day Exponential Moving Average (EMA), suggesting that the longer-term bullish trend may still be intact. The 14-day Relative Strength Index (RSI) is positioned slightly above the midline, indicating that the downside could be limited, but momentum is currently weak.
- Impact of US PCE Data: The release of the US core Personal Consumption Expenditures (PCE) Price Index on Friday tempered expectations for a significant interest-rate cut by the US Federal Reserve this month. This has supported the US Dollar and weighed on gold prices, as lower expectations for aggressive rate cuts reduce gold's appeal as a safe haven.
- China’s Economic Concerns: Ongoing concerns about China's sluggish economy, particularly as the world's largest buyer of gold, add to the downward pressure on the precious metal, further dampening demand.
- Market Conditions and Outlook: With the US Labor Day holiday leading to thin trading volumes, the bearish momentum in gold could be exaggerated. Traders are likely repositioning ahead of key US economic data releases later in the week, including the ISM Manufacturing PMI, ADP Employment Change, and the Nonfarm Payrolls, which could set the tone for gold's next move.
Closing statement: Gold may remain under pressure in the short term, especially with thin liquidity and a stronger US Dollar. However, the upcoming US economic data could trigger significant volatility, potentially offering some support to gold if the data disappoints or stokes fears of a slowing US economy.
CRUDE OIL
- Current Trading: West Texas Intermediate (WTI) crude oil prices are under pressure, declining for the second consecutive session and trading around $73.00 per barrel during Monday’s Asian trading hours.
- OPEC+ Production Increase: According to Reuters, OPEC+ is expected to proceed with a planned increase in oil output starting in October. This includes a production boost of 180,000 barrels per day (bpd) by eight OPEC+ members next month, which could further weigh on prices by increasing global supply.
- Supply Concerns from Libya: Despite the planned output increase by OPEC+, concerns over supply disruptions in Libya due to factional standoffs are providing some support to WTI prices. Any prolonged export disruptions from Libya's oilfields could limit the downside for crude oil prices.
- Weak Demand in Major Economies: WTI prices face additional downward pressure from weak demand in both China and the United States, the two largest oil consumers globally. In particular, US oil consumption in June fell to its lowest seasonal level since the 2020 pandemic, according to data from the US Energy Information Administration (EIA).
| SMA (20) | Falling |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: WTI oil prices may continue to face downward pressure in the short term due to concerns over weak global demand, particularly from China and the US. However, supply-side risks, such as disruptions in Libya, could limit the extent of the decline. The market will likely remain sensitive to any developments in OPEC+ production plans and geopolitical events affecting oil supply.
DAX
- Market Movers: Siemens Energy led gains on the DAX, rising by 1.76% due to increased expectations of a September rate cut by the European Central Bank (ECB). Real estate giant Vonovia also advanced by 1.70%, benefiting from these rate cut bets, which could positively impact interest-rate-sensitive sectors like real estate.
- Eurozone Inflation Impact: On Friday, Eurozone inflation data showed a decline from 2.6% in July to 2.2% in August, fueling speculation about a potential 25-basis point ECB rate cut in September. This softer inflation reading supports the argument for more accommodative monetary policy to bolster economic growth in the region.
- ECB Policymaker’s Stance: ECB Governing Council member Francois Villeroy de Galhau added to the dovish sentiment, indicating that weak economic growth in Europe might justify another rate cut. His comments reinforce the growing consensus for policy easing at the ECB’s upcoming meeting.
- Upcoming Data: Investors will focus on Monday's finalized Manufacturing PMI data for Germany, which is expected to confirm the preliminary decline from 43.2 in July to 42.1 in August. This data will provide further insights into the health of Germany's industrial sector and overall economic momentum.
- FOMC Insights: Comments from Federal Open Market Committee (FOMC) members on Monday will be closely watched, with investors seeking clues about the US economic outlook, labor market conditions, inflation, and future rate decisions by the Federal Reserve.
| SMA (20) | Slightly Rising |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: The DAX could see further gains if the ECB signals a clear intention to cut rates in September, providing support for rate-sensitive sectors like real estate and utilities. However, weaker-than-expected manufacturing data from Germany or hawkish signals from FOMC members could temper optimism and lead to increased market volatility.