EURUSD
- Current Movement: EUR/USD is trading slightly lower near 1.1050 during the European morning session on Tuesday. The pair remains under pressure, with traders awaiting key data releases later in the week.
- Market Conditions: Monday’s trading saw reduced volumes due to the US Labor Day holiday, leading to muted price action. This thin liquidity environment may have contributed to the lack of significant movement in the EUR/USD pair.
- Technical Analysis: Despite the recent dip, EUR/USD remains above the 200-day Exponential Moving Average (EMA), which is currently at 1.0845. This technical indicator suggests that the overall bullish trend is still intact as long as the pair stays above this level.
- Upcoming EU Data: Traders will be closely monitoring the release of EU Retail Sales data on Thursday and the Gross Domestic Product (GDP) growth figures on Friday. These reports will provide insights into the economic health of the Eurozone and could influence the EUR/USD’s direction.
- US Labour Market Data: The focus for the week will be on US labour market figures, starting with Wednesday’s JOLTS Job Openings for July. The job openings are forecasted to remain steady at 8.1 million month-over-month (MoM). This data could impact market sentiment and the US Dollar, thereby influencing the EUR/USD pair.
| 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’s near-term direction may hinge on the upcoming US labour data and Eurozone economic releases. A stronger-than-expected JOLTS report could bolster the US Dollar, pushing EUR/USD lower. Conversely, positive EU data or signs of weakening in the US labour market could provide support for the Euro and help the pair recover some losses.
GBPUSD
- Current Movement: GBP/USD is under pressure, approaching the 1.3100 level during early European trading on Tuesday. The pair is struggling to find direction as traders await more significant catalysts later in the week.
- Market Conditions: On Monday, GBP/USD drifted into a midrange due to a lack of major economic data from the UK and the closure of US markets for the Labor Day holiday. This resulted in a subdued trading session with little movement in the pair.
- UK Economic Calendar: The UK economic calendar is light this week, offering only low-tier data releases that are unlikely to have a significant impact on GBP/USD. The absence of major UK economic data means that the pair will likely be more influenced by global events and US data releases.
- BoE Rate Expectations: Investors currently do not expect the Bank of England (BoE) to cut interest rates in its September meeting but anticipate a potential 25-basis point rate cut in November. This outlook may limit the upside for the Pound Sterling (GBP) in the near term.
- Fed Rate Outlook: There is growing confidence among investors that the US Federal Reserve (Fed) will begin easing monetary policy at its upcoming September meeting. This expectation is contributing to the downward pressure on GBP/USD, as a more dovish Fed could strengthen the US Dollar.
| 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: The GBP/USD pair may continue to face downside risks as traders focus on the potential for a dovish shift from the Fed in September. The lack of significant UK economic data this week leaves the pair vulnerable to broader market sentiment and US data releases. If the US Dollar strengthens further, GBP/USD could break below the 1.3100 level. However, any signs of hesitation or delays in Fed rate cuts could provide some support for the Pound.
GOLD
- Current Movement: Gold is trading under pressure just below the $2,500 mark early Tuesday, consolidating after a three-day downtrend. The precious metal recently hit fresh weekly lows as market sentiment continues to weigh on its performance.
- Fed Rate Cut Expectations: The fading prospects of a significant 50 basis points (bps) interest rate cut by the US Federal Reserve (Fed) this month have been a major factor in gold's recent decline. The release of the US core Personal Consumption Expenditures (PCE) Price Index for July on Friday dampened hopes for aggressive monetary easing, impacting gold's appeal as a safe-haven asset.
- Market Sentiment: Markets are now pricing in only a 31% chance of a 50-bps cut at the Fed's September 17-18 policy meeting, with a 69% probability of a smaller 25-bps cut, according to CME Group’s FedWatch tool. This shift in expectations has contributed to the downward pressure on gold prices.
- Key Data Ahead: Traders are closely monitoring the upcoming US Nonfarm Payrolls data due on Friday, which could significantly influence expectations for the Fed's rate decision later this month. Additionally, gold traders will be watching Tuesday's US ISM Manufacturing PMI data, as well as Wednesday’s Job Openings and ADP Employment Change data, for further clues on the Fed’s likely course of action.
Closing statement: Gold's recent downside may persist if market expectations for a substantial Fed rate cut continue to diminish. The upcoming US economic data, particularly the Nonfarm Payrolls report, will be crucial in determining the direction of the Fed’s monetary policy and, consequently, the gold price. A stronger-than-expected labour market report could further reduce the likelihood of a large rate cut, adding to the bearish momentum in gold. Conversely, any signs of economic weakness could renew interest in gold as a safe haven, offering some support to prices.
CRUDE OIL
- Current Movement: West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $74.00 per barrel on Tuesday. The market is navigating through a mix of supply concerns and demand uncertainties.
- China's Manufacturing Slowdown: Recent data from the National Bureau of Statistics indicated a contraction in China's manufacturing sector in August, marking its lowest point in six months. As China is the world's largest importer of oil, this downturn is fueling concerns about weakened demand, contributing to downward pressure on oil prices.
- Libya's Oil Production Halt: Libya’s oil production came to a standstill on Monday due to the ongoing internal conflicts that have plagued the country since the ousting of Muammar Gaddafi in 2011. This disruption in supply is a significant factor in the oil market, offsetting some of the demand worries and providing support to prices.
- OPEC+ Production Increase: On the supply side, some relief may come as eight members of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, are set to increase oil output by 180,000 barrels per day (bpd) starting in October. This planned production boost could temper any significant upward movement in WTI prices.
- Key Data Ahead: Oil traders are closely watching the release of the US ISM Manufacturing PMI for August, due later Tuesday, which could offer insights into the health of the US economy and its oil demand. Additionally, the US Nonfarm Payrolls (NFP) report, due later this week, will be pivotal in shaping market expectations and could drive volatility in oil prices.
| 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 prices may face continued pressure if China's economic slowdown persists and the OPEC+ production increase materializes as planned. However, any significant disruptions in global supply, such as those in Libya, could counterbalance the impact of weak demand. The upcoming US economic data, particularly the ISM Manufacturing PMI and Nonfarm Payrolls, will be key in determining the near-term direction of WTI. A strong US economic performance could support prices, while further signs of economic weakness could lead to additional declines.
DAX
- Current Movement: The DAX continues to show strength, trading well above the 50-day and 200-day Exponential Moving Averages (EMAs), reinforcing a bullish trend in the index.
- Market Movers: Vonovia, a leading real-estate company, surged by 1.99% on Monday, extending its gains from Friday, as expectations of a European Central Bank (ECB) rate cut fueled demand for real-estate stocks. Volkswagen also saw a 1.25% increase, with investors reacting favorably to the company’s decision to close some factories in Germany, a move likely aimed at optimizing production efficiency.
- German Manufacturing PMI: On Monday, Germany's HCOB Manufacturing PMI for August fell to 42.4, down from 43.2 in July, indicating a continued contraction in the manufacturing sector and signaling a potential recession. This downturn highlights the ongoing challenges in Europe’s largest economy and may weigh on investor sentiment.
- US Manufacturing Data: Investors are looking ahead to Tuesday, September 3, when the US ISM Manufacturing PMI is due for release. Economists expect the PMI to rise slightly from 46.8 in July to 47.8 in August. This data could have implications for global market sentiment and may influence the direction of the DAX.
- Central Bank and Economic Indicators: Market participants should stay vigilant as central bank speakers and economic data releases throughout the week are likely to play a significant role in shaping risk sentiment. Any hints regarding future monetary policy moves, especially from the ECB and the US Federal Reserve, could lead to increased volatility in the markets.
| 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 remains in a bullish trend technically, but the ongoing recession signals in Germany's manufacturing sector and the anticipation of critical US economic data could introduce some near-term volatility. A stronger-than-expected US manufacturing report could support risk-on sentiment, benefiting the DAX. Conversely, continued weakness in German economic indicators may weigh on the index, especially if central bank communications suggest a more cautious outlook.