EURUSD
- Current Movement: EUR/USD is seeing mild gains, trading just above the 1.1050 level in the European morning session on Wednesday. Despite encountering near-term technical resistance, buyers are still active, keeping the pair balanced, though a strong bullish recovery remains elusive.
- US Manufacturing Data: The ISM Manufacturing PMI for August in the US was reported at 47.2, below market expectations of 47.5. This weaker-than-expected data reflects ongoing challenges in the US manufacturing sector and has provided some support to the Euro against the Dollar as it dampens expectations for aggressive Federal Reserve action.
- Limited European Data: Early in the week, the Euro has had limited significant economic data releases to influence its movement. However, this will change on Thursday, when Eurozone Retail Sales data for July is due. This will be closely followed by US labour market figures, setting the stage for Friday’s Nonfarm Payrolls (NFP) report.
- Friday’s NFP: The upcoming NFP report is expected to be a pivotal moment for the EUR/USD pair, as it will likely shape market expectations about the Federal Reserve's next move. Investors are currently pricing in the beginning of a new rate-cutting cycle, and a significant deviation in the NFP data could either solidify or alter this outlook.
| SMA (20) | Rising |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: EUR/USD remains relatively steady, with potential for volatility as crucial data releases loom. If the NFP data surprises to the downside, it could bolster expectations of a Fed rate cut, potentially pushing EUR/USD higher. Conversely, a strong NFP print could reignite Dollar strength, putting pressure on the Euro. Until then, the pair may continue to trade within its current range, with slight bullish bias as traders’ position ahead of the key data releases.
GBPUSD
- Current Movement: GBP/USD is holding steady above the 1.3100 mark in European trading on Wednesday. Despite the US Dollar's weakness, the pair has struggled to gain significant upward momentum amid a generally risk-averse market sentiment.
- US Manufacturing Data: The ISM Manufacturing PMI for August showed a slight increase to 47.2 from 46.8 in July. While still in contraction territory, this modest improvement did little to sway market sentiment significantly, leaving GBP/USD relatively unchanged.
- Upcoming US Data: Traders are focused on the upcoming US data releases, with the JOLTS Job Openings and the Fed's Beige Book due later Wednesday. These reports will provide further insights into the US labour market and economic conditions, which could influence the Dollar's direction.
- Friday's Employment Data: The key event this week is the US August employment data, especially the Nonfarm Payrolls (NFP) report on Friday. Economists from Deutsche Bank suggest that an increase in the Unemployment Rate could heighten expectations for a 50-bps rate cut by the Federal Reserve, potentially weakening the Dollar and offering support to GBP/USD.
- BoE Expectations: Investors currently expect the Bank of England (BoE) to maintain its interest rates unchanged in September, which could limit the Pound's upside potential in the near term.
| 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: GBP/USD remains steady above 1.3100, but its direction will likely be dictated by upcoming US data releases. A disappointing JOLTS report or an increase in the Unemployment Rate on Friday could fuel expectations for a more aggressive Fed rate cut, potentially lifting GBP/USD. However, if US data surprises to the upside, reinforcing the strength of the US economy, the pair may face renewed downward pressure. The Pound's movement will also be influenced by ongoing BoE rate expectations, which currently suggest a cautious stance.
GOLD
- Current Movement: Gold price is hovering below the $2,500 mark in Asian trading on Wednesday. Sellers have paused after three consecutive days of decline, as the market takes a breather.
- Technical Outlook: Despite the recent pullback, the short-term technical picture for Gold remains positive as long as prices stay above the 21-day Simple Moving Average (SMA), currently at $2,485. This level is crucial for maintaining the bullish momentum.
- Fed Rate Cut Expectations: The probability of a 50 basis points (bps) rate cut by the Federal Reserve at its September 18 meeting has risen, with markets now pricing in a 41% chance, up from 31% just a day earlier. This shift in expectations could provide some support for Gold, as lower interest rates typically benefit non-yielding assets like Gold.
- Chinese Economic Data: Gold prices may also find support from potential policy easing measures in China. Recent data, including a drop in the Caixin Services PMI to 51.6 in August (down from 52.1 in July), has heightened expectations for fresh stimulus from Beijing. Weakness in China’s economic data could drive demand for Gold as a safe haven.
- Upcoming US Data: Later Wednesday, the market will turn its attention to the US JOLTS Job Openings and the Fed’s Beige Book. These reports will offer further insights into the US economy and could influence the Fed's policy path, thereby impacting gold prices.
Closing statement: Gold is currently in a consolidation phase just below $2,500. If the price holds above the 21-day SMA, it could pave the way for a recovery, especially if upcoming US economic data disappoints or if China announces new stimulus measures. However, a stronger-than-expected US data release, particularly in labour markets, could reignite selling pressure on Gold, pushing prices lower. Traders should keep a close eye on these developments for further direction.
CRUDE OIL
- Current Movement: West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $70.00 on Tuesday, reflecting ongoing bearish sentiment in the market.
- Libyan Export Resumption: The decline in crude oil prices is partly due to expectations that the political dispute in Libya, which has halted the country's oil exports, may soon be resolved. This potential resumption of Libyan exports is contributing to increased supply concerns in the market.
- Global Demand Concerns: Crude oil prices are also pressured by worries over slowing global demand growth. Recent data highlights a sluggish outlook, with the Institute for Supply Management (ISM) reporting continued weakness in US manufacturing activity. This reinforces fears of reduced energy consumption in the world's largest economy.
- Chinese Economic Weakness: In addition to the US, China—the world's largest crude importer—has shown signs of economic slowdown. Manufacturing activity in China fell to a six-month low in August, and factory gate prices dropped sharply. This has raised concerns about weaker demand for oil in one of the key global markets.
- OPEC+ Production Plans: Further weighing on oil prices are the Organization of the Petroleum Exporting Countries and their allies (OPEC+), who plan to increase production in the upcoming quarter. This anticipated boost in supply comes at a time when demand growth is uncertain, adding to the downward pressure on prices.
| SMA (20) | Falling |
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| RSI (14) | Falling |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: WTI crude oil is under significant pressure, trading near $70.00 as the market grapples with concerns over rising supply and weakening demand. If the Libyan export situation is resolved and OPEC+ follows through with its production increase, prices could face further downside. On the other hand, any unexpected supply disruptions or signs of stronger global demand could offer support and potentially lead to a recovery in oil prices. Traders should closely monitor developments in Libya, OPEC+ actions, and upcoming economic data for clearer direction.
DAX
- Current Movement: The DAX is experiencing a pullback after recently hitting an all-time high, with notable declines led by Infineon and auto stocks. The tech sector's broader concerns have contributed to this retreat, pressuring the index.
- US Economic Concerns: Investor sentiment was further dampened by the decline in the US S&P Global Manufacturing PMI, which fell from 49.6 in July to 47.9 in August. This significant drop has heightened fears of a hard economic landing in the US, influencing global market sentiment, including the DAX.
- Upcoming Data Focus: On Wednesday, Germany’s finalized Services PMI will be closely watched by investors amid increasing recession fears. The preliminary survey indicated a decline in the HCOB Services PMI from 52.5 in July to 51.4 in August. This data will be critical in assessing the health of the German economy, Europe's largest, and could further impact DAX performance.
- US Labor Market Data: Also on Wednesday, attention will shift to the US labor market with the release of JOLTS Job Openings data. Economists expect a slight decrease from 8.184 million in June to 8.100 million in July. The labor market figures will be essential in shaping expectations for future US economic activity and its impact on global markets.
- ECB Policy Implications: A dovish stance from the European Central Bank (ECB) regarding interest rates could provide some support to the Eurozone economy. Such a policy could potentially revive buyer interest in DAX-listed stocks, particularly if the ECB signals continued monetary support to counteract recessionary pressures.
| SMA (20) | Slightly 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 DAX faces near-term challenges due to tech sector concerns and growing fears of a US economic slowdown, as indicated by recent PMI data. Investors should closely watch upcoming German and US economic indicators for further clarity. A dovish ECB could provide some relief to the DAX, but ongoing global economic uncertainties may continue to weigh on the index in the short term.