EURUSD
- Current price: The EUR/USD pair is trading with mild losses around 1.1145 on early Thursday, breaking a four-day winning streak. This dip reflects a slight consolidation after the recent rally.
- Anticipation of Dovish Fed Signals: Market participants continue to anticipate a dovish message from Federal Reserve Chair Jerome Powell during his upcoming speech at the Jackson Hole Symposium on Friday. This expectation adds to the ongoing weakness in the US Dollar (USD).
- Fed Rate Cut Expectations: After the release of July’s Consumer Price Index (CPI), the likelihood of a half-point rate cut by the Fed next month has decreased, with a smaller rate cut now considered more probable.
- FOMC Minutes: The FOMC Minutes also supported the notion of lower rates as soon as next month, though Governor Michelle Bowman expressed caution, advocating for a gradual approach to lowering rates if inflation aligns with the Fed’s 2% goal.
- ECB’s view: On the other side of the Atlantic, European Central Bank (ECB) Board member Fabio Panetta suggested on Wednesday that the ECB may be moving towards a period of monetary easing in response to declining inflation and sluggish growth in the Eurozone.
| SMA (20) | Rising |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: The EUR/USD pair has paused its recent rally, trading lower as investors weigh the prospects of a more cautious approach from both the Fed and ECB. As the market braces for Jerome Powell’s speech at the Jackson Hole Symposium, the direction of the pair will likely hinge on the clarity provided regarding future monetary policies from these central banks.
GBPUSD
- Current price: The GBP/USD pair is trading within a narrow range early on Thursday, remaining close to its highest level since July 2023, around the 1.3120 mark reached the previous day. The pair continues to show resilience, maintaining its position near this multi-month high.
- Technical Breakout: From a technical standpoint, this week’s sustained breakout above the 1.3000 psychological level and the subsequent move past the previous Year-to-Date (YTD) peak around 1.3045 have been seen as a new trigger for bullish traders. The pair's ability to hold above these key levels suggests a continuation of the upward momentum.
- BoE Rate Outlook: Rupert Thompson, Chief Economist at IBOSS, mentioned that the Bank of England (BoE) is expected to keep interest rates steady in September, with any potential rate cut likely being postponed until November. This outlook could impact market sentiment surrounding the British Pound in the coming months.
- Key Economic Indicators: Traders are now looking forward to the release of flash PMIs from both the UK and the US for short-term trading opportunities. On Thursday, the UK PMI data will be crucial for the GBP/USD pair. The Composite PMI is expected to inch up to 52.9 in August from 52.8 in the previous month, signaling expected growth in both the manufacturing and services sectors.
| SMA (20) | Rising |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: The GBP/USD pair remains buoyant, trading near recent highs as technical factors and economic data shape market sentiment. With traders closely watching the upcoming UK PMI figures, the pair could find fresh direction depending on the data outcomes. Should the economic indicators align with expectations, the GBP/USD might extend its upward trajectory, potentially testing new highs.
GOLD
- Gold Price: Gold price is attempting to build on the previous session’s correction in Thursday’s Asian trading, challenging the crucial $2,500 level. This level remains a significant psychological barrier for the precious metal as traders assess the next moves.
- Powell's Speech: Fed Chair Jerome Powell is set to deliver a highly anticipated speech at the Jackson Hole Symposium, where he may reiterate the Federal Reserve’s dovish stance. This follows the release of the July policy meeting minutes on Wednesday, which highlighted the Fed's cautious approach to monetary policy.
- Rate Cut Probabilities: According to the CME Group's FedWatch Tool, markets are currently pricing in a 35% probability of a 50 basis points (bps) rate cut at the Fed's upcoming September 17-18 meeting, while there is a 65% chance of a 25-bps reduction. These expectations are crucial for the gold market, as lower interest rates typically support gold prices.
- Profit-Taking: Gold traders are engaging in profit-taking ahead of the release of the US Preliminary S&P Global business PMI data. This data could offer new insights into the Federal Reserve's interest-rate outlook and impact the direction of gold prices.
- Geopolitical Tensions: Despite the profit-taking, the downside for gold prices may remain limited due to ongoing tensions in the Middle East. The situation between Hamas and Israel continues to create uncertainty, as Israeli Prime Minister Benjamin Netanyahu has refused to withdraw troops from the Philadelphi corridor on the Egypt-Gaza border.
Closing statement: Gold prices are testing significant resistance around $2,500 as markets await Fed Chair Powell’s Jackson Hole speech and critical US economic data. While profit-taking could cap gains in the near term, ongoing geopolitical tensions and expectations of a dovish Fed stance may keep gold prices supported. Traders should closely monitor upcoming events for potential impacts on the precious metal's trajectory.
CRUDE OIL
- WTI price: West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $71.80 on Thursday. The price remains under pressure as market dynamics evolve, reflecting the latest geopolitical and economic developments.
- Geopolitical situation: WTI prices have edged lower as Iran has refrained from launching retaliatory strikes against Israel in response to the killing of a senior Hamas leader in Tehran in late July. This lack of escalation has eased concerns about potential disruptions in the oil supply from the Middle East.
- US Crude Inventories: US crude oil inventories hit a seven-month low last week. According to the Energy Information Administration (EIA), US crude oil stockpiles for the week ending August 21 fell by 4.65 million barrels. This significant decline reflects tighter supply conditions in the world's largest oil consumer.
- Fed's July Minutes: The Federal Reserve's July 30-31 meeting minutes revealed that the "vast majority" of participants indicated that it would likely be appropriate to ease policy at the next meeting if the data continued to align with expectations. This dovish tone could support demand for crude oil in the near term as it may lead to a weaker US dollar.
- Key Economic Data: Oil traders will keep a close eye on the preliminary US S&P Global Purchasing Managers Index (PMI) for August for fresh impetus. This data could provide further clues on the health of the US economy and influence oil 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 prices remain subdued near $71.80, weighed down by geopolitical factors and the anticipation of key US economic data. The decline in US crude inventories highlights tightening supply, while expectations of potential Fed policy easing may offer some support. Traders should watch the upcoming PMI data for additional direction in the oil market.
DAX
- DAX Market Movers: Auto stocks led the charge on Wednesday, with Mercedes Benz Group advancing by 1.48% and BMW rising by 1.09%. The automotive sector's strength contributed significantly to the broader market's performance.
- ECB’s Panetta Talk: Fabio Panetta, a member of the ECB Governing Council, heightened expectations for a September rate cut during his comments on Wednesday. This development has influenced market sentiment, potentially leading to further adjustments in investor strategies.
- Impact of Germany's PMIs: Germany’s private sector PMIs are poised to play a crucial role in shaping demand for DAX-listed stocks. Economists are forecasting the HCOB Services PMI for Germany to edge down from 52.5 in July to 52.3 in August. These figures could sway investor sentiment and market performance.
- ECB Meeting Minutes: On Thursday, the release of the ECB Monetary Policy Meeting Minutes may reinforce the growing expectations of a September rate cut. This could have a significant impact on market dynamics, particularly within the Eurozone.
- FOMC Minutes: After the close of European markets on Wednesday, the FOMC Meeting Minutes from the Federal Reserve's July session fueled further speculation about a possible rate cut in September. This development could influence investor behavior and market trends in the coming days.
| SMA (20) | Slightly Falling |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: DAX performance has been buoyed by strong gains in the auto sector, with expectations of an imminent ECB rate cut further shaping market sentiment. As investors anticipate potential moves by both the ECB and the Fed, upcoming PMI data and central bank minutes will be critical in determining the direction of DAX-listed stocks.