EURUSD
- Current Price: The EUR/USD pair remains steady above 1.1150 in the European morning session on Tuesday, reflecting a cautious market tone.
- Fed Insights: Richmond Federal Reserve President Thomas Barkin highlighted potential vulnerabilities in the US labour market on Monday, suggesting that the current "low-hiring, low-firing" approach might not last if the economy weakens. This could signal potential challenges for the US economy, which may impact the US Dollar.
- ECB Outlook: The European Central Bank's (ECB) Accounts published last week showed that while there was no immediate push to lower interest rates, policymakers acknowledged that the discussion might resurface in September due to the ongoing drag from high rates on economic growth.
- Holzmann’s Statement: Governing Council member Robert Holzmann added that a rate cut is not guaranteed but could become more likely if the Fed lowers rates first.
- Upcoming German Data: Germany will be in focus this week with key data releases including the final Q2 GDP Growth Rate, Retail Sales, preliminary Inflation Rate, and the labour market report. These figures will be crucial in shaping market expectations for the EUR/USD pair, especially in the context of broader Eurozone inflation data.
| 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: EUR/USD may continue to find support around 1.1150 as markets digest Fed and ECB signals, with upcoming German and Eurozone data likely to provide further direction. If US economic concerns intensify, EUR/USD could see upward momentum, especially if the ECB delays any immediate rate cuts.
GBPUSD
- Price Stability: The GBP/USD pair is relatively stable, trading around the 1.3200 mark during the European session on Tuesday, as traders digest recent economic signals from both the UK and the US.
- Fed Concerns: Richmond Federal Reserve President Thomas Barkin expressed rising concerns about the US job market, which have influenced Fed Chair Jerome Powell's recent comments.
- Additional Info: Powell emphasized that interest rate cuts are needed to prevent unwanted spikes in unemployment, a sentiment echoed by San Francisco Fed President Mary Daly, who indicated that rate cuts might start with a quarter-percentage point reduction soon.
- UK Economic Indicators: In the UK, the British Retail Consortium (BRC) Shop Price Index fell by 0.3% year-on-year in August, following a 0.2% increase in July, signalling easing inflationary pressures in retail.
- PM’s Statement: UK Prime Minister Keir Starmer's recent remarks about the nation's economic challenges, cautioning that "things will get worse before they get better," reflect the ongoing difficulties faced by the UK economy.
| 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: GBP/USD is likely to remain influenced by the dovish signals from the Fed and the mixed economic outlook in the UK. If the Fed's dovish stance continues and UK data shows signs of resilience, GBP/USD could maintain its position around 1.3200, with potential for upward movement depending on further developments in US economic data and Fed policy decisions.
GOLD
- Upside Consolidation: Gold is currently in a consolidation phase above $2,500 as investors seek new catalysts to drive prices higher. This period of stability follows recent gains, with traders eyeing potential triggers for the next move in either direction.
- Middle East Tensions Easing: The easing of fears regarding a broader conflict in the Middle East has dampened the traditional safe-haven appeal of gold. Despite this, the US Dollar's inability to extend its overnight recovery has kept gold prices supported.
- Strong US Data: The release of stronger-than-expected US Durable Goods Orders for July, which surged by 9.9% compared to the 4.0% forecast, suggests resilience in the US economy. This data could weigh on gold if it bolsters the case for a less aggressive rate-cutting cycle by the Federal Reserve.
- Gold Market Insights: According to Sachin Jain, CEO of the World Gold Council's Indian operations, the recent reduction in gold duties is expected to benefit retail consumers, potentially boosting demand.
- Additional Info: Industry officials anticipate a rebound in Chinese gold demand as consumers adapt to higher prices, driven by economic uncertainty and concerns over currency stability.
Closing statement: Gold's price may remain in a holding pattern as market participants weigh the impact of easing geopolitical tensions and robust US economic data against continued expectations of Federal Reserve rate cuts. If demand from key markets like China and India picks up, and if the Fed's dovish signals persist, gold could break higher from its consolidation above $2,500.
CRUDE OIL
- Current Trading: West Texas Intermediate (WTI), the benchmark for US crude oil, is currently trading around $77.30 as of Tuesday, reflecting a stable yet cautious market sentiment.
- Libya Production Halt: Crude oil production and exports from Libya are at risk of shutdown due to a political dispute between the eastern government in Benghazi and the internationally recognized government in Tripoli over central bank leadership. This disruption in Libya, a significant oil producer, has potential implications for global oil supply, adding upward pressure on prices.
- Middle East Tensions Easing: The market has seen a reduction in fears of a broader Middle East conflict after Israel and Lebanon's Hezbollah exchanged fire without further escalation. This easing of geopolitical tensions in a key oil-producing region has helped stabilize oil prices, preventing further spikes.
- China's Oil Demand Concerns: China's July oil imports dropped by 12% from June and were 3% lower than in July 2023. This decline has raised concerns about the health of the Chinese economy and its future demand for oil, given that China is the world’s largest oil importer. The economic slowdown is particularly impacting major players like Sinopec, China’s largest crude refiner, which is struggling with poor diesel demand and reduced profits.
| SMA (20) | Falling |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: WTI prices are likely to remain sensitive to geopolitical developments and economic data. The halt in Libyan oil production could support prices in the near term but concerns over China's weakening demand could limit significant upside potential. As markets digest these conflicting signals, WTI might trade in a narrow range unless new catalysts emerge.
DAX
- Market Movers: The DAX faced downward pressure on Monday, with Qiagen dropping by 2.37% and Bayer declining by 1.15% as overall market risk sentiment soured. Auto stocks also faced challenges, with Volkswagen and Daimler Truck Holding seeing modest declines of 0.23% and 0.09%, respectively.
- ECB Rate Cut Expectations: European Central Bank (ECB) Chief Economist Philip Lane tempered expectations for a September rate cut, which weighed on demand for DAX-listed stocks. Lane emphasized the necessity of maintaining a restrictive monetary stance to ensure the disinflation process reaches the ECB's target, signaling that a rate cut may not be imminent.
- German Business Sentiment: The Ifo Business Climate Index for August fell slightly from 87.0 in July to 86.6, reflecting a more pessimistic view among German businesses. This decline in sentiment has further dampened hopes for a near-term ECB rate cut, contributing to a cautious outlook for the DAX.
- Economic Contraction: The German economy contracted by 0.1% in Q2 2024 compared to the previous quarter, confirming earlier estimates. This stagnation in growth raises concerns about the overall health of the Eurozone's largest economy and its impact on market sentiment.
- Looking Ahead: Market participants will closely monitor upcoming US Consumer Confidence data and housing reports, alongside speeches from Federal Reserve policymakers, for fresh insights into potential monetary policy shifts.
| 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: The DAX may continue to face headwinds as economic data from Germany paints a bleak picture and ECB rate cut expectations wane. However, any dovish signals from the US Fed could offer some support. In the short term, the DAX might experience sideways movement, with traders remaining cautious amid mixed signals.