EURUSD
- EUR/USD Movement: The EUR/USD pair continued its downward trajectory on Thursday, extending Wednesday’s losses and breaking below the critical 1.1100 support level. This decline pushed the pair to multi-day lows, reflecting a shift in sentiment as the US Dollar gained strength amid solid economic data from the United States.
- US GDP Growth: The US Department of Commerce reported that the Gross Domestic Product (GDP) growth rate increased at an annual rate of 3.0% in the second quarter (Q2) of 2024, according to the second estimate released on Thursday. This stronger-than-expected growth suggests that the US economy remains resilient, potentially avoiding a recession.
- Fed Rate Cut: The robust GDP figure has dampened hopes for a larger 50 basis-point rate cut by the Federal Reserve (Fed) in September, contributing to the Dollar's strength and pressuring the EUR/USD pair lower.
- European Inflation Data: In Europe, the Consumer Price Index (CPI) data from Germany and Spain indicated that inflation continued to cool in August. This decline in inflation has led to increased speculation that the European Central Bank (ECB) might consider cutting interest rates. The prospect of a rate cut by the ECB adds downward pressure on the Euro, as lower interest rates typically reduce the currency's appeal to investors.
- Upcoming Data: Traders are likely to remain cautious ahead of key economic data releases on Friday, including the flash estimate of the Eurozone July Harmonized Index of Consumer Prices (HICP) and the US July Personal Consumption Expenditure (PCE) Price Index. These reports will provide further insights into inflation trends on both sides of the Atlantic and could influence expectations for future monetary policy decisions by the ECB and the Fed.
| SMA (20) | Rising |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: The EUR/USD pair is at a critical juncture, with its direction likely influenced by upcoming economic data. The stronger-than-expected US GDP growth has bolstered the US Dollar, pushing EUR/USD lower. However, the pair’s future movement will depend on Friday’s inflation data from the Eurozone and the US. If Eurozone inflation shows further cooling, it could increase the likelihood of an ECB rate cut, exerting additional pressure on the Euro. Conversely, if the US PCE Price Index suggests persistent inflation, it could reinforce expectations for a more cautious Fed, potentially limiting the downside for EUR/USD.
GBPUSD
- US GDP: The US Gross Domestic Product (GDP) Annualized growth rate surged to 3.0% in Q2, surpassing expectations and the previous rate of 2.8%.
- US Jobless Claims: Initial Jobless Claims decreased slightly to 231,000 for the week ending August 23, reflecting a still-strong labour market.
- Fed Commentary: Federal Reserve Atlanta President Raphael Bostic suggested on Thursday that it might be "time to move" on rate cuts, citing cooling inflation and a higher-than-expected unemployment rate. This dovish signal could limit further USD strength.
- BoE Outlook: Despite the robust US data, the downside for GBP/USD may be limited. Traders expect the Bank of England (BoE) to maintain higher interest rates for longer, as BoE Governor Andrew Bailey suggested that the inflationary pressures' second-round effects might be less severe than anticipated.
GOLD
- Gold Price Movement: Gold prices dipped early Friday after encountering strong resistance near $2,530 on Thursday, highlighting the ongoing struggle to break higher.
- US Economic Data: The US economy demonstrated robust growth in Q2, with the annual growth rate revised upward to 3.0%, driven by strong consumer spending and business investment. This strong economic performance continues to challenge gold's appeal as a safe haven.
- Geopolitical Tensions: Renewed geopolitical concerns, including Ukrainian military strikes on Russian targets and simmering Israel-Iran tensions, provided some support for gold prices, keeping demand for the precious metal alive.
- ECB Rate Expectations: Cooling inflation in Spain and Germany has fueled speculation that the European Central Bank (ECB) may lean toward a rate cut in September, adding an element of caution to the gold market.
- Upcoming Data: Gold buyers await and refrain from placing fresh bets heading into the US core Personal Consumption Expenditures inflation showdown.
Closing statement: Gold may remain under pressure as strong US economic data supports a firm US Dollar, but geopolitical tensions could limit the downside, keeping the precious metal within its current trading range.
CRUDE OIL
- WTI Price Movement: West Texas Intermediate (WTI) crude oil continues its upward trend, trading around $76.10 per barrel during Friday's Asian session, supported by supply disruptions and geopolitical tensions.
- Libyan Supply Disruption: Over half of Libya's oil production, approximately 700,000 barrels per day, remains offline due to a standoff between rival political factions, leading to a suspension of exports at multiple ports, adding bullish pressure to oil prices.
- Iraqi Oil Supply Concerns: Iraq is expected to reduce its oil supplies after exceeding its production quota set by OPEC and its allies, further tightening the global oil supply.
- Global Demand Challenges: Despite the supply constraints, the upward momentum in WTI prices may be limited by ongoing concerns about weakened global oil demand, particularly due to economic uncertainties in China, the world's largest oil importer.
- US Economic Impact: Modest growth in the US economy has contributed to improved investor confidence, offering some support to oil prices.
| SMA (20) | Falling |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: While supply disruptions in Libya and Iraq may continue to support WTI prices, concerns over weakened global demand, especially from China, could cap further gains, keeping the market in a cautious balancing act.
DAX
- Market Movers: Tech stocks led gains in the DAX index as rising investor optimism over potential rate cuts by the ECB and Fed fueled buying interest. Notably, Infineon Technologies and SAP advanced by 1.61% and 1.96%, respectively, reflecting the positive sentiment in the tech sector.
- German Inflation: Germany's annual inflation rate eased from 2.3% in July to 1.9% in August, falling below the ECB's 2% target. This decline has strengthened market expectations of a potential rate cut by the ECB in September, providing further support to the DAX.
- Upcoming Economic Data: On Friday, key economic indicators such as German retail sales and unemployment figures will offer deeper insights into the health of the German economy. Retail sales are expected to show a modest increase of 0.1% in May, following a 1.2% decline in April, while the unemployment rate is anticipated to remain steady at 6.0% in August.
- Eurozone Inflation: Later in the European session, the release of Eurozone inflation data will be closely watched. Economists forecast a slight decrease in the core inflation rate from 2.9% in July to 2.8% in August, which could further influence ECB policy expectations.
- US Economic Impact: The US Personal Income and Outlays Report, due on Friday, will be a critical factor in shaping the Fed's rate path and could also impact market sentiment in Europe.
| 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 is likely to remain supported by expectations of ECB rate cuts, particularly if upcoming data reinforces the need for monetary easing. However, global economic data, especially from the US, could introduce volatility and impact overall market direction.