S&P500 (SPX) Price Analysis – Sep 06, 2024
Daily Price Outlook
The S&P 500 index has recently shown a subdued performance, struggling to dtop its downward momentum around the 5,503.41 level and hitting an intra-day low of 5,480.54.
This downturn has been influenced by disappointing ADP Employment Change data, reflecting uncertainty in market sentiment. The market remains on edge as investors await more clarity on economic indicators and Fed policy decisions while navigating the complexities of ongoing global conflicts.
Fed Rate Cut Expectations and Economic Data Impact on S&P 500
On the US front, the Federal Reserve's monetary policy outlook, combined with recent economic data, has been a crucial factor affecting the S&P 500. The CME FedWatch tool indicates that investors are anticipating a 59% chance of a 25 basis point rate cut and a 41% chance of a 50 basis point rate cut in September.
This expectation stems from the recent disappointing ADP Employment Change report, which showed a smaller-than-expected increase in private sector employment, with a rise of 99,000 in August compared to the consensus estimate of 145,000.
The weaker employment data, coupled with the anticipated US Non-Farm Payroll (NFP) report, which is expected to show a rise of 160,000 in August, has heightened speculation about potential Fed rate cuts. The Unemployment Rate is projected to decline slightly to 4.2%.
If the US employment data (NFP) falls short of expectations, the Federal Reserve might consider a 50 basis point rate cut instead of a smaller cut. This larger cut could lead to a weaker US Dollar because lower interest rates generally decrease the value of a currency.
As a result, a weaker US Dollar might impact the S&P 500's performance by affecting the value of investments and investor sentiment.
Impact of Gaza Conflict on Global Markets and the S&P 500 Index
On the geopolitical front, the situation in Gaza has become increasingly dire. UN spokesman Stephane Dujarric reported that over one million people in central and southern Gaza did not receive food rations in August, highlighting a "beyond catastrophic" humanitarian crisis.
Gaza’s Health Ministry has also noted that the Israeli military is blocking the entry of medical teams needed for a crucial polio vaccination campaign in southern Gaza.
Meanwhile, the increasing tensions remain high as Hamas accuses Israeli Prime Minister Benjamin Netanyahu of sabotaging a ceasefire deal by not withdrawing forces from Gaza’s border with Egypt.
The conflict has resulted in significant casualties, with at least 40,878 people killed and 94,454 wounded in Israel’s military actions against Gaza. Conversely, Hamas-led attacks on October 7 have claimed the lives of at least 1,139 people in Israel.
Therefore, the escalating Gaza conflict can create global uncertainty, leading to risk-averse behavior among investors. This heightened geopolitical tension may dampen investor sentiment and contribute to increased volatility in the S&P 500 index.
S&P 500 - Technical Analysis
The S&P 500 (SPX) is trading at $5,503.42, down 0.30%, with bearish momentum dominating the 4-hour chart. The index has been pressured by a broader market pullback, failing to break above key resistance at $5,572.63, the current pivot point.
A move above this level could trigger a bullish reversal, pushing prices toward immediate resistance at $5,641.79 and potentially extending gains to $5,699.82.
On the downside, immediate support rests at $5,441.61, with further downside risk towards $5,381.03 and $5,320.76 if selling pressure intensifies. The 50-day Exponential Moving Average (EMA) stands at $5,484.02, acting as a critical support zone.
A decisive break below this EMA could indicate deeper market weakness and open the door for additional declines.
The Relative Strength Index (RSI) currently sits at 42, reflecting mildly bearish sentiment. If the RSI slips below 40, it could signal a stronger selling wave, while a rebound above 50 would indicate renewed buying interest. For now, the technical landscape suggests caution, as the S&P 500 struggles to maintain upward momentum.
Given this setup, traders may consider an entry above $5,465, with a take-profit target at $5,575 and a stop-loss at $5,400. A breakout above the pivot point at $5,572.63 would confirm a bullish shift, but continued weakness below the 50-day EMA could lead to further downside risks.
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- GOLD Price Analysis – Sep 06, 2024
GOLD Price Analysis – Sep 06, 2024
Daily Price Outlook
Gold price (XAU/USD) extended its rebound to around $2,510 but remains below recent highs, as traders adopt a cautious stance ahead of the crucial US Nonfarm Payrolls (NFP) report, set to be released at 12:30 GMT.
The metal's upward movement is largely driven by weaker-than-expected US private payrolls data released on Thursday, which showed slower job growth despite a marginal fall in unemployment claims.
This has pressured the US Dollar (USD) as markets anticipate the NFP to play a critical role in shaping future US interest rate expectations. Additionally, concerns about a stagnant jobs market further enhance gold's safe-haven appeal.
Gold Price Boosted by Weaker US Employment Data and Rate Cut Speculations
On the US front, the broad-based US dollar weakened as Gold recovered following the release of disappointing ADP Employment Change data. The report revealed that the private sector added only 99,000 new jobs in August, falling short of the previous month’s 111,000 (revised down from 122,000) and economists’ 145,000 estimate.
Although US Initial Jobless Claims showed a drop to 227,000, from the revised 232,000 and an expected 230,000, it didn’t fully counteract the negative sentiment from the ADP data, painting a picture of a slowing labor market.
This data, along with recent weak JOLTS jobs figures, has increased speculation that the Federal Reserve may cut interest rates more significantly at their September 18 meeting. Lower interest rates make holding Gold more attractive by reducing the opportunity cost of the non-yielding asset.
Friday’s Nonfarm Payrolls (NFP) report will be crucial in determining whether the Fed opts for a 0.50% cut or a standard 0.25% cut. Currently, the market sees a 40% chance of a 0.50% cut, and weaker NFP data could increase this probability, potentially boosting Gold’s price.
Therefore, the weaker ADP data and ongoing labor market concerns heighten expectations for a significant Federal Reserve rate cut, boosting Gold's appeal. If Friday's NFP data confirms a slowdown, it could increase the likelihood of a 0.50% cut, driving Gold prices higher.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,519.03, up 0.09% in the 4-hour timeframe, as traders navigate mixed signals in the broader market.
The price is testing key technical levels, with the immediate resistance at $2,540.41 and the pivot point holding firm at $2,527.08. Should gold break above this level, bullish momentum could push it towards the next resistance targets of $2,553.16.
On the downside, immediate support sits at $2,499.42, with deeper supports at $2,482.48 and $2,472.08. A drop below $2,499.42 may signal increased selling pressure, potentially driving the price toward these lower support levels.
The 50-day Exponential Moving Average (EMA) of $2,506.28 is currently acting as a solid floor, reinforcing the bullish outlook as long as prices remain above it.
The Relative Strength Index (RSI) is at 59, signaling neutral to slightly bullish momentum. However, a break above 60 on the RSI would further confirm stronger upward movement, while a dip below 50 could shift the outlook to bearish.
Given the technical setup, traders might consider buying above $2,500, with a take-profit target of $2,520 and a stop-loss at $2,490. The technical picture suggests that gold’s next move will likely depend on its ability to break above the $2,527 pivot point or hold support near $2,499.42.
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GOLD Price Analysis – Sep 05, 2024
Daily Price Outlook
Gold (XAU/USD) extended its bullish rally, reaching an intraday high of $2,506. This upward trend can be attributed to weaker-than-expected U.S. job data, which boosted safe-haven demand for gold.
The prospect of falling interest rates in the U.S. also supports gold prices, as lower rates reduce the opportunity cost of holding a non-interest-bearing asset. Despite this positive backdrop, traders are exercising caution, avoiding aggressive bullish bets ahead of the critical U.S. Nonfarm Payrolls (NFP) report scheduled for Friday.
Apart from this, investors will keep their eyes on Thursday’s U.S. economic releases, including the ADP private sector employment report, Weekly Jobless Claims, and the ISM Services PMI. These reports are anticipated to offer short-term trading opportunities and further insights into market direction.
Weaker US Job Data and Fed Rate Cut Speculations Drive Gold Prices Up
On the US front, the broad-based US dollar struggled as recent economic reports suggested the Federal Reserve (Fed) might opt for more aggressive interest rate cuts in September.
On the data front, the latest labor market report showed job openings fell to 7.673 million in July, the lowest since January 2021, and June’s figures were revised lower. This decline, coupled with the Fed’s Beige Book indicating reduced economic activity in most regions, has raised speculation about a shift in Fed policy.
Gold prices saw a recovery due to the weaker US job data, as this increased demand for the safe-haven asset. Meanwhile, the lower interest rates would reduce the opportunity cost of holding gold.
However, the chance of the Fed cutting rates by 0.50% in September has jumped to 45% from around 31% before the data. With upcoming ADP Employment Change and Jobless Claims reports, and the critical US Nonfarm Payrolls (NFP) due on Friday, any further weak employment figures could strengthen the case for a larger rate cut.
Escalation in Israeli-Palestinian Conflict Boosts Demand for Gold
On the geopolitical front, tensions remain high as Israeli forces shot and killed a 16-year-old Palestinian boy in the Far’a refugee camp. According to Wafa news agency, soldiers fired multiple bullets at the child, abused him, and prevented ambulance crews from reaching him.
In response, Hamas has accused Israeli Prime Minister Benjamin Netanyahu of obstructing a ceasefire deal by refusing to withdraw forces from Gaza’s Philadelphi Corridor.
Consequently, the situation in Gaza continues to escalate, with recent Israeli bombardments killing at least 18 Palestinians. Palestinian officials report that around 4,000 residents have been forced to flee their homes in east Jenin under gunpoint, and the UN has criticized Israel for using "war-like tactics" against civilians in the West Bank.
Hence, the conflict has resulted in a severe humanitarian crisis, with over 40,000 people killed and nearly 95,000 wounded in Gaza. In contrast, at least 1,139 people were killed in Israel due to Hamas-led attacks on October 7.
Therefore, the escalation in the Israeli-Palestinian conflict, with increased casualties and ongoing violence, heightens geopolitical uncertainty. This typically boosts demand for safe-haven assets like gold, leading to potential price increases as investors seek stability.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is showing signs of strength as it attempts to break through key resistance levels. The price is now trading above the pivotal $2,500 mark, which acts as both psychological and technical resistance. This level coincides with the 50-day Exponential Moving Average (EMA) at $2,506.32, signaling that bullish momentum is building. Should the price continue to hold above this level, we could see a test of the next resistance at $2,520, followed by $2,527.
The Relative Strength Index (RSI) at 54.62 suggests that momentum is in the buyers' favor but not yet overbought, leaving room for more upward movement. On the support side, $2,490 remains critical, and a drop below this level could shift the momentum back to the bears, driving the price toward the next support at $2,482.
From a technical perspective, the gold market has broken out of a descending channel, suggesting further upward potential. However, if the price fails to sustain above $2,500, it could lead to renewed selling pressure.
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GBP/USD Price Analysis – Sep 05, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair maintained its upward trend and performed strongly around 1.3168, reaching an intra-day high of 1.3172.
The British pound strengthened as the positive UK economic outlook boosted market expectations that the Bank of England's (BoE) policy-easing cycle might be shallower this year compared to other central banks.
Meanwhile, the US dollar weakened due to weaker-than-expected U.S. job data, which increased the likelihood of a significant interest rate cut by the Federal Reserve. This also supported the GBP/USD pair.
Looking ahead, traders are being careful as they wait for the important US Nonfarm Payrolls (NFP) report on Friday. Before that, they'll also pay attention to Thursday's US economic updates, including job reports from the ADP, Weekly Jobless Claims, and the ISM Services PMI.
GBP/USD Strengthens on Positive UK Economic Outlook and Fewer BoE Rate Cut Expectations
On the BoE front, the British Pound is gaining strength as the positive UK economic outlook suggests that the Bank of England’s (BoE) interest rate cuts may be less aggressive compared to other central banks.
The latest S&P Global/CIPS PMI data shows the UK economy grew at a faster pace in August, with both the manufacturing and services sectors expanding significantly. This marks the strongest growth since April, raising hopes for a more stable economic environment.
Financial markets now expect the BoE to cut interest rates just once this year. The central bank, which began shifting to a more neutral policy in August, is expected to keep rates steady at 5% this month, with a possible cut in November or December.
Meanwhile, the Pound's value will be influenced by market sentiment and speculation on rate cuts, especially as key UK economic reports are absent. Next week, investors will turn their attention to employment data for July and monthly GDP figures.
This news has boosted the GBP/USD pair, as expectations of fewer BoE rate cuts support the British Pound. Strong UK economic data strengthens the Pound, while market sentiment and upcoming employment and GDP reports could drive further movement.
GBP/USD Rises as Weak US Job Data Fuels Fed Rate Cut Expectations
On the US front, the broad-based US Dollar (USD) weakened as weak Job Openings data for July put pressure on the currency. The latest report showed that US job vacancies fell to 7.67 million, the lowest in over three-and-a-half years.
This signals a slowing job market, raising expectations that the Federal Reserve (Fed) may start cutting interest rates more aggressively. Market speculation now suggests a 41% chance that the Fed could reduce rates by 50 basis points in its September meeting, up from 34% a week ago.
Looking ahead, the US Nonfarm Payrolls (NFP) report for August, due on Friday, will be a key event that could impact the USD. In Thursday’s North American session, important data like the ADP Employment Change, ISM Services PMI, and Initial Jobless Claims will be in focus.
Therefore, this news has strengthened the GBP/USD pair, with the Pound rising above 1.3150 as the weaker US Dollar faces pressure from soft US job data. Increased expectations of Fed rate cuts further support the Pound's gains against the Dollar.
GBP/USD - Technical Analysis
The British Pound is facing downside pressure against the U.S. Dollar as it struggles below the key resistance level of $1.31673, which is reinforced by the 50-day Exponential Moving Average (EMA). GBP/USD has formed a lower high at $1.31880, signaling potential weakness.
The immediate support at $1.30891 is being closely watched, as a break below this level could trigger further downside towards $1.30523. The pair is currently in a consolidation phase, with the RSI at 45.15, which indicates there’s room for the price to slide lower before reaching oversold territory.
The descending trendline from previous highs continues to act as resistance near $1.31673, and any failure to break above this could attract sellers. A confirmed bearish break below $1.30891 might lead to a retest of the psychological level at $1.30111. Meanwhile, bulls should be cautious as any upside movement remains capped by resistance near the $1.31880 zone.
The pair remains bearish below the pivot point at $1.31517, with a possible downside target at $1.30891. A failure to hold above $1.31517 suggests potential weakness in the short term.
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GOLD Price Analysis – Sep 05, 2024
EUR/USD Price Analysis – Sep 05, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair continued its upward momentum, trading around 1.1096 and reaching an intra-day high of 1.1109. This movement comes as investors closely monitor US economic data, which has influenced the pair's performance.
Despite a surprising 0.1% decline in annual Eurozone Retail Sales for July—contrary to expectations for growth—the Euro (EUR) remains robust against major currencies. Notably, monthly Retail Sales did rise by 0.1%, meeting forecasts.
Moreover, EUR/USD gains were bolstered by weaker-than-expected US JOLTS Job Openings data for July. This disappointing data has increased market expectations for a more aggressive policy-easing cycle by the Federal Reserve (Fed). As a result, the US dollar has weakened, further supporting the recent strength of the EUR/USD pair.
Euro Remains Strong Despite Weaker Eurozone Data and Growth Concerns
Despite a 0.1% decline in annual Eurozone Retail Sales for July, the Euro (EUR) remains strong. Retail Sales data, which reflects consumer spending, was expected to grow but instead fell slightly. However, the monthly Retail Sales increased by 0.1%, as predicted.
This mixed data has led to speculation that the European Central Bank (ECB) may lower interest rates soon. The ECB began easing in June but paused in July, and there’s anticipation of further cuts due to concerns about slow economic growth and easing inflation.
Additionally, worries about Eurozone economic performance have increased. The final HCOB PMI report showed slower growth in economic activity, with a reading of 51.0, down from 51.2. This slowdown is due to weaker growth in services and ongoing contraction in manufacturing. ECB member François Villeroy de Galhau suggested that these economic issues might prompt the ECB to cut interest rates in September.
Therefore, the news of weaker Eurozone Retail Sales and slower growth intensifies speculation that the ECB will cut interest rates. This speculation, combined with easing inflationary pressures, supports the Euro (EUR), contributing to the EUR/USD pair’s strength.
EUR/USD Recovery Driven by Weaker US Job Data and Upcoming Economic Reports
On the US front, the EUR/USD pair has extended its recovery. This rebound followed weaker-than-expected US JOLTS Job Openings data for July, which has fueled speculation that the Federal Reserve (Fed) might start a significant policy-easing cycle soon.
The disappointing JOLTS data, showing job vacancies at 7.67 million compared to the revised 7.91 million in June and below the 8.1 million estimate, raised concerns about the labor market and led to a drop in the US Dollar (USD). The US Dollar Index (DXY) has declined further to around 101.20 as a result.
Looking ahead, the USD’s movement will be influenced by the upcoming ADP Employment Change and ISM Services Purchasing Managers Index (PMI) data for August. The ADP data, due at 12:15 GMT, is expected to show a rise in private sector payrolls to 145K from 122K in July. The ISM Services PMI, set for release at 14:00 GMT, is projected to decline slightly to 51.1 from 51.4.
Stronger data in these reports could reduce expectations for aggressive Fed rate cuts, while weaker results could reinforce them, impacting the USD’s strength and, consequently, the EUR/USD pair.
EUR/USD - Technical Analysis
EUR/USD is showing signs of consolidation after breaking out of a descending channel. The pair is currently hovering near the 1.10690 support level, which coincides with the pivot point for today.
If the price manages to stay above this level, it could trigger further upward momentum towards the immediate resistance at 1.11005. Above this, the next resistance stands at 1.11228, followed by a potential move to 1.11892 if bullish momentum continues.
The RSI at 55.77 indicates that the market still has room to the upside, with momentum building slowly. However, traders should remain cautious if the price slips below the support level of 1.10690, as this could expose the pair to a move down towards 1.10395, and possibly further to 1.09995. A break above the 50-day EMA at 1.10991 will serve as an additional bullish confirmation.
Overall, the EUR/USD pair is showing potential for gains as long as it remains above the key support of 1.10690. A bullish breakout above the 50-EMA could drive further upward movement, while a failure to hold support might bring in selling pressure.
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- GOLD Price Analysis – Sep 05, 2024
GOLD Price Analysis – Sep 04, 2024
Daily Price Outlook
Despite negative risk sentiment following weak US manufacturing data, Gold (XAU/USD) failed to halt its losing streak and remained under pressure around the 2,487 level, hitting an intra-day low of 2,472.
This decline can be attributed to the heavy long positions held by Commodity Trading Advisors (CTA) and institutional investors. With many large players already holding substantial amounts of gold, there is limited room for further price increases.
On the geopolitical front, there are no new major events driving up gold demand. Although Russia’s recent missile and drone attack on Ukraine, which resulted in 50 fatalities, is significant, such attacks have been frequent, and this ongoing situation hasn't provided a new impetus for gold.
Gold Prices Remain Unchanged Despite Rising Rate Cut Expectations
On the US front, gold isn’t benefiting from the growing expectation that the Federal Reserve might cut interest rates by 0.50% at its meeting on September 18. Before a recent weak report on US manufacturing, there was a 31% chance predicted for this big cut. Now, the probability has jumped to 41%. Normally, such a shift would be good for gold since lower interest rates make holding gold less costly. However, gold’s price hasn’t increased as expected.
On the data front, upcoming US employment reports could influence interest rate expectations. This week’s key releases include US JOLTS Job Openings on Wednesday, which are predicted to drop slightly to 8.1 million. A bigger drop could suggest a weakening job market and increase the likelihood of a larger rate cut.
Thursday’s ADP Employment Change and Jobless Claims will also be watched closely, with the most significant report being Friday’s US Nonfarm Payrolls (NFP). If NFP numbers are lower than expected, it could support the case for a larger rate cut and potentially impact gold prices.
Despite higher expectations for a significant Fed rate cut, gold prices haven’t risen. If employment reports indicate a weaker job market and support a larger rate cut, gold might eventually benefit, but currently, it’s not reacting as expected.
Geopolitical Tensions Fail to Boost Gold Demand
On the geopolitical front, there aren’t any new major events driving up gold demand. Although Russia recently carried out a large missile and drone attack on Ukraine, killing 50 people, this attack follows a pattern of similar incidents and hasn’t had a big impact on gold.
In Gaza, the situation remains tense. Israelis are protesting for a ceasefire to secure the safe release of hostages, and the US has charged Hamas leaders with crimes related to the October 7 attacks. Despite these ongoing issues, there hasn’t been a significant shift in gold demand.
Therefore, the ongoing geopolitical tensions, including Russia’s attacks and the situation in Gaza, haven’t led to a noticeable increase in gold demand. Despite these conflicts, gold prices have remained stable, suggesting that these events aren't significantly influencing its value.
GOLD (XAU/USD) - Technical Analysis
Gold is currently trading around $2,503, facing a critical juncture on the 2-hour chart. After breaking down from an ascending triangle pattern, the price has been hovering near the $2,503 level, struggling to reclaim its previous bullish momentum. This breakdown is significant as the ascending triangle was providing support around the $2,507 level, and the recent price action suggests that the bears are gaining control.
On the technical front, the pivot point is situated at $2,507, which is now acting as a critical resistance. Immediate resistance stands at $2,508, followed by stronger resistance levels at $2,514 and $2,517. On the downside, the immediate support is at $2,491, with subsequent support levels at $2,480 and $2,471. The 50 EMA, currently positioned at $2,508, is acting as a ceiling for the price, preventing any meaningful recovery.
The Relative Strength Index (RSI) is currently at 44.41, indicating neutral momentum but with a slight tilt towards oversold conditions. This could imply a potential reversal or consolidation phase if the selling pressure continues to mount. However, the key to watch is whether the price can break back above the 50 EMA at $2,508, which could signal a shift in momentum.
In conclusion, Gold's recent breakdown from the ascending triangle pattern around the $2,507 mark has opened the door for further downside potential. If the price remains below $2,507, the bearish momentum could accelerate, targeting the next support at $2,491 and potentially down to $2,480 or even $2,471.
Conversely, a recovery above $2,508 could challenge resistance levels at $2,514 and $2,517. For traders, an entry point could be considered at a sell position below $2,507, with a take profit target set at $2,492 and a stop loss at $2,517 to manage risk effectively.
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- EUR/USD Price Analysis – Sep 04, 2024
EUR/USD Price Analysis – Sep 04, 2024
Daily Price Outlook
During the European trading session, the EUR/USD is consolidating within a narrow range close to a fresh two-week low of 1.1025. The major currency pair has turned sideways as the US Dollar (USD) adjusts following the release of the US ISM Manufacturing PMI data for August.
Meanwhile, the Euro’s near-term outlook remains negative as market participants anticipate that the European Central Bank’s (ECB) policy-easing cycle could be aggressive, given the steep decline in Eurozone inflationary pressures and weak economic growth.
USD Weakness and Upcoming Labor Data Could Boost EUR/USD
On the US front, the broad-based US Dollar (USD) is adjusting after the release of the ISM Manufacturing PMI data for August, which showed a reading of 47.2. This figure missed expectations of 47.5 but was an improvement from the eight-month low of 46.8. Despite this small uptick, a PMI below 50.0 still signals a contraction in manufacturing activity.
Consequently, the US Dollar Index (DXY) has dropped to around 101.60 after failing to regain a two-week high of 102.00. Investors are now looking ahead to Friday's US Nonfarm Payrolls (NFP) data for August, which will be crucial in determining the Federal Reserve’s next move on interest rates. There is a general expectation that the Fed might start reducing its key borrowing rates this month, but opinions vary on the size of the potential cut.
In addition to the NFP data, attention will also be on the US JOLTS Job Openings report for July and the ADP Employment Change data for August. The JOLTS report is anticipated to show about 8.1 million job vacancies, slightly down from the 8.184 million reported the previous month.
The Fed Chair Jerome Powell's recent comments at the Jackson Hole Symposium, highlighting concerns over weakening labor demand, have made these labor market reports even more significant for market participants.
Therefore, the weak ISM Manufacturing PMI and the upcoming US labor market data contribute to USD weakness, which could bolster the EUR/USD pair. If the Fed signals a rate cut, the EUR/USD might gain further, given the Eurozone's downbeat outlook.
ECB Rate Cut Expectations and Weak Eurozone Data Limit EUR Gains
On the EUR front, the shared currency shows a slight recovery as the US Dollar weakens. However, the Euro's near-term outlook remains negative. Market participants anticipate that the European Central Bank (ECB) might aggressively ease policy due to the sharp drop in Eurozone inflation and sluggish economic growth.
Bank of America (BofA) expects more ECB rate cuts through 2025 and 2026, forecasting a deposit rate of 2% by Q3 2025 and 1.5% in 2026. They note that Europe's recovery is fragile, affected by slow growth in China and political issues.
Furthermore, ECB officials express concerns about their policy stance being too restrictive. ECB Executive Board member Piero Cipollone warned about balancing inflation targets with economic growth. Investors are awaiting the Eurozone Retail Sales data for July, expected to show a slight 0.1% increase after a 0.3% contraction in June.
Despite a potential improvement, this may not alter market expectations of further ECB rate cuts. In the menatime, the Eurozone Producer Price Index (PPI) also showed slower deflation at 2.1%, better than the 2.5% estimate, but unlikely to change the ECB’s policy direction.
Therefore, the Euro's slight recovery against the US Dollar may be short-lived as expectations of aggressive ECB rate cuts and weak Eurozone economic data suggest continued EUR/USD pressure. The market anticipates further ECB easing, which could limit substantial gains for the EUR/USD pair.
EUR/USD - Technical Analysis
The EUR/USD pair is currently trading at $1.10568, gaining 0.13% during today's session. The price is edging closer to the pivot point at $1.11005, a crucial level that could set the tone for the day's trading.
Immediate resistance lies at $1.11395, with the next key levels being $1.11892 and $1.10337. On the downside, immediate support can be found at $1.09995, with further supports at $1.09685.
The 50-day Exponential Moving Average (EMA) sits at $1.11083, slightly above the current price. This EMA acts as a strong barrier for bulls trying to push the price higher.
A break above this could see the pair testing the next resistance at $1.11395, while a rejection could drive EUR/USD back toward its key support areas.
Technical indicators suggest a bearish bias for now. The Relative Strength Index (RSI) stands at 39, signaling that the market has room for further declines before reaching oversold conditions.
In the short term, selling pressure could dominate if the pair breaks below the immediate support at $1.10695. A fall below this level would likely accelerate the downward move toward $1.10208.
However, if EUR/USD manages to breach the $1.11005 pivot point and hold above it, we could see a shift in sentiment, potentially driving the pair toward $1.11395. Watch closely for a break or bounce around these key levels.
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GBP/USD Price Analysis – Sep 04, 2024
Daily Price Outlook
During the European trading session, the GBP/USD pair remained subdued around the 1.3112 level as market sentiment weakened amidst rising uncertainty ahead of the release of the US Nonfarm Payrolls (NFP) data for August, due on Friday. Despite growing speculation that the Bank of England (BoE) will implement a shallower policy-easing cycle for the remainder of the year compared to other central banks, the British currency struggles to gain strength.
British Pound Weakens Despite Improving UK Economy and BoE Rate Cut Expectations
On the BoE front, the British Pound is struggling against major currencies. Despite speculation that the Bank of England (BoE) will ease its monetary policy only slightly for the rest of the year, the Pound remains weak.
Market expectations indicate the BoE might cut interest rates by 40 basis points (bps) this year. In comparison, the European Central Bank (ECB) is expected to cut rates by 65 bps, and the Federal Reserve (Fed) is projected to lower its rates by 100 bps.
Consequently, the UK economy is showing signs of improvement, with better-than-expected performance in manufacturing and services. The final S&P Global/CIPS Composite PMI for August was revised up to 53.8, surpassing the preliminary figure of 53.4.
This suggests that the UK economy is growing at its fastest pace since April. Despite this positive news, the Pound’s performance remains subdued, reflecting a cautious outlook on the BoE’s gradual approach to policy easing.
GBP/USD Pressured by US NFP Uncertainty and Fed Rate Cut Speculation
On the US front, the GBP/USD pair is struggling as market uncertainty grows ahead of the US Nonfarm Payrolls (NFP) data for August, due on Friday. S&P 500 futures have dropped further, showing decreased risk appetite among investors, while the US Dollar Index (DXY) slightly corrects to around 101.60.
The NFP report is crucial because it will influence expectations about the Federal Reserve's interest rate decisions in September. While the Fed is expected to adjust its policy this month, there's debate over whether it will cut rates significantly or take a more gradual approach.
If the NFP data shows a slowdown in job growth and higher unemployment, expectations for a 50 basis point (bps) rate cut by the Fed will likely rise. Fed Chair Jerome Powell has indicated support for the labor market if it worsens. Conversely, if the job data is steady or better than expected, hopes for a large rate cut may weaken.
Investors will also watch the US JOLTS Job Openings for July and the Fed’s Beige Book for more clues on the labor market, with job openings anticipated to decrease slightly from June.
Therefore, the uncertainty around the US NFP data and potential Federal Reserve rate cuts is likely to keep the GBP/USD pair under pressure. Weak job data could boost the Dollar due to expectations of aggressive Fed cuts, while strong data might weaken the Pound further.
GBP/USD - Technical Analysis
The GBP/USD pair is trading at $1.31136, with a modest gain of 0.01%. Currently, the pair is hovering near a crucial pivot point at $1.31620, signaling potential indecision in the market.
The 50-day Exponential Moving Average (EMA) rests at $1.31695, just above the current price level, reinforcing the significance of the resistance at $1.31880. A break above this resistance could open the door for gains toward $1.32269, but for now, the downside appears to dominate the outlook.
The Relative Strength Index (RSI) is at 39, suggesting that bearish momentum is gaining strength, but it is not yet in oversold territory. If the pair breaks below the immediate support at $1.31218, we could see a test of lower levels, with the next support sitting at $1.30784. Further declines may push GBP/USD toward $1.30410 and $1.30111, which will be key areas for bulls to defend.
For today, the key battle lies around the $1.31620 pivot. A failure to break this level would likely result in a bearish continuation, with selling pressure intensifying if $1.31218 is breached. On the upside, a break above $1.31880 could trigger a bullish reversal, but the pair remains constrained by the broader downward trend.
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- GOLD Price Analysis – Sep 04, 2024
GOLD Price Analysis – Sep 03, 2024
Daily Price Outlook
Gold prices (XAU/USD) continue their decline, trading around the 2490 level. However, this drop is attributed to a stronger US Dollar and rising US Treasury bond.
However, expectations of a potential US Federal Reserve (Fed) rate cut in September could support gold prices, as lower interest rates reduce the opportunity cost of holding non-yielding gold. Furthermore, ongoing geopolitical tensions in the Middle East may drive demand for gold as a safe-haven asset.
Looking ahead, the Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers Index (PMI) is set for release on Tuesday.
The key event this week will be the August US Nonfarm Payrolls (NFP) report, which could influence the Federal Reserve's decision on interest rate cuts and, in turn, affect gold prices in the short term.
Impact of Recent US Economic Data and Federal Reserve Expectations on Gold Prices
On the US front, the broad-based US dollar (USD) strengthened, and US Treasury bond yields rose on Tuesday as the US Bureau of Economic Analysis reported that the headline Personal Consumption Expenditures (PCE) Price Index increased by 2.5% year-over-year in July, matching the previous figure but missing the estimated 2.6%.
In the meantime, the core PCE, excluding food and energy, also rose by 2.6%, consistent with prior data but slightly below the forecast of 2.7%. Moreover, the US Gross Domestic Product (GDP) grew at an annualized rate of 3.0% in Q2, surpassing expectations of 2.8%. Initial Jobless Claims for the week ending August 23 fell to 231,000, slightly below the anticipated 232,000.
On the other hand, markets are currently pricing in a nearly 69% chance of a 25 basis points (bps) rate cut by the Federal Reserve in September, with a 31% probability for a 50 bps reduction.
Moving ahead, the US ISM Manufacturing PMI for August is expected to improve to 47.5 from 46.8 in July, while the Services PMI may decline to 51.1 from 51.4. Job additions for August are forecasted at 163,000, with the Unemployment Rate expected to decrease slightly to 4.2%.
Therefore, the stronger US dollar and higher Treasury yields could pressure gold prices down. However, expectations for a Fed rate cut and weaker PMI data might support gold, as lower rates reduce the opportunity cost of holding non-yielding assets.
GOLD (XAU/USD) - Technical Analysis
Gold is currently trading around $2,503, facing a critical juncture on the 2-hour chart. After breaking down from an ascending triangle pattern, the price has been hovering near the $2,503 level, struggling to reclaim its previous bullish momentum. This breakdown is significant as the ascending triangle was providing support around the $2,507 level, and the recent price action suggests that the bears are gaining control.
On the technical front, the pivot point is situated at $2,507, which is now acting as a critical resistance. Immediate resistance stands at $2,508, followed by stronger resistance levels at $2,514 and $2,517. On the downside, the immediate support is at $2,491, with subsequent support levels at $2,480 and $2,471. The 50 EMA, currently positioned at $2,508, is acting as a ceiling for the price, preventing any meaningful recovery.
The Relative Strength Index (RSI) is currently at 44.41, indicating neutral momentum but with a slight tilt towards oversold conditions. This could imply a potential reversal or consolidation phase if the selling pressure continues to mount. However, the key to watch is whether the price can break back above the 50 EMA at $2,508, which could signal a shift in momentum.
In conclusion, Gold's recent breakdown from the ascending triangle pattern around the $2,507 mark has opened the door for further downside potential. If the price remains below $2,507, the bearish momentum could accelerate, targeting the next support at $2,491 and potentially down to $2,480 or even $2,471.
Conversely, a recovery above $2,508 could challenge resistance levels at $2,514 and $2,517. For traders, an entry point could be considered at a sell position below $2,507, with a take profit target set at $2,492 and a stop loss at $2,517 to manage risk effectively.
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- AUD/USD Price Analysis – Sep 03, 2024
AUD/USD Price Analysis – Sep 03, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair extended its bearish trajectory, slipping to an intra-day low of 0.6730 and hovering around the 0.6732 level. This downward movement is primarily driven by a strengthening US dollar, bolstered by upbeat US economic data and rising Treasury yields. However, the dollar's gains may be tempered by growing market expectations of a 25 basis point rate cut by the Federal Reserve in September.
Besides this, the Australian dollar faces pressure from domestic economic indicators. The unexpected decline in Australia’s Private Capital Expenditure and lower-than-anticipated CPI figures are weighing on the AUD, contributing to its weakness against the USD.
Traders are now eyeing Australia's Q2 Gross Domestic Product (GDP) and July Trade Balance data, along with a forthcoming speech by Reserve Bank of Australia (RBA) Governor Michele Bullock, for further insights into the central bank's monetary policy outlook.
US Dollar Strengthens Amid Mixed Economic Data and Rate Cut Speculation, Pressuring AUD/USD
On the US front, the broad-based US dollar strengthened as Treasury yields continued to rise. However, its gains could be limited by growing expectations that the Federal Reserve might cut interest rates by 25 basis points in September.
Traders are now looking ahead to the upcoming US employment data, especially the August Nonfarm Payrolls (NFP), for more clues on the timing and extent of potential Fed rate cuts.
Recent US economic data highlights mixed signals. The US Bureau of Economic Analysis reported that the headline Personal Consumption Expenditures (PCE) Price Index rose by 2.5% year-over-year in July, slightly below the expected 2.6%.
The core PCE, excluding food and energy, also grew by 2.6%, just shy of the 2.7% forecast. Meanwhile, US Gross Domestic Product (GDP) grew at an annualized rate of 3.0% in the second quarter, surpassing expectations.
Initial Jobless Claims fell to 231,000 for the week ending August 23, indicating a slight improvement in the labor market. However, Federal Reserve Atlanta President Raphael Bostic suggested that it might be time to consider rate cuts due to cooling inflation and rising unemployment, with his comments being rated as neutral on the hawkish-dovish scale.
Consequently, the mixed US economic data and rising Treasury yields, along with speculation about a Fed rate cut, have contributed to the US dollar's strength, putting downward pressure on the AUD/USD pair as the Australian dollar struggles to maintain its value.
Mixed Australian Economic Data Creates Uncertainty for AUD/USD Pair
On the other hand, Australia’s Building Permits surged by 10.4% month-over-month in July, recovering strongly from a 6.5% decline in June and marking the highest growth since May 2023. On an annual basis, building permits grew by 14.3%, a notable rebound from the previous 3.7% decline, indicating a positive trend in the construction sector.
However, Australia's economic outlook is mixed. Private Capital Expenditure unexpectedly dropped by 2.2% in the second quarter, reversing from a 1.9% expansion in the previous period and missing market expectations for a 1.0% increase.
This decline marks the first contraction in new capital spending since the third quarter of 2023. Additionally, Australia’s Monthly Consumer Price Index (CPI) rose by 3.5% year-on-year in July, down slightly from June's 3.8% but slightly above the expected 3.4%. Despite the decrease, this is the lowest CPI figure since March, reflecting some easing in inflation.
Traders are now watching closely for Australia's Q2 Gross Domestic Product (GDP) and July Trade Balance data, along with an upcoming speech by Reserve Bank of Australia (RBA) Governor Michele Bullock, for further clues on the central bank's approach to monetary policy.
Therefore, the mixed economic data from Australia, including a rebound in building permits and declines in capital expenditure and CPI, may create uncertainty for the AUD/USD pair. Traders will be closely watching upcoming GDP and Trade Balance reports for clearer direction.
AUD/USD - Technical Analysis
The Australian Dollar (AUD/USD) is currently trading around $0.6742, showing signs of a bearish continuation following a recent breakdown. The pair is under pressure as it trades below the key support level of $0.6754, now acting as immediate resistance. The breakdown below this level has opened the door for further declines towards the next support levels.
The pivot point for today’s session is at $0.6754, which also marks the immediate resistance. Should the pair attempt a recovery, it may find resistance at $0.6770, with the next levels of resistance at $0.6784 and $0.6793. On the downside, immediate support lies at $0.6720, followed by $0.6699 and $0.6677.
Technical indicators are pointing towards continued bearish momentum. The Relative Strength Index (RSI) is currently at 33.73, indicating oversold conditions, which could suggest a potential short-term rebound before the downtrend resumes. The 50-day Exponential Moving Average (EMA) is positioned at $0.6784, reinforcing the resistance around this level.
Given the recent price action and the technical indicators, a sell position below $0.6754 could be considered, with a take profit target at $0.6720 and a stop loss set at $0.6770 to manage risk. The breakdown below key support levels suggests that the bears are in control, and the pair could see further declines if it remains below the $0.6754 pivot point.
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