EURUSD
- The EUR/USD pair has recorded modest gains during the Asian trading session on Monday. Currently, it trades near 1.0531, marking an increase of 0.24% for the day.
- The US Dollar has had difficulty capitalizing on the gains it made after the release of US Consumer Price Index (CPI) data over the past two trading days. During the Asian session on Monday, the USD traded in a relatively narrow range.
- The subdued performance of the US Dollar may be attributed to market expectations that the Federal Reserve (Fed) will maintain higher interest rates for an extended period. These expectations were reinforced by the latest US consumer inflation figures released last Thursday, which indicated that inflation remains above the Fed's target. This, in turn, has kept the possibility of at least one more Fed rate hike in 2023 on the table.
- Conversely, the EUR/USD pair may face headwinds related to speculations that the European Central Bank (ECB) is not currently considering further rate hikes. This expectation could limit the pair's gains.
| SMA (20) | Falling |
|
|
| RSI (14) | Slightly Rising |
| |
| MACD (12, 26, 9) | Slightly Rising |
|
Closing statement: The EUR/USD pair has seen a modest uptick in the Asian session, primarily due to a weaker US Dollar. Market expectations of the Fed maintaining higher interest rates have put downward pressure on the USD. However, concerns related to the ECB's rate hike plans could limit the pair's gains. The future direction of EUR/USD will likely depend on factors such as economic data releases, central bank policies, and market sentiment.
GBPUSD
- The GBP/USD pair has been gaining traction during the Asian trading session on Monday, trading above the mid-1.2100s.
- Over the weekend, Bank of England (BoE) Governor Andrew Bailey made remarks during the International Monetary Fund meetings in Morocco. He expressed concerns about rising borrowing costs affecting the housing market and employment. Bailey indicated that interest rates are likely to remain at the current level of 5.25% to bring inflation back to the 2% target.
- Market sentiment appears to be a dominant factor influencing trading as investors await key economic data releases. In particular, the market is looking ahead to the release of UK employment data and US Retail Sales figures, both scheduled for Tuesday.
- In the United States, there are expectations among investors of a possible interest rate hike by the Federal Reserve (Fed) by the end of the year. This is driven by higher inflation expectations and upbeat inflation data released last week.
| SMA (20) | Falling |
|
|
| RSI (14) | Slightly Rising |
| |
| MACD (12, 26, 9) | Slightly Rising |
|
Closing statement: The GBP/USD pair has shown strength in the Asian session, likely influenced by remarks from BoE Governor Bailey and prevailing market sentiment. While Bailey indicated a desire to maintain interest rates to address inflation concerns, the market is looking forward to important economic data releases and is monitoring the possibility of a Fed rate hike in the US. The future direction of GBP/USD will depend on these factors and evolving market sentiment.
GOLD
- On Friday, the price of Gold experienced a significant turnaround. It started with a jump from $1,832 and reached a three-week high at $1,933 in American trading, marking a notable shift in the upward direction.
- This surge in gold price was influenced by a flight to safety theme as investors sought refuge in the precious metal, particularly as the weekend was approaching and geopolitical uncertainties were prevalent.
- Investors also seemed to be covering their short positions in anticipation that the ongoing Hamas-Israel conflict could sustain upward risks for gold price.
- Additionally, a lack of demand for US Treasuries due to concerns over rising deficits contributed to the strength in gold prices. Furthermore, the gold rally received support from a pause in the recovery of the US Dollar, influenced by dovish comments from Federal Reserve (Fed) officials.
- As the new trading week begins on Monday, Gold price is seen as paring back some of its gains. This can be considered a natural corrective mode after the significant move observed on Friday.
- Geopolitical tensions in the Middle East are expected to continue providing support for gold price. US Dollar traders, on the other hand, are anticipating the release of US Retail Sales data and are monitoring statements from Fed officials for potential influences on the precious metal's price.
Closing statement: The price of Gold exhibited a notable rally on Friday, attributed to a flight to safety, short position coverage, concerns over deficits, and a pause in the US Dollar's recovery. While there may be some correction at the beginning of the week, geopolitical tensions and upcoming economic data will be important factors to watch for further developments in gold prices.
CRUDE OIL
- Crude oil is currently trading around the $87.70 region, reflecting a decline of approximately 0.48% for the day. Market participants appear cautious and are refraining from making aggressive bets, possibly due to the need for more clarity regarding developments related to the Israel-Hamas clashes.
- The ongoing clashes between Israel and Hamas are creating geopolitical uncertainties, especially regarding the possibility of a broader Middle East conflict. This instability in the world's top oil-producing region has the potential to disrupt oil supplies, and this factor is perceived as a tailwind for Crude Oil prices.
- The United States has taken a firmer stance concerning Russia, imposing sanctions on two shipping companies. These sanctions are related to the transportation of Russian oil that was purchased at a price exceeding the $60 per barrel price cap set by G7 countries last year.
- Despite these geopolitical tensions and potential supply disruptions, there are growing concerns in the market about the rapidly rising borrowing costs. These concerns revolve around the idea that such high interest rates might dampen global economic activity and, subsequently, reduce fuel demand.
| SMA (20) | Falling |
|
|
| RSI (14) | Neutral | ||
| MACD (12, 26, 9) | Slightly Rising |
|
Closing statement: Crude oil prices are currently experiencing a degree of uncertainty as traders await further developments in the ongoing Israel-Hamas clashes. Geopolitical tensions in the Middle East remain a driving factor behind oil prices. However, concerns about rising borrowing costs and their potential impact on global economic activity are also influencing market sentiment and capping the upside for Crude Oil. Therefore, it is important to closely monitor developments in the Middle East and assess their impact on oil supply, as well as how markets respond to changing economic conditions.
DAX
- On Friday, the DAX experienced a significant decline of 1.55%, extending a 0.23% loss from the previous day, and concluded the trading session at 15,187. These losses indicate that the index is currently facing negative sentiment.
- The negative sentiment was influenced by economic data from China, particularly related to inflation and trade. Notably, China experienced its twelfth consecutive monthly decrease in year-over-year producer prices, signaling ongoing weak demand conditions. This data reflects broader global economic challenges.
- German wholesale prices have also been on a declining trend, falling for the sixth consecutive period. In September 2023, these prices dropped by 4.1% year-on-year. This trend was exacerbated by a base effect resulting from the high price increases observed in the previous year due to the Ukraine conflict.
- In the morning session, Eurozone trade data is expected to be released and is of interest to investors. Economists predict that the trade surplus will expand from €6.5 billion to €12.5 billion in August. A widening trade surplus could have implications for both the Eurozone and DAX performance.
- Besides economic data, market participants will closely monitor speeches from key figures, including ECB President Christine Lagarde and Executive Board members Andrea Enria and Anneli Tuominen. Any forward guidance that leans toward favoring ECB rate hikes may impact buyer appetite for DAX-listed stocks.
| SMA (20) | Falling |
|
|
| RSI (14) | Slightly Falling |
|
|
| MACD (12, 26, 9) | Neutral |
Closing statement: The DAX experienced notable losses on Friday, influenced by a combination of global economic challenges, weak demand conditions reflected in Chinese economic data, and declining German wholesale prices. Eurozone trade data and speeches from ECB officials will provide further insights into the economic landscape and may influence the DAX's performance in the near term. It is important to remain attentive to these economic indicators and statements from central bank officials when evaluating potential future trends in the DAX.
