Daily Market Analysis

 

 

Latest Economic and Fundamental Insights

 

The dollar index held steady around 100.7 on Friday as traders prepared for the latest personal consumption expenditures price index report, the Federal Reserve’s preferred inflation gauge.

China stimulus, strong gold put silver on a bull run, but not without risks

Gold stabilizes at record levels

The Fed’s preferred inflation gauge will be closely watched later today, as strong data released on Thursday defied expectations for an aggressive rate-cutting cycle.

U.S. GDP growth was confirmed at a 3% annual rate for the second quarter, with unemployment claims unexpectedly falling and durable goods orders steady.

However, Fed rate futures indicate that markets are pricing in about a 49% chance of another 50 basis point cut in November.

Meanwhile, additional fiscal stimulus from China and the growing risk of a wider conflict in the Middle East continue to boost gold’s appeal.

During the week, gold is heading for its third consecutive gain.

Gold falls amid possible technical correction

Gold prices fell at the start of the Asian session amid a possible technical correction after the front-month contract hit another record high on Thursday.

“The daily RSI is pointing to overbought conditions, and the weekly RSI is reaching extreme levels.” The RSI suggests that gold may be on the verge of a correction, although it is not a clear sell signal in itself,

“Technically, gold is still in a strong uptrend, so it is difficult to predict how much higher the precious metal will go.”

Chinese stocks are set for their best week since 2008 as Beijing unveils a massive stimulus package to revive the economy, sending Asian shares to their highest levels in 2-1/2 years, while a sharp drop in oil prices heralds a slowdown in global inflation.

Oil prices fall on expectations of increased supply, and China’s stimulus limits losses, with Brent crude trading at $73.00 and West Texas Intermediate at $67.00.

On a weekly basis, Brent crude is expected to fall by 4%, while West Texas Intermediate crude is expected to fall by 6%.

While investors across asset classes are cheering after Chinese authorities finally rolled out bolder stimulus, oil markets appear to be obsessed with Libya and OPEC this week, according to Priyanka Sachdeva, senior market analyst at Philip Nova.

“The recent decision by OPEC+ to increase production has only added to the gloom,” Sachdeva said, adding that the oil market had been suffering from weak demand over the past few months.

“While it is uncertain whether Chinese stimulus will translate into higher fuel demand, it may provide some relief to the oil market.”

China’s central bank on Friday cut interest rates and pumped liquidity into the banking system as Beijing ramps up stimulus to return economic growth to its target of around 5% this year and combat deflationary pressures.

More fiscal measures are expected to be announced before China’s public holidays starting on Oct. 1, after a meeting of top Communist Party leaders showed a growing sense of urgency over mounting economic headwinds.

Meanwhile, rival factions claiming control of Libya’s central bank signed an agreement on Thursday to end their dispute. The conflict has caused a sharp decline in the country’s oil production and exports, with crude exports falling to 400,000 barrels per day this month, from more than 1 million barrels last month.

Bitcoin price started a fresh rally above the $64,750 resistance level. Bitcoin price is now consolidating near $65,000 and may remain supported.

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Smart technical reports

 

 

How they work

A likely scenario is proposed for today, and the probability of this scenario being achieved, according to technical analysis, may be between 60% and 75%.

If the first scenario fails, the probability of the second scenario being achieved will be between 60% and 75% certain.

The first scenario fails when the price reaches the level of the alternative scenario condition, and the alternative scenario is immediately activated and the prediction from the first scenario is cancelled.

These reports are not considered a substitute for the trader’s decision, but rather they are a tool to assist the follower in making his own decisions, as a reference based on the origins of classical technical analysis.

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GOLD

 

General trend: Upward

Interval: Half an hour (30 minutes)

Current price: 2665.22

Scenario 1: Buy gold with a break and stability above 2672.59, targeting 2679.02 and 2686..15

Alternative scenario: Sell gold with a break and stability below 2661.21 with a target price of 2654.76 and then 2646.93

Comment: Trading above the supports and averages suggests an upward trend.

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CRUDE OIL

 

Trend: Upward

Interval: Half an hour (30 minutes)

Current price: $67.58 per barrel

Scenario 1: Buy oil by breaking the $67.80 level, targeting $68.24 and then $68.83.

Alternative scenario: Sell oil with a break and stability by closing a candle below the $67.12 levels, targeting $66.60 and then $66.01.

Comment: Trading above the supports and averages suggests an upward trend.

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EURUSD

 

General trend: Upward

Interval: Half an hour (30 minutes)

Current price: 1.11412

Scenario 1: Buy EUR/USD by breaking 1.11605, targeting 1.11790 and then 1.12014

Alternative scenario: Sell the EUR/USD with a break and stability with a candle closing below 1.11378, targeting 1.11218 and then 1.11005.

Comment: Trading above the supports and averages suggests an upward trend.

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GBPUSD

 

Trend: Upward

Interval: Half an hour (30 minutes)

Current price: 1.33790

Scenario 1: Buy the pound dollar with a break and stability above the level of 1.34016, targeting the price of 1.34257 and then 1.34543.

Alternative scenario: Sell the pound dollar with a break and stability with a close below 1.33732, targeting 1.33475 and then 1.33253.

Comment: Trading above the supports and averages suggests an upward trend.

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NAS100

 

Trend: Upward

Interval: Half an hour (30 minutes)

Current price: 20265

Scenario 1: Buy Nasdaq with a break and hold with a close above 20387, targeting 20491 then 20609

Alternative scenario: Sell Nasdaq with break and hold with close below 20231 with target price 20106 then 19999

Comment: Trading above the supports and averages suggests an upward trend.

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Economic Calendar

 

(Times are in GMT+3)

From USA Core PCE Price Index (MoM) (Aug) 15:30

From USA Core PCE Price Index (YoY) (Aug) 15:30
Canadian Government Budget (YoY) (July) 18:00

Fundamental Analysis

 

 

The dollar index held steady around 100.7 on Friday as traders prepared for the latest personal consumption expenditures price index report, the Federal Reserve’s preferred inflation gauge.

The index came under pressure on Thursday as the yuan and other risky currencies rose after China pledged to step up fiscal and monetary support measures.

Meanwhile, data released Thursday showed the latest weekly jobless claims fell to a four-month low, pointing to resilience in the labor market.

GDP growth of 3% in the second quarter was also confirmed and the first quarter figures were revised upward, along with year-over-year growth for both 2023 and 2022.

Moreover, durable goods orders were flat last month, compared to expectations for a sharp decline of 2.6%.

Markets are currently divided on whether the Fed will cut interest rates by another 50 basis points in November, or opt for a more modest 25 basis point cut.

Gold held near $2,670 an ounce on Friday, trading at record highs as markets prepared for the highly anticipated U.S. personal consumption expenditures report for further guidance on the Federal Reserve’s monetary policy outlook.

Oil prices fell for a third day on Friday and were on track to fall for the week as investors focused on expectations of increased output from Libya and the broader OPEC+ group, although fresh stimulus from top importer China limited losses.