enDaily Analysis 08/05/2024
Latest Economic and Fundamental Insights
The dollar index rose above 105.5 on Wednesday, reaching its highest level in a week, after hawkish comments from a Federal Reserve official lifted the currency.
Gold fell as the dollar rose and traders focused on the timing of a potential interest rate cut. China’s central bank added another 60,000 ounces of gold to its reserves in April, extending its streak of consecutive purchases to 18 months.
Federal Reserve Governor Jerome Powell said the central bank may need to keep interest rates on hold all year to ensure inflation is under control.
This week’s economic calendar includes the University of Michigan consumer sentiment reading on Friday and comments from a slew of Fed officials. US CPI data is due out on May 15.
“The Fed is worried about inflation, but it won’t raise rates any further and still wants to cut them if it has the chance – that’s the story. Not much will happen to the story until we get CPI next week,” said Ilya Spivak, head of global macro at Tastylive.
He added that if upcoming reports show scary inflation, the Fed won’t be able to cut rates and will put pressure on gold. Bullion is used as a hedge against inflation, but rising interest rates reduce the attractiveness of holding non-yielding assets.
Markets are currently pricing in a 65% chance of a US rate cut in September, according to CME’s FedWatch tool.
China’s central bank added another 60,000 ounces of gold to its reserves in April, extending its streak of consecutive purchases to 18 months.
Asian stocks were directionless on Wednesday, while the dollar held steady despite a dip in US Treasury yields as markets assessed mixed signals from US policymakers and economic data on the path of Federal Reserve interest rates.
Oil prices retreated on Wednesday amid concerns about rising supply, with Brent crude trading at $82.00 and West Texas Intermediate at $77.00. The group of major producers is due to meet on June 1 to decide on production policy for the second half of the year.
Industry data showed US crude inventories rose by 0.509 million barrels last week, defying market expectations for a decline of 1.43 million barrels. On the demand side, investors are looking to the latest Chinese trade figures this week.
Bitcoin failed to break above the $65,500 resistance level and is now moving lower with some bearish signals showing below $63,500.
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.
GOLD
General trend: bullish
Time interval: half an hour (30 minutes)
Current price: 2316.38
The first scenario: Buy gold at a break and hold above 2319.35, with a target price of 2326.38 and 2333.51. Alternative scenario: Sell gold at a break and hold below 2308.57, with a price target of 2302.12 and then 2295.89.
Comment: Trading above supports and averages suggests an upward trend
CRUDE OIL
Trend: bearish
Time interval: half an hour (30 minutes)
Current price: $77.83 per barrel
The first scenario: selling oil at a break and holding steady by closing the candle below the $77.41 level, targeting a price of $76.89, then 76.31. Alternative scenario: buying oil at a break of the $78.09 level, targeting a price of $78.56, then 79.12.
Comment: Trading below resistances and averages suggests a decline
EURUSD
General trend: – Bullish
Time interval: half an hour (30 minutes)
Current price: 1.07405 The first scenario: Buying the euro/dollar at a break of 1.07541, targeting a price of 1.07726 then 1.07950 Alternative scenario: selling the euro/dollar at a break of 1.07314, targeting a price of 1.07154 then 1.06941
Comment: Trading above supports and averages suggests an upward trend
GBPUSD
Trend: down
Time interval: half an hour (30 minutes)
Current price: 1.24862
The first scenario: selling the pound dollar at a fraction and holding below the level of 1.24739, targeting the price of 1.24541 then 1.24317. The alternative scenario: buying the pound dollar at a break and holding steady by closing above 1.25075, targeting the price of 1.25361 then 1.25582.
Comment: Trading above supports and averages suggests an upward trend
NAS100
Trend: bullish
Time interval: half an hour (30 minutes)
Current price: 18197
The first scenario: Buying the Nasdaq at a break and holding steady with a close above 18256, targeting the price of 18326 then 18423. The alternative scenario: Selling the Nasdaq at a break and holding steady with a close below 18133 with a price of 18071 then 18001.
Comment: Trading above supports and averages suggests an upward trend
Economic Calendar
(Times are in GMT+3)
- US crude oil inventory 5:30 PM.
Fundamental Analysis
Minneapolis Fed President Neel Kashkari said on Tuesday he expects the central bank to stay on hold for a while until there’s clear evidence inflation is dropping. He didn’t rule out raising rates if inflation speeds up.
Markets still expect rate cuts this year, though. The latest US jobs data came in lower than expected, and cautious comments from other Fed officials strengthened those expectations.
Investors are now looking for more comments from the Fed and the Michigan consumer sentiment index on Friday for a clearer picture of the path for interest rates.
The dollar remained strong against the yen even as Japanese authorities warned again about extreme currency movements.
Gold prices fell on Wednesday as the dollar rose. Market participants were assessing the timeline for potential US rate cuts and looking for new signals for more clarity on monetary policy.
West Texas Intermediate crude futures fell to around $78 per barrel on Wednesday, retreating to their lowest levels in nearly two months. This follows reports that Russian Deputy Prime Minister Alexander Novak suggested OPEC+ may consider increasing crude production.
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