EURUSD
- The Euro continues to face downward pressure, hovering around 2.7% below its peak in July. This decline has been notable since the middle of the previous month, indicating a short-term downtrend.
- Despite this decline, the currency pair has been unable to surpass the 100-day Moving Average (MA), which plays a significant role in maintaining the broader bullish sentiment.
- On Wednesday, both the dollar index and dollar index futures experienced a slight 0.1% decline. However, over the course of the week, they maintained a 0.4% increase.
- Investor sentiment concerning the eurozone economy remains pessimistic. The Sentix economic index for the eurozone recorded a slight improvement, reaching -18.9 in August, compared to -22.5 in July.
- The surprise announcement of a windfall tax on bank profits by Italy led to significant market repercussions. The Italian stock index, FTSE MIB, plummeted over 2%, positioning it as the week's worst performer.
| SMA (20) | Slightly Falling |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: The Euro is grappling with a short-term downtrend, remaining below its July high by around 2.7%. Despite this decline, the currency pair's inability to breach the 100-day Moving Average keeps the broader bullish bias in check. As economic sentiment in the eurozone remains uncertain, Italy's imposition of a windfall tax on bank profits reverberated through the market, particularly impacting the Italian stock index. The week witnessed mixed dynamics in the dollar's performance, with slight declines on Wednesday, yet maintaining a weekly increase of 0.4%.
GBPUSD
- The US Dollar regained its strength during this week, driven by concerns over global economic growth and uncertainties.
- The British Pound faced downward pressure and approached the possibility of breaking lower, but it found support around the 1.2680 mark.
- The ongoing growth concerns worldwide might continue boosting the US Dollar's strength. Such a trend could prompt GBP/USD to test support levels once again.
- The price action in GBP/USD reveals that it is positioned above key Simple Moving Averages (SMAs), including the 55, 100, and 200-day SMAs. These SMAs also exhibit positive gradients, reflecting a favorable trend.
- In the UK, the FTSE 100 Index showed a positive start, trading 0.22% higher in the morning.
| SMA (20) | Slightly Falling |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: The US Dollar staged a rebound in strength during the week, propelled by concerns over global economic growth. Sterling, however, found support around the 1.2680 mark, preventing a deeper decline. The US Dollar's potential for further appreciation due to ongoing global growth uncertainties might lead GBP/USD to test support levels again. Notably, GBP/USD's price action remains above key SMAs, including the 55, 100, and 200-day SMAs, which exhibit positive gradients. In the UK, the FTSE 100 Index initiated the week on a positive note, trading 0.22% higher.
GOLD
- Gold prices maintained their position near one-month lows throughout the week, reflecting deteriorating market sentiment and the influence of potential Federal Reserve rate hikes.
- The Federal Reserve continued to communicate a hawkish stance to the markets, leading to a strengthening of the US Dollar, which in turn impacted gold's performance.
- A significant remark came from Fed member Bowman, who indicated that the Federal Reserve might need to implement "additional rate increases" to address inflation and bring it back to the 2% target.
- Investors awaited the U.S. Consumer Price Index (CPI) inflation data scheduled for Thursday, a key economic indicator that could further influence gold's trajectory.
- As the week progressed, market participants were on the lookout for comments from other Federal Reserve officials, considering the mixed outlook that had been signaled earlier in the week regarding future rate hikes.
Closing statement: Gold prices maintained their stance near one-month lows as market sentiment worsened and the prospect of additional Federal Reserve rate hikes prompted investors to favour the US Dollar. The Federal Reserve's consistent hawkish message and Fed member Bowman's suggestion of potential further rate increases further fueled the Dollar's strength. All eyes were on the upcoming U.S. Consumer Price Index (CPI) inflation data, while comments from various Fed officials added to the overall market anticipation.
CRUDE OIL
- Crude oil prices experienced a slight decline in Asian trade during the week due to indications of a significant weekly increase in U.S. inventories, adding pressure to the market sentiment.
- Weak economic indicators from China, a major oil importer, continued to affect the demand outlook for crude oil, contributing to the cautious sentiment.
- Despite the recent decline, crude oil prices remained close to four-month highs, driven by expectations of tighter supplies this year, particularly due to substantial supply cuts by Saudi Arabia and Russia.
- Data from the American Petroleum Institute (API) revealed an unexpected growth of over 4 million barrels in U.S. crude inventories during the week to July 28, contrasting with forecasts for a draw of 0.2 million barrels. This followed a record draw of over 17 million barrels in the prior week.
- Investors awaited official inventory data from the Energy Information Administration (EIA) for further insights. The EIA data was expected to show a draw of 0.6 million barrels, which could impact market sentiment and crude oil prices.
| SMA (20) | Rising |
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| RSI (14) | Neutral | |||
| MACD (12, 26, 9) | Slightly Rising |
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Closing statement:Crude oil prices encountered a modest decline during the week, influenced by a notable inventory build in the U.S. and ongoing concerns about demand dynamics, particularly due to weak economic signals from China. Despite this, the market remained supported by the prospect of tighter oil supplies attributed to significant supply cuts by major producers. Investors closely monitored official inventory data to gain a clearer understanding of market conditions.
DAX
- European stock markets were poised to open higher in an effort to recover from recent losses. Investors sought to regain ground while keeping an eye on ongoing quarterly corporate earnings releases
- Germany, once a powerhouse driving the eurozone's growth, faced economic challenges. The country's economy contracted in the second quarter, reflecting difficulties within the region's economic engine.
- The Sentix economic index for Germany dropped to -30.7, a notable decrease from the previous -23.4 points. This decline underscored the growing concerns about Germany's economic health.
- The Sentix report provided a candid assessment, labeling Germany as "the sick man of the eurozone." This stark characterization highlighted the extent of the economic struggles faced by the largest economy in the region.
- Amid these economic challenges, the earnings season continued with Germany-based E.ON, Europe's largest energy company, scheduled to release its financial results. This added to the mix of factors influencing market sentiment.
| SMA (20) | Slightly Rising |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Falling |
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Closing statement: European stock markets aimed for recovery after recent losses, but concerns about Germany's economic contraction lingered, painting a challenging picture for the region. Amidst ongoing earnings reports, attention was focused on Germany's economic struggles and their potential impact on market dynamics.