EURUSD
- The EUR/USD pair advanced on Wednesday, driven by the strength of the Euro across various currency pairs. Market participants were in anticipation of significant US inflation data.
- The Euro showcased notable outperformance, buoyed by Italy's decision to partially reverse a windfall tax imposed on the banking sector. This move contributed to a rebound in banking stocks.
- Despite recent gains, the Euro remained approximately 2.7% below its July peak, reflecting a short-term downtrend that had persisted since the middle of the previous month.
- The EUR/USD displayed a clash between bullish and bearish sentiment as the exchange rate lingered near the resistance level of 1.0980. This dynamic indicated uncertainty in the market.
- The Euro's behavior was cautious ahead of the European Central Bank's monthly Economic Bulletin and the release of US inflation data in the form of the Consumer Price Index (CPI) for July. Both events were poised to influence the currency pair's movement.
| SMA (20) | Slightly Falling |
|
|
| RSI (14) | Slightly Rising |
|
|
| MACD (12, 26, 9) | Slightly Falling |
|
Closing statement: The EUR/USD pair gained ground propelled by Euro strength and the partial reversal of a banking sector tax in Italy. However, the pair continued to grapple with a short-term downtrend and uncertainty around key upcoming events, including the ECB Economic Bulletin and the US CPI data release.
GBPUSD
- GBP/USD experienced minimal movement during the mid-week, as the British Pound lacked significant domestic drivers. The trading session concluded with the pair remaining relatively unchanged against the United States Dollar.
- Market attention was predominantly directed towards Thursday's impending inflation figures from the United States, holding sway over Sterling's performance. The interplay between developments in EUR/USD also played a crucial role in GBP/USD movement.
- With the recent Bank of England interest-rate decision already affecting the Pound, the UK economic calendar offered limited prospects for impactful events, save for upcoming growth figures scheduled for Friday.
- GBP/USD underwent a substantial decline since the middle of July. The United Kingdom's persistent and elevated inflation compared to other developed economies has contributed to this downward trend.
- The dollar index and dollar index futures showed steadiness during Asian trade, recording a gain of about 0.5% for the week, influencing the broader trading dynamics of GBP/USD.
| SMA (20) | Slightly Falling |
|
||
| RSI (14) | Slightly Rising |
|
||
| MACD (12, 26, 9) | Falling |
|
|
Closing statement: GBP/USD exhibited relatively flat trading during the mid-week, with attention shifting towards US inflation data. The aftermath of the recent Bank of England decision, coupled with the United Kingdom's distinct inflation trends, has contributed to the pair's recent decline.
GOLD
- Gold prices remained close to one-month lows on Thursday, while copper prices found stability after significant losses. Market participants adopted a cautious stance ahead of the impending U.S. inflation data set to be released later in the day.
- The market's attention was centered on the Consumer Price Index (CPI) inflation data from the United States, slated for release. The CPI for July was expected to show a slight increase from the previous month, possibly prompting the Federal Reserve to adopt a more hawkish stance.
- Any indications of persistent inflationary pressures would provide the Federal Reserve with added rationale to maintain high interest rates and a tight monetary policy. Such a stance could negatively impact non-yielding assets like gold.
- Anticipations of an elevated CPI reading contributed to the dollar's strength, positioning it as a favored safe haven asset over gold. The dollar's appeal in uncertain times can exert downward pressure on gold prices.
- Recent calls from some Fed officials for additional interest rate hikes, citing ongoing inflationary concerns, added to the complex environment. The Federal Reserve's stated intention to potentially raise rates further this year reinforced the overarching impact of inflation on monetary policy decisions.
Closing statement: Gold prices remained at one-month lows, with market focus squarely on the impending U.S. CPI inflation data release. The potential implications of persistent inflation for Federal Reserve policy decisions, coupled with the dollar's safe haven allure, played a significant role in shaping the direction of gold prices.
CRUDE OIL
- Crude oil prices experienced a slight decline on Thursday, stepping back from their multi-month highs. Traders adopted a cautious approach as they awaited the release of significant U.S. inflation data later in the day. Persistent concerns regarding sluggish demand from China further impacted market sentiment.
- The anticipation of high inflation levels potentially strengthening the Federal Reserve's hawkish stance added to the caution. This scenario could lead to economic challenges in the coming months, potentially weighing on oil demand.
- A series of discouraging economic indicators from China intensified apprehensions about the pace of demand recovery in the world's largest oil importer. These concerns cast doubt on the trajectory of future oil consumption.
- China's oil imports in July dropped to their second-lowest level this year, as the momentum of the post-COVID economic recovery subsided. This decline in oil imports signaled challenges to the pace of demand revival in the country.
- Despite the recent retreat, crude oil remained within an ascending trend channel. This upward trajectory followed its breakthrough of various resistance levels in recent trading sessions.
| SMA (20) | Rising |
|
|
|
| RSI (14) | Slightly Rising |
|
||
| MACD (12, 26, 9) | Rising |
|
|
Closing statement:Crude oil prices saw a minor dip from recent multi-month highs as traders exercised caution before the release of pivotal U.S. inflation data. The interconnected dynamics of inflation's impact on the Federal Reserve's policies, coupled with concerns about China's demand, continued to mold the oil market's landscape. Amidst these factors, the overall trajectory of crude oil remained within an ascending trend channel.
DAX
- Germany's stock market witnessed gains after the closing bell on Wednesday, propelled by positive performance in sectors like Telecoms, Financial Services, and Food & Beverages. This sector-led upward movement contributed to the overall rise in shares.
- The DAX volatility index, reflecting the implied volatility of DAX options, experienced a decrease of 2.29%, reaching a value of 18.35. This reduction indicated a relative stabilization in market sentiment.
- European stock markets were poised to open higher on Thursday as investors awaited the release of a crucial U.S. inflation report. The impending data had a significant influence on market expectations and behavior.
- The DAX futures contract in Germany demonstrated a positive trend by trading 0.32% higher. Similarly, CAC 40 futures in France surged by 0.72%, while the FTSE 100 futures contract in the U.K. maintained a stable position.
- The ongoing earnings season continued to influence market dynamics. Siemens, a German engineering group, reported third-quarter profit figures that fell below expectations. However, the company highlighted a "normalization in demand," with a particular focus on improvements in demand from China.
| SMA (20) | Slightly Rising |
| |
| RSI (14) | Slightly Rising |
| |
| MACD (12, 26, 9) | Falling |
|
|
Closing statement: Germany's stock market displayed resilience, with sector-led gains contributing to positive sentiment. The DAX volatility index indicated a decrease in implied market volatility, while the anticipation of a key U.S. inflation reading shaped investor attitudes. Amidst this landscape, the earnings season remained a driving factor, with Siemens' report highlighting trends in demand normalization, especially in China.