EURUSD
- EUR/USD Price Movement: EUR/USD retraces its recent losses from the previous session, trading around 1.0800 during the European hours on Friday.
- Technical Analysis: The analysis of the daily chart indicates that the pair is following the lower boundary of a descending channel, which suggests a reinforcement of the bearish trend.
- Fed's Rate Cut Indications: Chief Powell mentioned that the FOMC is moving closer to a potential rate cut, possibly in September.
- US Economic Data: On the US side, the ISM Manufacturing PMI eased to 46.8 in July, while weekly Initial Jobless Claims increased more than expected by 249K in the week to July 27.
- Eurozone Economic Activity: Adding to the view of the loss of momentum in activity in the euro area, the final HCOB Manufacturing PMI in Germany and the euro bloc remained well below the 50 threshold that separates expansion and contraction.
| SMA (20) | Slightly Rising |
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| RSI (14) | Falling |
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| MACD (12, 26, 9) | Falling |
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Closing statement: The EUR/USD pair is currently experiencing downward pressure as it trades around 1.0800. The technical analysis points to a continuation of the bearish trend, with the pair adhering to the lower boundary of a descending channel. The potential for a rate cut by the FOMC, as indicated by Chief Powell, adds to the complexity of the pair's outlook. US economic data shows signs of weakness, with a decline in the ISM Manufacturing PMI and a higher-than-expected increase in weekly Initial Jobless Claims. Concurrently, the euro area is witnessing a loss of momentum, as reflected in the sub-50 readings of the HCOB Manufacturing PMI in Germany and the broader euro bloc. These factors combined suggest that the EUR/USD might remain under pressure in the near term.
GBPUSD
- Current Trading Level: The GBP/USD pair trades around 1.2730 during the European session on Friday.
- BoE Governor's Comments: Bank of England Governor Andrew Bailey explained the decision to reduce the policy rate to 5% and addressed media questions. Bailey noted that the increase in the minimum wage has not been detrimental from their viewpoint.
- Inflation Outlook: The overall inflation trajectory in the UK, including upside risks, is now closer to the 2% target compared to the median forecast.
- USD Dynamics: The US Dollar (USD) may advance against its peers due to increased risk aversion. Recent manufacturing and labor market data have created a complex situation involving an economic slowdown in the United States.
- Upcoming US Data: Traders are likely to closely watch the upcoming July US Nonfarm Payrolls and Average Hourly Earnings data, set to be released later in the North American session, for insights into the US labor market.
| SMA (20) | Rising |
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| RSI (14) | Falling |
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| MACD (12, 26, 9) | Falling |
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Closing statement: Given the current economic indicators and central bank actions, GBP/USD is expected to remain under pressure. The dovish stance of the BoE, combined with potential strength in the USD due to risk aversion and critical upcoming US labour market data, suggests that the pair might experience further downside in the near term.
GOLD
- Current Trading Level: Gold price is gathering pace to resume the recent upside early Friday, following a flattish close on Thursday.
- Geopolitical Tensions: Risk-off flows remained in vogue, courtesy of the heightening Middle East tensions. New York Times reported that Iranian Supreme Leader Ali Khamenei has ordered a direct strike on Israel for the killing of Hamas chief Haniyeh.
- US Economic Concerns: Later in American trading, risk aversion intensified after the US ISM Manufacturing PMI showed further contraction and raised worries over the health of the US economy.
- Fed Policy Outlook: The US NFP report holds more significance this time around, especially after the US central bank tweaked its policy statement on Wednesday to say that it is "attentive to the risks to both sides of its dual mandate", rather than previously only noting its attention to inflation risks.
- Upcoming US Data: The Unemployment Rate is seen steadying at 4.1% while the annual Average Hourly Earnings are set to rise by 3.7% in July, following June’s 3.9% increase.
Closing statement: Given the current geopolitical tensions and concerns over the US economy, XAU/USD (Gold) is expected to continue its upward trajectory. The heightened risk aversion and significant upcoming US labour market data will likely keep the demand for gold strong as a safe-haven asset.
CRUDE OIL
- Current Trading Level: West Texas Intermediate (WTI) crude oil price inches higher to near $76.80 per barrel during Friday’s European session.
- Geopolitical Tensions: Markets are closely watching Iran's reaction to the assassination of Hamas leader Ismail Haniyeh. According to the New York Times, Haniyeh was killed in Tehran after attending the inauguration of Iran's new president.
- Economic Concerns: Weak Purchasing Managers Index (PMI) data from both the United States (US) and China are raising concerns about oil demand.
- Market Uncertainty: Oil traders face uncertainty as they navigate a complex situation involving an economic slowdown and increased expectations for a Federal Reserve rate cut.
- Upcoming US Data: Traders are closely watching the upcoming July US Nonfarm Payrolls and Average Hourly Earnings data.
| SMA (20) | Slightly Falling |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Falling |
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Closing statement: Considering the ongoing geopolitical tensions and weak economic data from major oil-consuming countries, the price of WTI crude oil is likely to remain volatile. However, any significant developments in US labour market data or changes in Federal Reserve policy could provide further direction for oil prices.
DAX
- German Manufacturing PMI: On Thursday, finalized German manufacturing PMI numbers drew investor interest. The HCOB Manufacturing PMI fell from 43.5 in June to 43.2 in July, though it was an improvement from the preliminary 42.6.
- US Jobless Claims: Continuing US jobless claims increased from 1,844k in the week ending July 13 to 1,877k in the week ending July 20. The higher claims fueled speculation about a possible US hard landing.
- FOMC Press Conference: The higher claims data followed Wednesday’s FOMC press conference, where Powell expressed concerns about further deterioration in the labor market.
- Corporate Earnings: On Friday, Daimler Truck Holding will release its earnings report. Weaker-than-expected results and a gloomier outlook may further impact auto stocks.
- US Jobs Report: The crucial US Jobs Report will put the US economy under the spotlight. Economists forecast average hourly earnings to increase by 3.7% year-on- year in July, down from 3.9% in June.
| SMA (20) | Slightly Falling |
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| RSI (14) | Falling |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: : The DAX index is likely to remain sensitive to upcoming economic data and corporate earnings, particularly from major companies like Daimler Truck Holding. Any significant developments in the US labour market or further signals from the Federal Reserve could also impact market sentiment and influence future movements in the DAX.