EURUSD
- The U.S. Bureau of Labor Statistics will release its July nonfarm payrolls (NFP) report today, which is highly anticipated by market participants.
- The upcoming report's strength or weakness compared to expectations will be a critical determinant in shaping the trajectory of the U.S. dollar, significantly influencing the outlook for EUR/USD.
- The Euro zone witnessed a slowdown in business activity, reflected in both manufacturing and services sectors as Services PMI fell short of estimates.
- HCOB's final Composite Purchasing Managers' Index (PMI), a crucial indicator of overall economic health, registered an 8-month low, indicating economic challenges in the region.
- Given the significance of the NFP report and the Euro zone's economic performance traders and investors are exercising caution, awaiting crucial insights into the USD's direction and its potential impact on EUR/USD.
| SMA (20) | Slightly Falling |
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| RSI (14) | Neutral | ||
| MACD (12, 26, 9) | Falling |
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Closing statement: Today's NFP report release holds paramount importance for EUR/USD, as it will shape the trajectory of the U.S. dollar and dictate the pair's outlook. The recent slowdown in Euro zone business activity adds to the market's cautious sentiment, making the NFP report's impact even more critical for traders and investors to make informed decisions.
GBPUSD
- The Bank of England (BoE) raised interest rates by 0.25% to a range of 5% to 5.25% on Thursday, marking a shift from the 0.5% hike implemented in June.
- While inflation remains above the 2% target, the BoE expects it to decrease significantly to around 5% by the end of the year.
- Despite leaving the door open to more rate increases and warning of sustained high rates, there are signs of division among BoE monetary policy committee members. Market participants are less certain about the number of future rate hikes.
- Financial markets anticipate the BoE's terminal rate to be around 5.75%, given the relative moderation of price pressures compared to other regions.
- Traders and economists are closely monitoring the upcoming Non-Farm Payrolls report, expecting steady job growth near 200K, while anticipating a slowdown in average hourly earnings to 0.3% month-on-month.
| SMA (20) | Slightly Falling |
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| RSI (14) | Neutral | ||||
| MACD (12, 26, 9) | Falling |
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Closing statement: The recent BoE interest rate hike has caused uncertainty in the GBP/USD market, as the central bank navigates inflation concerns. Despite optimism about inflation easing, divisions among BoE committee members have led to uncertainty about the number of future rate hikes. Meanwhile, the market's focus remains on the upcoming Non-Farm Payrolls report, which could further impact the trajectory of the US dollar and influence GBP/USD's movements.
GOLD
- Gold prices remained relatively stable on Friday as traders awaited key labor data that could influence U.S. monetary policy. Copper, on the other hand, received some buying interest in anticipation of further cues on Chinese stimulus measures.
- Resilience in the U.S. labor market could give the Federal Reserve more reasons to continue hiking interest rates as part of its efforts to curb inflation.
- June's nonfarm payrolls data falling below expectations raised hopes that the Fed's room for further rate hikes could be limited. A similar trend in July could lead to expectations that the Fed is nearing the end of its rate hike cycle, potentially weakening the U.S. dollar, and benefiting gold as a safe-haven asset.
- Escalating tensions between the U.S. and China may put pressure on the U.S. dolla and favor gold as a traditional safe-haven asset. President Joe Biden is reportedly considering limiting outbound U.S. investment in China, which could lead to furthe restrictions in the future.
- The ongoing US-China tensions and potential investment restrictions could add to market uncertainty, prompting investors to seek refuge in safe-haven assets like gold.
Closing statement: Gold prices remained stable ahead of crucial labour data that could impact U.S. monetary policy and influence the dollar's strength. Positive labour market indicators may provide further impetus for the Federal Reserve to continue raising interest rates. However, any signs of a slowdown in job growth could signal a potential end to the rate hike cycle, supporting gold as a safe-haven asset. Additionally, escalating tensions between the U.S. and China may exert pressure on the U.S. dollar and bolster gold's appeal as a traditional safe-haven asset amid market uncertainty.
CRUDE OIL
- Crude oil prices rose on Friday, heading for a sixth consecutive positive week, as major producers Saudi Arabia and Russia extended supply cuts. However, gains were tempered ahead of crucial U.S. payrolls data.
- Saudi Arabia and Russia, the world's biggest oil producers, announced that they will extend their supply cuts until the end of December and possibly beyond. Saudi Arabia will maintain a 1 million barrels per day (bpd) cut, while Russia will reduce oil exports by 300,000 bpd.
- The announcement of supply cuts came just before an OPEC+ meeting on Friday. Both Saudi Arabia and Russia hinted at the possibility of implementing deeper cuts to support higher oil prices.
- The extended supply cuts helped crude oil prices recover from earlier losses during the week. Market sentiment suggests that the tightening of supplies is likely to offset potential declines in demand amid weak global economic conditions.
- With major producers continuing to curtail production, traders remain optimistic about oil prices, anticipating that reduced supplies will balance out any demand challenges amid the uncertain global economic climate.
| SMA (20) | Rising |
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| RSI (14) | Neutral | |||
| MACD (12, 26, 9) | Neutral |
Closing statement: Crude oil prices surged as Saudi Arabia and Russia, the key players in the oil market, decided to extend supply cuts until the end of the year and possibly beyond. This move boosted market sentiment and helped oil prices recover from earlier losses. The ongoing efforts to restrict production are expected to keep crude oil prices well-supported in the coming weeks, as traders believe that tightening supplies will counterbalance any potential weakening in demand amid the prevailing global economic challenges.
DAX
- European stock markets are anticipated to open higher on Friday as investors process earnings reports from tech giants Apple and Amazon and await the release of the highly anticipated U.S. nonfarm payrolls report.
- The DAX futures contract in Germany traded 0.34% higher, indicating a positive start for the German stock market. However, CAC 40 futures in France fell 0.72%, and FTSE 100 futures in the U.K. traded flat, reflecting mixed sentiment in the region.
- After reaching a new intraday high on Monday, the DAX index experienced a pullback, with negative divergence observed on daily stochastics. Currently, the index is testing the 100-day moving average, a crucial technical level.
- German factory orders demonstrated robust growth, climbing by 7% in June, surpassing expectations of a 2.0% drop. This positive economic data may have implications for the DAX's performance.
- Investors will closely monitor construction PMI data from the eurozone, U.K., and Germany, as well as industrial production figures from France, Italy, and Spain. Additionally, eurozone retail sales data will be of interest to gauge economic trends.
| 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: The DAX index is expected to open higher as investors digest earnings reports from major tech companies and await the U.S. nonfarm payrolls report. The index experienced a pullback from a recent high and is currently testing the 100-day moving average. Positive economic data, such as the strong growth in German factory orders, may further influence market sentiment. Traders will closely follow upcoming data releases, including construction PMI and industrial production figures, for further insights into the European economic landscape.