EURUSD
- Current Trading: The EUR/USD pair is trading higher around the 1.1100 mark in early Monday trading, benefiting from a weaker US Dollar as market sentiment tilts toward risk-on following recent data releases.
- ECB's Uncertainty: On the policy front, European Central Bank (ECB) Governing Council member and Central Bank of Ireland Governor Gabriel Makhlouf reiterated on Friday that the ECB is still operating in a "highly uncertain environment." He emphasized that the central bank would rely on incoming data to inform future decisions regarding monetary policy, signalling a cautious approach.
- Anticipated ECB Rate Cut: Research from Rabobank highlighted that the ECB announced its second rate cut of the current cycle last week. Another cut is expected before the end of the year, as inflation pressures ease and economic growth in the Eurozone shows signs of slowing.
- Revised Growth Projections: In line with this dovish stance, the ECB’s latest staff projections reflect a downward revision in Eurozone growth, further supporting the case for continued monetary easing. Weaker economic prospects have tempered the Euro’s bullish momentum but have been partially offset by the ongoing depreciation of the US Dollar.
- Fed's Rate Path: Investors will closely watch the US Federal Reserve (Fed) policy meeting scheduled for Wednesday. Market participants are looking for guidance on how aggressively the Fed plans to reduce interest rates, especially in the wake of recent US inflation and labour market data. This will be key for the future direction of the EUR/USD pair.
| SMA (20) | 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 EUR/USD pair could remain supported near the 1.1100 level if the US Dollar continues to weaken, especially ahead of the Fed meeting. However, the Euro may face challenges if further ECB rate cuts and slower growth weigh on sentiment. The pair will likely remain sensitive to the Fed’s policy announcement and any new guidance on the future path of US interest rates.
GBPUSD
- Current Trading: The GBP/USD pair experiences some dip-buying at the start of the new week, trading in relatively thin conditions due to holidays in China and Japan. Despite a quiet session, the pair finds some support as buyers take advantage of recent dips.
- USD Weakness Continues: The US Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, hovers near its year-to-date (YTD) low, last seen in August. The persistent weakness in the USD is driven by expectations of aggressive easing from the Federal Reserve (Fed), with markets pricing in a more dovish outlook for the Fed compared to other central banks.
- BoE Expectations: Meanwhile, the British Pound (GBP) benefits from the outlook that the Bank of England (BoE) will be less aggressive in cutting rates compared to the Fed over the next year. While both central banks are expected to lower rates, the market perceives that the BoE will maintain a tighter policy, supporting the GBP relative to the USD.
- BoE Rate Cut Bets: However, markets continue to bet on more BoE rate cuts as recent UK data points to a weakening economy. Last week’s data revealed a slowdown in wage growth and a flat GDP print for the second consecutive month in July, fuelling speculation that the BoE may need to cut rates to support growth.
- Central Bank Meetings Ahead: Traders are now awaiting key central bank decisions this week. The Fed is set to announce its rate decision after its two-day policy meeting on Wednesday, followed by the BoE meeting on Thursday. These events will likely provide more clarity on the policy paths for both central banks and set the tone for the GBP/USD pair’s next move.
| SMA (20) | Rising |
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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 GBP/USD pair is likely to remain influenced by central bank developments, particularly the outcome of the Fed and BoE meetings this week. If the BoE is seen as less dovish than the Fed, the GBP could remain supported. However, further signs of economic weakness in the UK could limit the Pound's upside, especially if the BoE signals more aggressive easing measures.
GOLD
- New All-Time High: The gold price continues its upward momentum for the third consecutive day, climbing to a fresh all-time peak of $2,589 during Monday’s European session. This marks a significant recovery for the precious metal, which had previously seen a negative stretch over the last six sessions.
- Fed Rate Cut Bets: Investors are increasingly positioning for an oversized interest rate cut by the Federal Reserve (Fed), driven by signs of subsiding US inflation. This prospect of lower interest rates continues to support the non-yielding gold, as the opportunity cost of holding the metal diminishes in a lower-rate environment.
- Geopolitical Risks: Safe-haven demand for gold received an additional boost from reports of a second assassination attempt on Republican presidential candidate Donald Trump at his Florida golf club on Sunday. These developments, combined with the ongoing Russia-Ukraine war and escalating tensions in the Middle East, are pushing investors towards the relative safety of gold bullion.
- Market Caution: Despite the bullish factors, some investors are moving to the sidelines ahead of this week’s key central bank events, particularly the outcome of the Federal Open Market Committee (FOMC) meeting on Wednesday. The FOMC decision will provide further clarity on the Fed’s monetary policy trajectory, which could have significant implications for the US Dollar and gold.
Closing statement: With gold prices trading near record highs, the XAU/USD outlook remains positive in the short term, especially amid heightened geopolitical risks and expectations of Fed rate cuts. However, the upcoming FOMC meeting will be crucial in determining the next phase for gold prices, as any surprises in the Fed’s communication could trigger sharp movements in the US Dollar and, by extension, gold.
CRUDE OIL
- WTI Crude Oil Prices: West Texas Intermediate (WTI) crude oil prices faced renewed selling during Monday’s European session, trading just below the $68.00 mark, marking a daily loss of over 0.60%. The pressure comes amid growing concerns over slowing global demand.
- Weak Chinese Data: A string of disappointing economic data out of China, the world's largest oil importer, over the weekend has reignited fears about slowing fuel demand. The economic slowdown in China continues to be a significant factor weighing on crude oil prices, adding to an already cautious outlook for global demand.
- OPEC and IEA Demand Forecasts: The Organization of Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) recently lowered their demand growth forecasts, which has further contributed to the bearish tone surrounding crude oil. These revisions reflect concerns about slower economic activity, particularly in major economies like China, and continue to drive selling pressure.
- US Dollar Weakness: On the other hand, the US Dollar (USD) remains under pressure due to expectations of an oversized interest rate cut by the Federal Reserve (Fed). The USD weakness helps limit the downside for oil prices, as a weaker dollar typically makes commodities like oil cheaper for holders of other currencies, thus supporting demand.
- Improved Demand Worldwide: According to Bloomberg, there are signs of increasing oil demand from countries like India, which could provide some relief to the crude oil market. Additionally, the Energy Information Administration (EIA) has projected that global oil consumption will rise to 101.9 million barrels per day (b/d), providing a more positive long-term outlook for the market.
| SMA (20) | Falling |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Falling |
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Closing statement: While WTI crude oil prices are currently under pressure due to concerns over Chinese demand and downward revisions to global demand growth by key agencies, the weakness in the US Dollar is offering some relief. India’s growing demand could also provide a tailwind for prices, but market participants will likely remain cautious amid ongoing global economic concerns. Traders will keep a close eye on any further economic data from major economies and central bank decisions, particularly from the Fed, for cues on oil price direction.
DAX
- Market Movers Drive Gains: On Monday, the DAX saw significant movements driven by standout performances from key stocks. Zalando SE, the online retailer, surged by 10.30%, while Siemens Energy rallied 9.44% as market sentiment improved on the back of growing expectations of a more dovish Federal Reserve (Fed) rate path. Auto stocks also contributed to the index’s gains, buoyed by the prospect of lower borrowing costs, which could benefit the capital-intensive automotive sector.
- Eurozone Industrial Production Weakness: Eurozone industrial production data released on Friday showed a 0.3% decline for July, following stagnant growth in June. This has bolstered expectations for a December rate cut by the European Central Bank (ECB), as the weak industrial data suggests that the region’s economy may require further monetary support to spur growth.
- Eurozone Trade Data: Investors will closely watch the release of Eurozone trade data on Monday, September 16. Economists are forecasting the trade surplus to shrink from €22.3 billion in June to €14.9 billion in July, signaling potential challenges for the region’s export-driven economy.
- US Consumer Sentiment: In the US, the Michigan Consumer Sentiment Index climbed from 67.9 in August to 69.0 in September, suggesting that rising consumer confidence could support increased consumer spending. Given that consumer spending accounts for over 60% of US GDP, this could have positive spillover effects on global markets, including the DAX.
- NY Empire State Manufacturing Index: Looking ahead to Monday, the release of the NY Empire State Manufacturing Index will be another critical data point for investors. Economists expect a slight improvement in the index, with forecasts calling for a move from -4.7 in August to -3.9% in September, which may offer some optimism about the state of US manufacturing.
| SMA (20) | Slightly Rising |
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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 DAX is poised to continue benefiting from positive investor sentiment around the prospect of lower interest rates from the Fed and the ECB. However, the market will be sensitive to upcoming data releases, particularly from the Eurozone and US, as these will provide further clues on the economic outlook and the likelihood of rate cuts. Traders will keep a close watch on Eurozone trade data and the NY Empire State Manufacturing Index next week for additional market-moving insights.