EURUSD
- The recent weakness of the Euro against the US Dollar is primarily attributed to the significant strengthening of the US Dollar across various currency pairs.
- The EUR/USD recorded a consecutive second-day drop, reaching 1.0866. This level marked a 1.5-month low. The pair's decline was influenced by a risk-off sentiment prevailing in the market and the upward movement in US Treasury bond yields.
- Technically, the EUR/USD pair's sustained trading below the 200-SMA (Simple Moving Average) and the previous support line, which extended from late May, supported the bearish outlook. Additionally, the bearish signals from the MACD added weight to the potential for further downside movement.
- The analysis noted that US building permits data had mixed outcomes. While housing starts exceeded forecasts, permits fell short of estimates. This mixed data from the US housing sector could contribute to market uncertainties.
- The analysis suggested that the strong retail sales figures from the previous day, coupled with the current US economic data, could influence the Federal Reserve's decision-making process. The data pointing to a robust US economy might compel the Fed to consider maintaining higher interest rates for a longer period.
| SMA (20) | Falling |
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| RSI (14) | Neutral | ||
| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: The Euro's recent weakening against the US Dollar was influenced by the Dollar's strength, risk-off sentiment, and rising US Treasury bond yields. The pair's technical indicators aligned with a bearish outlook, supported by its trading below key moving averages and the MACD signals. Mixed US building permits data and strong retail sales figures could impact the Federal Reserve's rate decisions, underscoring the strength of the US economy.
GBPUSD
- The British Pound exhibited strength against the US Dollar on Wednesday, driven by the anticipation that the Bank of England (BoE) could raise interest rates in the near future, potentially as early as next month.
- The latest official inflation report played a role in boosting the Pound. Although the annualized Consumer Price Index (CPI) rise of 6.8% in July was lower than June's 7.9%, it matched market expectations. Importantly, it remained more than three times the BoE's target rate of 2%, which hasn't been achieved since 2021.
- The BoE's Monetary Policy Committee (MPC) has projected that inflation will decline to 4.9% by the end of the current year, based on their previous forecasts.
- The analysis noted that GBP/USD is trading well below the July highs reached a month earlier. Moreover, the pair has fallen below a significant trend line that had been established since the lows of September the previous year. This trend line breach could raise concerns among Sterling bulls.
- Despite a busy week for UK data, the Pound to Dollar pair is expected to be primarily influenced by economic events in the United States. However, attention might shift back to the Pound on Friday with the release of official retail sales numbers, shedding more light on the state of the UK's domestic economy.
| SMA (20) | Slightly Falling |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Neutral |
Closing statement: The British Pound gained ground against the US Dollar, driven by expectations of potential interest rate hikes by the Bank of England. The CPI report, although lower than the previous month, remained significantly above the BoE's target rate. Technical aspects were also highlighted, including GBP/USD's distance from previous highs and the breach of an important trend line. The Pound's performance is likely to be influenced by US economic events, with Friday's retail sales data potentially shifting focus back to the UK economy.
GOLD
- Gold prices stabilized in Asian trading on Thursday, attempting to recover after experiencing three consecutive days of losses. However, these attempts at recovery were hindered by recent hawkish signals from the Federal Reserve.
- Despite growing concerns over a potential economic slowdown in China, gold did not see a significant influx of safe haven demand. Instead, traders seemed to be favoring the dollar due to the expectation of higher yields.
- The Federal Open Market Committee (FOMC) meeting minutes from the previous night revealed a more hawkish stance among board members than what the market had anticipated. This added to the pressure on gold prices.
- The analysis pointed out that the messaging from various Fed speakers over the past week consistently emphasized a commitment to maintaining tight monetary policy for an extended period. This reinforced the market's perception of potential rate hikes in the future.
- Following the release of the FOMC minutes, the US dollar surged to nearly a two-month high. In addition, the yields on the benchmark 10-year Treasury notes reached their highest levels in almost 10 months, suggesting a strengthening US economic outlook.
Closing statement: Gold prices in Asian trade showed signs of stabilization after a string of losses. The Federal Reserve's hawkish signals, reflected in both FOMC minutes and consistent messaging from Fed speakers, contributed to the strengthening of the US dollar. Despite concerns about a potential economic slowdown in China, traders favoured the dollar due to the expectation of higher yields, which consequently dampened the appeal of gold.
CRUDE OIL
- Crude oil prices displayed a volatile pattern on Thursday after experiencing a downward trend over the past three sessions. The market sentiment remained negative due to concerns about slowing economic growth in China and potential additional interest rate hikes in the United States, which could negatively impact fuel demand in the two largest global economies.
- The analysis highlighted that the ongoing pullback in oil prices is the most significant correction witnessed during the current bullish phase, amounting to more than a 5% decline. Comparatively, the two preceding pullbacks registered around 4.5% declines before resuming the bullish trend. The current correction appears more stubborn and extended.
- On August 16, the Energy Information Administration (EIA) released its Weekly Petroleum Status Report, revealing a significant decline of 6 million barrels in crude inventories from the previous week. This reduction exceeded the consensus forecast of a 2.3-million-barrel decrease.
- The analysis noted that the United States continued to build its Strategic Petroleum Reserve, which increased from 347.8 million barrels to 348.4 million barrels. This activity added to the dynamics of oil demand and supply.
- The market was influenced by weak trade data from Japan, which raised concerns about a global economic slowdown. Japan's exports, particularly to China, contracted in July. This reinforced apprehensions about faltering demand in key economic regions.
| SMA (20) | Rising |
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| RSI (14) | Neutral | |||
| MACD (12, 26, 9) | Falling |
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Closing statement: Crude oil prices experienced a volatile session on Thursday, reflecting concerns about slowing economic growth in China and the potential for further interest rate hikes in the US, impacting fuel demand. The ongoing pullback in oil prices, the most significant during the current bullish phase, was noted, with this correction appearing more persistent. The recent EIA report indicating a substantial decline in crude inventories, along with the US activity in building the Strategic Petroleum Reserve, further influenced market dynamics. Weak trade data from Japan added to worries about a global economic slowdown and its impact on oil demand.
DAX
- Following Wednesday's trading session, Germany stocks exhibited a mixed performance. Gains were observed in sectors such as Consumer & Cyclical, Food & Beverages, and Software, driving shares higher. Conversely, losses were registered in sectors like Construction, Pharmaceuticals & Healthcare, and Media, causing shares to trend lower.
- The analysis noted that economic indicators emanating from the euro area served as a distraction for investors, temporarily diverting attention from the prevailing negative sentiment across Asian markets.
- The report highlighted that the Eurozone economy recorded a noteworthy expansion of 0.3% during the second quarter, following a stagnation in the preceding quarter. The year-over-year growth rate reached 0.6% compared to 1.1% in the first quarter, affirming earlier estimates.
- The analysis underscored that June's industrial production figures brought a sense of relief. Industrial production saw a rise of 0.5%, surpassing forecasts that had anticipated a decline of 0.1%. This improvement followed a 0.2% increase in May's industrial production.
- The assessment highlighted the ongoing significance of the Eurozone's economic performance. Attention was directed towards the release of Eurozone trade data for July. The data release was anticipated to be of particular interest against the backdrop of a weak global demand environment and concerns about China's economic challenges.
| SMA (20) | Slightly Falling |
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| RSI (14) | Neutral | |
| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: Germany's stock market exhibited mixed dynamics on Wednesday. Gains surfaced in sectors like Consumer & Cyclical, Food & Beverages, and Software, contrasted by declines in Construction, Pharmaceuticals & Healthcare, and Media sectors. Eurozone economic indicators briefly diverted attention from Asian market pessimism. The economy expanded in Q2, and June's industrial production surpassed forecasts. Focus lingered on July's Eurozone trade data amidst global demand and China's economic outlook concerns.