EURUSD
- Current Price Action: The EUR/USD pair is trading positively for the third consecutive day, hovering near 1.1165 during European trading on Friday. The Euro's strength comes amid a softer US Dollar and uncertainty regarding the Federal Reserve's future interest rate cuts.
- FOMC Outlook: After the FOMC event earlier this week, uncertainty looms over whether the September interest rate cut will be repeated. The Fed's updated dot plot hints at an additional 50 basis points of rate cuts for the remainder of the year. This dovish tone has weighed on the USD, supporting the EUR/USD pair.
- ECB Stance: On the other hand, ECB officials remain cautious about future rate cuts. Bundesbank President Joachim Nagel emphasized on Wednesday that inflation in the Eurozone remains above acceptable levels, suggesting that further easing may not be imminent.
- Lagarde’s statement: ECB President Christine Lagarde noted that the waning impact of current monetary policy restrictions should benefit the economy, and that inflation is expected to return to 2% by 2025. However, she maintained a cautious tone regarding additional monetary actions.
- Key Events: The next major event for EUR/USD traders will be ECB President Christine Lagarde's scheduled appearance at the Michel Camdessus Central Banking Lecture in Washington DC on Friday, where her remarks could provide more clarity on the ECB's outlook.
| SMA (20) | Rising |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: The EUR/USD pair could maintain its upward bias if the Fed's dovish stance continues to pressure the US Dollar. However, a cautious ECB and concerns over persistent inflation in the Eurozone could limit the Euro's gains. Traders will be closely watching Lagarde's speech for any signs of future ECB policy shifts, which could influence the pair’s direction in the short term.
GBPUSD
- Current Price Action: The GBP/USD pair is trading with a positive bias for the third consecutive day, staying comfortably above the 1.3300 level during Friday's European morning session. This sustained strength comes on the back of support for the British Pound and weakness in the US Dollar.
- Bank of England (BoE) Decision: The British Pound (GBP) continues to benefit from the Bank of England's decision on Thursday to leave interest rates unchanged, while also announcing plans to reduce its stock of government bonds by £100 billion over the next 12 months.
- MPC’s Stance: One Monetary Policy Committee (MPC) member, Swati Dhingra, voted for a rate cut for the second time, though the majority supported maintaining the current interest rate levels.
- UK Retail Sales Data: On the economic front, UK Retail Sales figures for August showed stronger-than-expected growth, lending additional support to the British Pound and helping to maintain the positive sentiment surrounding the currency pair.
- USD Weakness: The USD remains under pressure, trading near its lowest level since July 2023. This weakness is fuelled by ongoing market speculation that the Federal Reserve will continue its rate-cutting cycle, further supporting the GBP/USD pair.
| SMA (20) | Rising |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: The GBP/USD pair could see further upside as long as the Fed's dovish tone continues to suppress the US Dollar, while expectations of a stable BoE policy provide support for the GBP. However, any signs of a weaker UK economic outlook or hints of a more aggressive Fed policy shift could temper the pair’s bullish momentum. Traders will keep an eye on upcoming Fed speeches and UK economic data for further guidance.
GOLD
- Current Price Action: Gold is attempting to build on Thursday’s rebound, consolidating its weekly gains in early Friday trading. The continued weakness in the US Dollar is providing support for the XAU/USD pair, maintaining its bullish momentum.
- PBOC and Chinese Economy: The People’s Bank of China (PBOC) kept the mortgage lending rate unchanged, disappointing market expectations for a rate cut amid concerns of an economic slowdown. This decision had limited immediate impact on gold, but the underlying concerns about Chinese economic growth could potentially support gold as a safe-haven asset in the longer term.
- US Economic Data: Despite US Dollar bulls being unimpressed, US Initial Jobless Claims data showed a drop to 219K in the week ending September 14, the lowest level since May, signaling continued labor market resilience. However, the USD continues to weaken due to overall market expectations of future rate cuts from the Federal Reserve, benefiting gold prices.
- Geopolitical Risks: Renewed fears of an escalation in Middle East tensions continue to bolster gold as a safe-haven asset. Any significant geopolitical developments could further support demand for gold.
- Gold Demand from CBs: Several Asian central banks and Russia are reportedly increasing their gold reserves to reduce reliance on the USD. This trend supports the long-term bullish outlook for gold as demand for the precious metal remains solid among global central banks.
Closing statement: The XAU/USD pair could continue to see further gains if USD weakness persists, and geopolitical risks remain elevated. The demand from central banks also strengthens the bullish case for gold. However, any unexpected improvements in the US Dollar or Chinese economic data could limit the upside for gold in the near term. Traders will closely watch developments in the global economy and geopolitical events for potential catalysts.
CRUDE OIL
- Current Price Action: West Texas Intermediate (WTI) crude oil is trading around $71.00 per barrel on Friday, experiencing a slight dip due to profit-taking after recent gains.
- Geopolitical Tensions: The ongoing escalation of tensions in the Middle East, highlighted by Israeli airstrikes on Hezbollah positions in southern Lebanon, continues to provide a degree of support to oil prices. Any further escalation in the region could lead to supply concerns, thus potentially limiting downside risks for oil.
- US Crude Stockpiles: The US Energy Information Administration (EIA) reported a 1.63 million barrel decline in crude oil inventories for the week ending September 13. This larger-than-expected drawdown in stockpiles supports the outlook for crude oil prices in the near term as supply tightens.
- Chinese Economic Data: Weaker-than-expected data from China, the world's second-largest oil consumer, continues to pose a risk to oil prices. Industrial Production growth in China slowed to a five-month low in August, and Retail Sales also weakened, signaling concerns about future oil demand in the region and capping potential gains for crude prices.
- US Economic Outlook: The prospect of lower borrowing costs in the United States, following the recent rate cuts, may enhance the economic outlook for the world's largest oil consumer. This could support demand for crude oil, providing a potential offset to weaker demand expectations from China.
| SMA (20) | Falling |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: While geopolitical risks and falling US crude inventories offer support to WTI prices, concerns over Chinese economic slowdown may limit significant upside. Traders will monitor developments in Middle Eastern tensions and economic data from key oil-consuming nations, particularly the US and China, for further direction. WTI could see continued volatility in the near term, with upside potential if geopolitical risks intensify or economic data surprises to the upside.
DAX
- Current Price Action: The DAX index surged to a record high of over 19,000 on Thursday, driven by strong performances in tech and auto stocks, and bolstered by optimism surrounding a soft landing for the US economy.
- Producer Price Data: According to Destatis (Germany's Federal Statistical Office), producer prices in August 2024 increased by 0.2% compared to July 2024. While the rise is modest, it reflects continued pricing pressure in the German economy, which could influence corporate profitability in DAX-listed companies.
- ECB President Speech: Later Friday, ECB President Christine Lagarde is set to speak. Her insights into the ECB's monetary policy outlook and the broader economic environment in the eurozone may significantly influence investor sentiment and demand for DAX-listed stocks. Market participants will be keen to gauge the ECB's stance on inflation and the potential for further rate cuts.
- US Fed Insights: Philly Fed President Patrick Harker is also scheduled to speak on Friday. His comments on the US economic outlook, the labor market, and the future of the Fed's rate path will be closely monitored by global investors. Any dovish signals could further support risk appetite and potentially drive DAX higher.
- German Economic Outlook: The outlook for the German economy remains sluggish, with growth not expected to resume until at least the end of the year. A Bloomberg survey of experts predicts stagnation for the three months through September, a downgrade from earlier forecasts of 0.2% growth. This stagnation could dampen enthusiasm for DAX-listed stocks, particularly in more cyclical sectors.
| SMA (20) | Rising |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: The DAX is riding high on tech and auto stock gains, with central bank policy and economic data expected to play a critical role in determining the next move. Investors will be closely watching Christine Lagarde's speech and US Fed commentary for guidance on interest rate paths. Geopolitical and macroeconomic factors, particularly the sluggish German economy, could weigh on the index in the longer term, though in the near term, sentiment remains positive.