EURUSD
- EUR/USD Recovery: On Tuesday, the EUR/USD pair rebounded from bearish sentiment, making an unsuccessful attempt to break the 1.1200 mark. This recovery indicates a shift in market sentiment, but the pair is facing resistance at this critical psychological level.
- ECB Rate Cut Speculation: The Euro remains vulnerable due to expectations of further interest rate cuts by the European Central Bank (ECB). Any additional signs of economic weakness in the Eurozone could limit the EUR/USD upside. Continued dovish outlooks from ECB policymakers contribute to this cautious stance.
- Knot's Remarks: On Tuesday, ECB Governing Council member Klaas Knot reaffirmed that the central bank would continue cutting rates at least through the first half of 2025, aiming to bring rates down to between 2% and 3%. This forward guidance reinforces the dovish expectations surrounding the ECB's monetary policy, further capping the potential for the Euro to appreciate significantly.
- Muller's Caution: ECB policymaker Madis Muller added to the uncertainty, stating that another rate cut in November remains a possibility. However, he emphasized that policymakers may lack sufficient data on the economy's performance to make clear decisions. The economic data in the coming weeks will play a critical role in determining the ECB's next move.
- Upcoming Data: Investors will closely watch France’s Consumer Confidence and US New Home Sales data, both set to be released on Wednesday. These figures could provide additional insight into the health of the Eurozone and US economies, potentially influencing the EUR/USD pair. Additionally, remarks from Fed Governor Adriana Kugler may offer more clues on the Federal Reserve's stance on interest rates.
| SMA (20) | Rising |
|
|
| RSI (14) | Rising |
|
|
| MACD (12, 26, 9) | Slightly Rising |
|
Closing statement: The EUR/USD remains under pressure due to the likelihood of further ECB rate cuts and signs of a struggling Eurozone economy. While the pair has made some gains, it faces significant resistance at 1.1200. Traders will closely monitor upcoming economic data and central bank speeches for further direction. Any hawkish signals from the Fed or weaker-than-expected Eurozone data could drive the EUR/USD lower in the near term.
GBPUSD
- GBP/USD Rally: The GBP/USD pair continued its rally on Tuesday, climbing above the 1.3400 handle to reach fresh 30-month highs. This surge was largely driven by broad-based weakness in the US Dollar (USD), as markets continued to digest the implications of recent dovish signals from the Federal Reserve (Fed).
- BoE's Dovish Remarks: Despite the Pound Sterling's (GBP) gains, Bank of England (BoE) Governor Andrew Bailey's dovish remarks added a layer of caution to the outlook. Bailey stated he was "very encouraged" by the downward trend in UK inflation and suggested that the future path for BoE interest rates would likely be gradual and downwards. This indicates that the BoE may not raise rates aggressively soon, which could weigh on the Pound if market expectations shift toward looser policy.
- Fed Rate Cut Expectations: According to the CME Group's FedWatch Tool, markets are currently pricing in a 75% chance of a 50-basis point rate cut by the Federal Reserve in November. This dovish outlook from the Fed continues to pressure the USD, which is a key factor supporting the ongoing bullish momentum for GBP/USD.
- US Economic Data: Weaker-than-expected US macroeconomic data released on Tuesday also contributed to the USD's underperformance. The disappointing data, coupled with a risk-on market environment, has further eroded demand for the safe- haven Dollar, validating the positive near-term outlook for the GBP/USD pair.
- BoE MPC Member Speech: Later Tuesday, a scheduled speech by BoE Monetary Policy Committee (MPC) Member Megan Greene could provide additional insights into the BoE's monetary policy outlook. Traders will be watching closely for any comments that might influence the GBP and add to the momentum driving the GBP/USD pair.
| SMA (20) | Rising |
|
|
| RSI (14) | Rising |
|
|
| MACD (12, 26, 9) | Rising |
|
|
Closing statement: The GBP/USD pair remains bullish, supported by a combination of USD weakness and continued positive sentiment around the Pound Sterling. However, dovish signals from the BoE could temper gains if the market begins to price in a more gradual path for UK rate cuts. Attention will remain focused on upcoming central bank commentary and key economic data releases that may influence the pair’s direction.
GOLD
- Gold Hits Record High: Gold prices surged to the $2,670 level early Wednesday, marking yet another record high. This rally comes as global risk sentiment improves, and gold continues to benefit from both safe-haven demand and a weakening US Dollar (USD).
- Boost from China: Risk appetite in Asian markets received a fresh boost after the People’s Bank of China (PBOC) slashed its one-year Medium-term Lending Facility (MLF) rate from 2.30% to 2.0% on Thursday. This move, aimed at supporting China’s weakening economy, has fueled a global risk-on sentiment, which indirectly supports gold prices as investors look for stable assets.
- Fed Rate Cut Expectations: Another factor supporting gold is the growing expectation that the US Federal Reserve (Fed) will implement a 50-basis point rate cut in November. The likelihood of lower interest rates is weighing on the USD, making gold, which is priced in US Dollars, more attractive to investors globally.
- Weak US Economic Data: The CB Consumer Confidence Index fell sharply to 98.7 in September, down from an upwardly revised 105.6 in August. This was the largest drop in the index since August 2021, further reflecting growing concerns about the state of the US economy. Additionally, the Richmond Fed index hit a 52-month low of -21 in September, reinforcing the notion that the US economy may be struggling.
- Upcoming Events: Looking ahead, there is a lack of top-tier US economic data on the docket, but speeches from Fed policymakers and overall market risk sentiment will likely continue to influence gold price movements. Traders will keep an eye on these events for any further indications about the Fed's rate policy and the general economic outlook.
Closing statement: The XAU/USD pair remains highly bullish, supported by a combination of global risk factors, expectations of further Fed rate cuts, and weak US economic data. If the US Dollar remains under pressure and global equities rally, gold prices may continue to climb. However, speeches from Fed officials and any sudden changes in risk sentiment could impact the pace of this rally.
CRUDE OIL
- WTI Price: West Texas Intermediate (WTI), the benchmark for US crude oil, is holding steady near $71.20 in Wednesday's trading session. The price movement reflects a mix of global economic factors and supply concerns, keeping WTI within a narrow range.
- China Stimulus Supports Oil Prices: The People’s Bank of China (PBoC) has unveiled additional monetary stimulus measures aimed at reviving the country's slowing economy. As China is the world’s largest crude oil importer, these efforts are helping to support WTI prices. Any signs of economic recovery in China could further bolster demand for oil, contributing to upward price pressure.
- Geopolitical Tensions in the Middle East: Escalating tensions in the Middle East continue to drive concerns over potential disruptions in global oil supply. The risk of instability in a region critical for oil production adds a bullish element to WTI, as markets remain wary of any developments that could affect crude availability.
- Falling US Crude Inventories: Another supportive factor for WTI prices comes from the American Petroleum Institute (API) report, which showed that US crude oil inventories fell by 4.339 million barrels for the week ending September 20. The larger-than- expected decline in stockpiles suggests tighter supply conditions in the US, which is likely to underpin oil prices in the short term.
- Upcoming Data and Fedspeak: Later Wednesday, traders will closely monitor the US Energy Information Administration (EIA) report on crude oil stockpiles for further insights into US supply levels. A continued drawdown in inventories could provide additional upside momentum for WTI. Also on the radar is a scheduled speech by Federal Reserve Governor Adriana Kugler.
| SMA (20) | Falling |
|
|
| RSI (14) | Slightly Rising |
| |
| MACD (12, 26, 9) | Slightly Rising |
|
Closing statement: WTI prices remain supported by China's economic stimulus efforts and declining US crude inventories. Additionally, geopolitical risks in the Middle East could keep supply concerns elevated, providing further upside potential. Traders will await the EIA report and remarks from Fed policymakers to assess the broader impact on global oil demand and the US economic trajectory.
DAX
- Market Movers: DAX gained strength on Wednesday, primarily driven by auto stocks after China's stimulus measures raised hopes for increased demand in the world's largest car market. BMW led the charge with a 3.55% gain, while Daimler Truck Holding and Volkswagen followed, advancing 1.76% and 1.62%, respectively. Investors are optimistic that China's monetary support could bolster car sales and benefit German automakers.
- Germany's IFO Index: The German IFO Business Climate Index dropped for the fifth consecutive month, declining to 85.4 in September from 86.6 in August, falling below the consensus forecast of 86.0. This decline highlights ongoing economic stagnation in Germany, with businesses expressing pessimism about the current economic climate. The consistent fall in the IFO Index raises concerns about the growth outlook for Germany's economy.
- ECB Policymaker’s Remarks: Comments from ECB policymaker Klaas Knot, who supports gradual rate cuts in the first half of 2025, provided additional support for DAX- listed stocks. Expectations of easing monetary policy have fueled investor appetite for equities, with the belief that lower borrowing costs will stimulate economic activity across the Eurozone, particularly benefiting major industrial sectors like autos.
- US Consumer Confidence: In the US, the CB Consumer Confidence Index dropped sharply from 105.6 in August to 98.7 in September, signaling weakening consumer sentiment. The Present Situation Index and Expectations Index also declined, sparking concerns about the health of the US labor market and broader economic outlook. These developments may have indirect effects on German companies, especially those with significant exposure to US markets.
- Focus on US Data: Investors will also be paying close attention to the release of US new home sales data on Wednesday. Economists expect a 5.1% decline in August, following a strong 10.6% surge in July. Any deviation from these expectations could influence risk sentiment and impact DAX movements, especially considering the intertwined nature of global economic trends.
| SMA (20) | Rising |
|
|
| RSI (14) | Rising |
|
|
| MACD (12, 26, 9) | Rising |
|
|
Closing statement: The DAX remains supported by optimism around China's stimulus measures, which may help German automakers. However, the persistent decline in the IFO Index raises questions about Germany’s economic resilience. Market participants will closely monitor global economic data, especially from the US, as weaker consumer confidence and potential declines in new home sales could shape investor sentiment going forward.