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10 September 2024,05:57
Daily Market Analysis
10 September 2024, 05:57
*The U.S. dollar remains stable ahead of Wednesday’s U.S. CPI reading.
*Wall Street recorded a technical rebound in the last session, following Friday’s sharp decline.
*All eyes are on the UK’s unemployment rate, due today, to gauge the strength of the Sterling.
Market Summary
The U.S. dollar remained stable in the last session as traders await Wednesday’s key U.S. inflation data, which is expected to provide clues on the Federal Reserve’s rate cut decision next week. Wall Street saw a slight recovery from its recent bearish trend, with the Dow Jones surging nearly 500 points. In contrast, Asian equity markets were weighed down by China’s sluggish economic performance, dampening investor sentiment.
Pound Sterling traders are also closely monitoring the UK’s unemployment rate report due later today, which could provide insights into the strength of the British economy and influence GBP/USD movements.
In the commodity market, gold prices edged slightly higher, hovering near the $2,500 mark as traders anticipate Wednesday’s U.S. inflation data. Oil prices remained supported by concerns over a potential hurricane hitting the U.S. Gulf Coast, which could disrupt supplies. However, the persistently weak demand outlook continued to exert downward pressure, keeping oil prices at recent low levels.
Current rate hike bets on 18th September Fed interest rate decision:
Source: CME Fedwatch Tool
-50 bps (32.5%) VS -25 bps (67.5%)
Market Movements
DOLLAR_INDX, H4
The Dollar Index rebounded after the CME FedWatch Tool showed a decreased likelihood of a 50-basis points rate cut, following a downbeat Nonfarm Payrolls report. Currently, the odds for a 25 basis points cut have risen to 73%, while the probability for a 50 basis points cut is at 27%. Investors are now focusing on the upcoming Consumer Price Index (CPI) release, which is expected to move closer to the Fed’s 2% inflation target.
The Dollar Index is trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 62, suggesting the index might extend its gains after breakout since the RSI stays above the midline.
Resistance level: 101.70, 102.35
Support level: 100.55, 99.70
Gold prices are consolidating near a solid support level as investors await crucial US economic data. The CPI is projected to fall from 2.9% to 2.6% YoY, with core CPI expected to stay at 3.2%. The recent NFP report showed a 142K increase in jobs, below the 160K consensus, but a dip in the Unemployment Rate provided some support to the Greenback. Fed officials expressed dovish views, with calls for rate cuts to support the labor market.
Gold prices are trading higher while currently testing the resistance level. MACD has illustrated diminishing bearish momentum, while RSI is at 51, suggesting the commodity might extend its gains after breakout since the RSI stays above the midline.
Resistance level: 2505.00, 2525.00
Support level: 2480.00, 2450.00
The GBP/USD pair has declined by over 0.5% this week, nearing its next support level at 1.3065, indicating continued bearish momentum. The U.S. dollar strengthened as market sentiment shifted, with traders now anticipating a smaller rate cut from the Federal Reserve. This expectation has bolstered the dollar’s position against the Pound Sterling. Meanwhile, the UK’s unemployment rate, which is set to be released later today, will be a key factor in determining the pair’s direction.
GBP/USD is currently trading with strong bearish momentum, a break below from the current support level will be a solid bearish signal for the pair. The RSI is approaching the oversold zone while the MACD has broken below the zero line and is diverging suggest the bearish momentum is gaining.
Resistance level: 1.3240, 1.3220
Support level:1.2980, 1.2910
The EUR/USD pair has breached the support level at 1.1040, signaling a bearish outlook. The euro remains under pressure as markets anticipate a potential 25 bps rate cut by the European Central Bank (ECB) during its meeting on Thursday, which could further weaken the euro. Conversely, the U.S. dollar continues to gain strength, buoyed by last Friday’s better-than-expected U.S. job data, which has solidified expectations that the Federal Reserve may adopt a more cautious approach to rate cuts. This divergence in central bank policy expectations is likely to maintain downside pressure on the EUR/USD pair.
EUR/USD remains below its long-term downtrend resistance level and has broken below from the support level suggesting a solid bearish signal for the pair. The RSI is on the brink of breaking into the oversold zone while the MACD flowing close to the zero line suggests bearish momentum is gaining.
Resistance level: 1.1110, 1.1170
Support level: 1.0985, 1.0940
The US equity market rebounded after last week’s decline, driven by investor interest in Apple’s new AI-enhanced iPhones and profit-taking ahead of key inflation reports. The upcoming consumer price index and producer price index for August, scheduled for release on Wednesday and Thursday, respectively, are critical as they will be the last major data points before the Fed meeting on September 18. Investors should watch these reports closely for indications of future market movement.
Nasdaq is trading higher while currently testing the resistance level. MACD has illustrated diminishing bearish momentum, while RSI is at 39, suggesting the index might extend its gains since the RSI rebounded sharply from oversold territory.
Resistance level: 18890.00, 20015.00
Support level: 17865.00, 17115.00
The AUD/USD pair continues its downward trajectory following a substantial drop last Friday, reflecting strong bearish momentum. The pair has been primarily pressured by the strengthening U.S. dollar as market sentiment shifts towards a smaller-than-expected rate cut from the Federal Reserve in its upcoming FOMC meeting. However, the Reserve Bank of Australia (RBA) is expected to maintain its current interest rate in the September decision, which could potentially provide some support for the Aussie dollar.
The is now trading in a lower-low price pattern followed by a significant plunge on last Friday suggesting the bearish momentum remains strong. The RSI is on the brink of breaking into the oversold zone while the MACD is edging lower, suggesting the bearish momentum is gaining.
Resistance level: 0.6673, 0.6730
Support level: 0.6610, 0.6550
Oil prices saw a slight rebound due to supply disruptions caused by Tropical Storm Francine, which led to the closure of Texas ports and halted operations by major oil companies. However, the overall bearish trend remains due to ongoing concerns about economic slowdowns in China and the US. Supply disruptions are providing only limited support to oil prices.
Oil prices are trading lower while currently testing the support level. However, MACD has illustrated increasing bullish momentum, while RSI is at 43, suggesting the commodity might experience technical correction since the RSI rebounded sharply from oversold territory.
Resistance level: 71.80, 74.30
Support level: 67.60, 65.80
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