Daily Market Analysis

Latest Economic Insights

Key Headlines:

• The dollar rises above 99.5 with the Federal Reserve decision approaching and rate hike expectations increasing.
• Markets are pricing a probability of around 92%–93% for a US rate hike of 25 basis points tomorrow.
• The yield on 10-year US bonds moves past 5% and adds to the pressure on gold.
• Gold is trading near $4,285–4,290 amid the strength of the dollar and higher yields.
• Brent crude is near $107 and West Texas near $102.5 amid continued supply risks.
• Bitcoin is trading near $77,800 with the CLARITY Act vote awaited today and the interest rate decision tomorrow.

Fundamental Analysis

• The Dollar and Monetary Policy
  • The dollar index rose above the 99.5 level on Tuesday, continuing its gains for the fifth consecutive session, with investors focused on the Federal Reserve meeting that ends with the interest rate decision tomorrow, Wednesday.
  • Markets point to a probability approaching 92%–93% for a rate increase of 25 basis points, supported by the recent inflation data and the rise in oil prices, while the yield on ten-year US Treasury bonds moved past the 5% level.
  • The rise in energy remains a fundamental factor in monetary policy expectations, since the continuation of oil above $100 may keep inflationary pressures elevated and make the Federal Reserve more cautious regarding an easing of monetary policy.
  • After tomorrow’s decision, attention will focus on the remarks of Federal Reserve Chairman Kevin Warsh to find out whether the rate hike will be a single step or the beginning of a new phase of tightening.

• Gold:
  • Gold traded near $4,285–4,290 per ounce after losses exceeding 1% during Monday’s session, affected by the strength of the dollar and the rise in Treasury yields.
  • The move of the ten-year US bond yield past the 5% level represents clear pressure on gold, coinciding with the increase in the probability of a US rate hike tomorrow.
  • On the other hand, the geopolitical risks in the Middle East provide some support for the metal, but their effect currently remains less than the effect of the dollar, yields and monetary policy expectations.

• Oil:
  • Brent crude traded near $106.5–107 per barrel, while West Texas Intermediate moved near $102.5, with the state of uncertainty continuing over supplies in the Middle East.
  • The shutdown of the Saudi East-West pipeline is continuing, coinciding with a decline in vessel movement through the Strait of Hormuz and continued tensions in the Red Sea and Bab el-Mandeb, which keeps the risk premium elevated.
  • The postponement of the talks between Iran and the Gulf states regarding the navigation arrangements in the Strait of Hormuz has also reduced the chances of reaching a rapid de-escalation, while any announcement of a restoration of supplies could lead to a rapid correction in prices.

• Bitcoin
  • Bitcoin traded near $77,800 with two main events awaited, namely the procedural vote on the CLARITY Act today and the US Federal Reserve’s decision tomorrow.
  • The procedural vote on the act needs 60 votes to move to the discussion stage, and the success of the vote does not mean the final passage of the act, but it represents an important step toward establishing a clearer regulatory framework for the digital asset market.
  • At the same time, US Bitcoin funds recorded limited positive flows of around $9.7 million on Monday after four consecutive sessions of outflows totalling around $462.7 million.
  • The Federal Reserve’s decision remains the biggest factor during the coming hours, where a more hawkish stance could pressure Bitcoin and high-risk assets, while a less hawkish stance than expected could provide new support to the market.

Today’s Economic Data (GMT+3 / KSA time)

• From Spain, Core Consumer Price Index (August) 10:00

GOLD

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 4,290.22
• First scenario: Buy on a break above 4,319.40
• Targets: 4,351.17 then 4,386.32
• Alternative scenario: Sell on a break below 4,277.88
• Targets: 4,243.70 then 4,210.96
• Note: Gold is still under selling pressure and is trading below the main moving averages. A break above 4,319.40 supports an extension of the upward correction, while a break below 4,277.88 makes a resumption of the downward trend toward the next support levels more likely.

CRUDE OIL

• Trend: Bullish
• Timeframe: 30 minutes
• Current price: 101.06
• First scenario: Buy on a break above 102.01
• Targets: 103.73 then 105.64
• Alternative scenario: Sell on a break below 99.88
• Targets: 98.03 then 96.26
• Note: Oil is holding the bullish trend and is trading above the main moving averages. A break above 102.01 supports a resumption of the upward wave, while a break below 99.88 makes an extension of the downward correction toward the next support areas more likely.

EURUSD

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 1.15264
• First scenario: Buy on a break above 1.15494
• Targets: 1.15773 then 1.16126
• Alternative scenario: Sell on a break below 1.15172
• Targets: 1.14829 then 1.14536
• Note: The euro is moving below the main moving averages with selling pressure continuing. A break above 1.15494 supports a shift in the movement toward an upward correction, while a break below 1.15172 makes a resumption of the decline toward the next support levels more likely.

GBPUSD

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 1.34713
• First scenario: Buy on a break above 1.34966
• Targets: 1.35311 then 1.35676
• Alternative scenario: Sell on a break below 1.34620
• Targets: 1.34266 then 1.33926
• Note: The pound is still under selling pressure and is trading below the main moving averages. A break above 1.34966 supports an extension of the upward correction, while a break below 1.34620 restores selling pressure and opens the way for a continuation of the decline.

NAS 100

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 29,062.21
• First scenario: Buy on a break above 29,209.96
• Targets: 29,342.71 then 29,467.91
• Alternative scenario: Sell on a break below 28,916.83
• Targets: 28,748.87 then 28,539.10
• Note: The index is still under selling pressure and is trading below the main moving averages. A break above 29,209.96 supports an extension of the upward correction, while a break below 28,916.83 makes a resumption of the downward trend more likely.