Daily Market Analysis

Latest Economic Insights

• Key Headlines:
• The dollar is moving near 99.4 with the Federal Reserve decision awaited this evening.
• Markets are pricing a probability exceeding 90% for a US rate hike of 25 basis points.
• The yield on 10-year US bonds is moving near 5% and continues to pressure gold.
• Gold rises to near $4,328 with limited buying ahead of the Federal Reserve decision.
• Brent crude is near $107.8 and West Texas near $104.9 after a strong rise in US inventories.
• Bitcoin is trading near $76 thousand after the CLARITY Act stalled and with the US interest rate decision awaited.

Fundamental Analysis

• The Dollar and Monetary Policy
  • The dollar index moved near the 99.4 level on Wednesday and close to its highest levels in around two weeks, with investors’ focus shifting entirely to the Federal Reserve decision awaited this evening.
  • Markets are pricing a probability exceeding 90% for a rate increase of 25 basis points, which could lift the interest rate range from 3.50%–3.75% to 3.75%–4.00%, after the rise in inflation and the continuation of oil prices above $100.
  • The yield on ten-year US Treasury bonds also held near 5%, which provides support to the dollar and increases the pressure on assets that are sensitive to interest rates.
  • Since the rate hike has become largely priced in, the focus tonight will be on the interest rate projections chart, the economic projections and Kevin Warsh’s remarks, to find out whether the Federal Reserve is paving the way for a further increase during the coming months.

• Gold:
  • Gold rose to near $4,328 per ounce with some buying appearing ahead of the Federal Reserve decision, but it is still under pressure from the rise in the dollar and Treasury yields.
  • Gold’s direction remains tied to the Federal Reserve’s message more than to the interest rate decision itself, where a more hawkish stance could lead to higher yields and renewed pressure on the metal, while a more balanced speech could provide support to prices.
  • The geopolitical risks in the Middle East continue to provide some defensive demand for gold, but the effect of interest rates and yields remains the stronger factor at present.

• Oil:
  • Brent crude retreated to near $107.8 per barrel, while West Texas Intermediate moved near $104.9, after the preliminary data showed a large and unexpected rise in US crude inventories.
  • Data from the American Petroleum Institute showed inventories rising by around 7.1 million barrels, against expectations of a decline of around 1.6 million barrels, which provided short-term pressure on prices.
  • On the other hand, supply risks remain elevated with the continued disruption of the Saudi East-West pipeline and the impact on loading operations from the port of Yanbu, coinciding with the continued risks to shipping movement through the Strait of Hormuz and Bab el-Mandeb.

• Bitcoin
  • Bitcoin traded near $76 thousand after the US Senate failed to push the CLARITY Act to the next stage, where the bill received 50 votes against 49 while it needed 60 votes to clear the procedural vote.
  • The stalling of the act led to an increase in regulatory uncertainty and pressure on Bitcoin, coinciding with the rise in yields and oil prices and expectations of a tightening of US monetary policy.
  • The focus now shifts almost entirely to the Federal Reserve decision, where a more hawkish speech could lead to continued pressure on Bitcoin, while a less hawkish stance than expected could help lower yields and improve liquidity and risk appetite.

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

• From the United Kingdom, Consumer Price Index (YoY) (August) 09:00
• From the United States of America, Core Retail Sales (MoM) (August) 15:30
• From the United States of America, Retail Sales (MoM) (August) 15:30
• From the United States of America, Interest Rate Decision issued by the Federal Reserve Board 21:00
• From the United States of America, Federal Open Market Committee Statement, Economic Projections and Interest Rate Projections Chart 21:00
• From the United States of America, Press Conference of Federal Reserve Board Chairman Kevin Warsh 21:30

GOLD

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 4,327.47
• First scenario: Buy on a break above 4,349.68
• Targets: 4,381.45 then 4,416.60
• Alternative scenario: Sell on a break below 4,308.17
• Targets: 4,273.98 then 4,241.25
• Note: Gold is still under selling pressure and is trading below the main moving averages. A break above 4,349.68 supports an extension of the upward correction, while a break below 4,308.17 makes a resumption of the downward trend toward the next support levels more likely.

CRUDE OIL

• Trend: Bullish
• Timeframe: 30 minutes
• Current price: approximately 102.10
• First scenario: Buy on a break above 103.27
• Targets: 104.99 then 106.89
• Alternative scenario: Sell on a break below 101.14
• Targets: 99.29 then 97.52
• Note: Oil is holding the bullish trend and is trading above the main moving averages. A break above 103.27 supports a resumption of the upward wave, while a break below 101.14 makes an extension of the downward correction toward the next support areas more likely.

EURUSD

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 1.15463
• First scenario: Buy on a break above 1.15593
• Targets: 1.15872 then 1.16225
• Alternative scenario: Sell on a break below 1.15271
• Targets: 1.14927 then 1.14624
• Note: The euro is moving below the main moving averages with selling pressure continuing. A break above 1.15593 supports a shift in the movement toward an upward correction, while a break below 1.15271 makes a resumption of the decline toward the next support levels more likely.

GBPUSD

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 1.34783
• First scenario: Buy on a break above 1.34985
• Targets: 1.35315 then 1.35679
• Alternative scenario: Sell on a break below 1.34623
• Targets: 1.34269 then 1.33930
• Note: The pound is still under selling pressure and is trading below the main moving averages. A break above 1.34985 supports an extension of the upward correction, while a break below 1.34623 restores selling pressure and opens the way for a continuation of the decline.

NAS 100

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 29,034.24
• First scenario: Buy on a break above 29,174.14
• Targets: 29,306.89 then 29,432.09
• Alternative scenario: Sell on a break below 28,881.01
• Targets: 28,713.05 then 28,503.28
• Note: The index is still under selling pressure and is trading below the main moving averages. A break above 29,174.14 supports an extension of the upward correction, while a break below 28,881.01 makes a resumption of the downward trend more likely.