Daily Market Analysis

Latest Economic Insights

• Key Headlines:
• The dollar steadies near 100.2 and is heading toward weekly gains exceeding 1% after the US rate hike.
• Markets continue to assess the possibility of a further rate hike in October, with Treasury yields retreating slightly.
• Gold rises to near $4,350, benefiting from the decline in oil and US yields.
• Brent crude is trading near $104 and West Texas near $101 as concerns over Saudi supplies ease.
• The Bank of Japan raises the interest rate from 1.00% to 1.25% amid the continued tightening of monetary policy.
• Bitcoin is attempting to recover above $76 thousand, but weak institutional flows and declining market sentiment are limiting the momentum.

Fundamental Analysis

• The Dollar and Monetary Policy
  • The dollar index steadied near the 100.2 level on Friday and remained close to its highest levels in seven weeks, with markets continuing to assess the path of monetary policy after the Federal Reserve raised interest rates by 25 basis points to the 3.75%–4.00% range.
  • Federal Reserve Chairman Kevin Warsh affirmed that inflation is still elevated and that the bank may need further tightening, while markets are currently pricing a probability approaching 53% for a further rate hike during the October meeting.
  • Nevertheless, the dollar lost part of its momentum with the retreat in oil prices and the decline in the yield on ten-year US Treasury bonds from above 5% to near 4.93%, which eased some of the expectations related to the continuation of monetary tightening at a rapid pace.
  • The dollar index is heading toward achieving weekly gains exceeding 1%, but the continuation of this strength will depend on the direction of inflation, oil and yields, and on the extent to which the coming US data confirms the economy’s ability to withstand further interest rate increases.
  • In Japan, the Bank of Japan raised the interest rate from 1.00% to 1.25%, while core inflation came in at 1.7% annually against expectations of 1.8%, and the remarks of the bank’s governor Kazuo Ueda will remain important in determining the pace of monetary tightening during the coming period.

• Gold:
  • Gold rose by more than 1% to trade near 4,310
  • Gold traded near $4,350 per ounce on Friday after rising by around 2% in the previous session, benefiting mainly from the retreat in Treasury yields, the decline in oil prices and the fading momentum of the dollar.
  • The decline in the yield on ten-year US bonds to near 4.93% helped reduce the opportunity cost of holding gold, while the retreat in oil contributed to easing concerns over a continued acceleration in energy-driven inflation.
  • Nevertheless, the expectations of a further US rate hike in October still represent a pressure factor, and therefore gold’s direction will remain directly tied to the movement of the dollar, yields and oil prices, alongside the continued defensive demand resulting from the geopolitical risks in the Middle East.

• Oil:
  • Brent crude retreated to near $104 per barrel, while West Texas Intermediate moved near $101, with oil continuing its decline for the third consecutive session as concerns eased over a long-term disruption to Saudi supplies.
  • Saudi Arabia is working to restore around half of the East-West pipeline’s capacity within days, with a gradual return to full operation expected during the coming weeks, coinciding with the use of alternative shipping arrangements to maintain oil flows to buyers.
  • The new diplomatic efforts also contributed to easing part of the risk premium, but the state of uncertainty remains elevated with the continuation of the tensions related to Iran, the Houthis, the Strait of Hormuz and Bab el-Mandeb.
  • The decline in Brent from the levels that moved past $109 at the start of the week to near $104 is considered an important development for the markets, because it eases inflation risks and supports the decline in bond yields, which in turn is reflected in the dollar and gold.

• Bitcoin
  • Bitcoin is trading above the $76 thousand level and is attempting to recover part of its losses after the pressures that followed the US rate hike, with higher trades appearing near the $77 thousand area during the session.
  • But the general picture remains cautious, as the Bull Score index fell from 80 to 30, coinciding with weak sentiment among short-term Bitcoin holders, which points to a clear decline in the strength of momentum and demand.
  • Institutional demand also came under pressure after around $450.3 million of outflows from spot Bitcoin products were recorded, while the combined outflows from Bitcoin and Ethereum products amounted to around $592 million, at a time when the stablecoin supply remained near $301 billion.
  • On the other hand, the retreat in the US bond yield from above 5% to near 4.93% provides some support for high-risk assets, and therefore the return of positive flows to ETFs and a continued decline in the dollar and yields will be among the most important signals required to confirm Bitcoin’s ability to continue the recovery.

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

• From Japan, National Core Consumer Price Index (YoY) (August) 03:30 – came in at 1.7% against expectations of 1.8%.
• From Japan, Interest Rate Decision issued by the Bank of Japan 06:00 – the interest rate was raised from 1.00% to 1.25%.
• From the United Kingdom, Retail Sales (MoM) (August) 09:00.
• From Japan, Press Conference of Bank of Japan Governor Kazuo Ueda 09:30.

GOLD

• Trend: Bullish
• Timeframe: 30 minutes
• Current price: 4,396.50
• First scenario: Buy on a break above 4,408.02
• Targets: 4,439.80 then 4,474.94
• Alternative scenario: Sell on a break below 4,366.51
• Targets: 4,332.33 then 4,299.59
• Note: Gold is moving with clear upward momentum after regaining the main moving averages. A break above 4,408.02 supports a continuation of the advance toward the next resistance levels, while a break below 4,366.51 makes the start of a downward correction toward the next support levels more likely.

CRUDE OIL

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 97.70
• First scenario: Buy on a break above 99.22
• Targets: 100.84 then 102.74
• Alternative scenario: Sell on a break below 96.98
• Targets: 95.13 then 93.36
• Note: Oil is moving under selling pressure and is trading below the main moving averages. A break above 99.22 supports a shift in the movement toward an upward correction, while a break below 96.98 makes a continuation of the decline toward the next support levels more likely.

EURUSD

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 1.14817
• First scenario: Buy on a break above 1.14968
• Targets: 1.15247 then 1.15600
• Alternative scenario: Sell on a break below 1.14645
• Targets: 1.14302 then 1.14009
• Note: The euro is moving below the main moving averages with selling pressure continuing. A break above 1.14968 supports a shift in the movement toward an upward correction, while a break below 1.14645 makes a resumption of the decline toward the next support levels more likely.

GBPUSD

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: approximately 1.33700
• First scenario: Buy on a break above 1.33851
• Targets: 1.34354 then 1.34718
• Alternative scenario: Sell on a break below 1.33488
• Targets: 1.33134 then 1.32795
• Note: The pound is still under selling pressure and is trading below the main moving averages. A break above 1.33851 supports an extension of the upward correction, while a break below 1.33488 restores selling pressure and opens the way for a continuation of the decline.

NAS 100

• Trend: Bullish
• Timeframe: 30 minutes
• Current price: 29,616.77
• First scenario: Buy on a break above 29,695.33
• Targets: 29,828.09 then 29,953.29
• Alternative scenario: Sell on a break below 29,402.21
• Targets: 29,234.24 then 29,024.47
• Note: The index is moving with clear upward momentum and is trading above the main moving averages. A break above 29,695.33 supports a continuation of the advance toward the next resistance levels, while a break below 29,402.21 makes the start of a downward correction more likely.