Daily Market Analysis

Latest Economic Insights

• Key Headlines:
• The dollar steadies above 101 at its highest levels in around two months after strong US economic data.
• The probabilities of a further US rate hike in October rise to around 70% against 55% on the previous day.
• The strength of US activity and the rise in price pressures reinforce expectations of continued hawkish monetary policy.
• Gold is trading below $4,300, affected by the strength of the dollar and the rise in Treasury yields.
• Brent crude is trading near $102 and West Texas near $91 amid continued uncertainty between the United States and Iran.
• Bitcoin is watching support at $82 thousand with institutional flows and corporate buying continuing.

Fundamental Analysis

• The Dollar and Monetary Policy
  • The dollar index remained above the 101 level on Thursday, hovering at its highest levels in around two months, after the stronger-than-expected US economic data reinforced the belief that the economy is still able to withstand further monetary tightening.
  • Data from S&P Global showed that US private sector activity expanded during September at its fastest pace in more than five years, with an improvement in activity in the services and manufacturing sectors coinciding with the emergence of stronger price pressures.
  • This data comes at a time when a number of Federal Reserve officials affirmed their support for the recent decision to raise interest rates, while continuing to warn that inflation still represents the main risk facing monetary policy.
  • These developments pushed markets to raise the probability of a further US interest rate increase in October to around 70%, compared with around 55% on the previous day, which provided additional support to the dollar and Treasury yields.
  • At the same time, oil prices returned to rising with the continued state of uncertainty regarding the negotiations between the United States and Iran, which brings back energy-related inflation risks and increases the difficulty of the Federal Reserve shifting to a less hawkish stance in the near period.
  • Attention turns today to the unemployment benefits data and new home sales for additional signals regarding the strength of the US economy, where strong data could reinforce expectations of a rate hike in October, while weak readings could ease those bets.

• Gold:
  • Gold steadied below the $4,300 per ounce level on Thursday after a sharp decline in the previous session, affected mainly by the strength of the dollar and the rise in US Treasury yields.
  • The strong US economic data increased the pressures on the metal after markets raised the probability of a rate hike in October to around 70%, which increases the opportunity cost of holding gold, which offers no periodic return.
  • The recovery in oil prices also represents an additional pressure factor, because the rise in energy costs may feed inflation again and give the Federal Reserve greater justification for continuing monetary tightening.
  • On the other hand, gold is still receiving long-term support from central bank purchases, geopolitical risks and concerns related to fiscal sustainability, but the effect of the dollar and yields remains the strongest factor in the short term.

• Oil:
  • Brent crude traded near $102 per barrel, while West Texas Intermediate moved near $91, with oil holding part of the previous session’s gains amid the continued state of uncertainty regarding US-Iranian relations.
  • Iranian President Masoud Pezeshkian said before the United Nations General Assembly that Tehran will not allow freedom of navigation through the Strait of Hormuz as long as the US sanctions and blockade remain in place, which revived concerns over the stability of energy flows across the region.
  • On the other hand, Saudi Arabia is working to restore oil exports through the main East-West pipeline, an important route that allows the Strait of Hormuz to be bypassed, and its return could help ease part of the risks related to supplies.
  • In the United States, the administration is discussing with the refining companies the possibility of reducing diesel exports on a voluntary basis, while markets also remain attentive to developments in the Russian-Ukrainian war following discussions regarding a ceasefire in the energy sector.
  • Oil therefore remains between two opposing factors: the continuation of the geopolitical risks supports prices, while improved supply routes and any diplomatic progress may lead to a decline in the risk premium.

• Bitcoin
  • The $82 thousand level remains among the important areas the Bitcoin market is watching, as holding it supports the stability of the price structure, while a clear break of it could increase the risks of a correction toward lower areas.
  • On the other hand, flows into exchange-traded funds and institutional activity continue to provide support to the market, with expectations of a possible improvement in momentum during the fourth quarter if demand continues and the pressures resulting from the dollar and yields ease.
  • Strategy also bought around 950 Bitcoin worth close to $75.7 million during the past week, raising its declared holdings to around 846 thousand Bitcoin, which reflects the continuation of institutional accumulation operations.
  • The short-term picture remains tied to a large degree to global liquidity and the US interest rate path, since the continued strength of the dollar and rising interest rate expectations could pressure Bitcoin, while a retreat in yields and the return of strong institutional flows could support an attempt to regain the upward momentum.

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

• From Switzerland, Interest Rate Decision issued by the Swiss Central Bank (Q3) 10:30
• From Switzerland, Swiss National Bank Press Conference 11:30
• From the United States of America, Unemployment Claims Benefits 15:30
• From the United States of America, New Home Sales (August) 17:00
• From the United States of America, Federal Reserve Balance Sheet 23:30

GOLD

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 4,286.65
• First scenario: Buy on a break above 4,310.05
• Targets: 4,341.82 then 4,376.97
• Alternative scenario: Sell on a break below 4,268.53
• Targets: 4,243.35 then 4,201.61
• Note: Gold is moving in a downward trend and is trading below the main moving averages. A break above 4,310.05 supports a shift in the movement toward an upward correction, while a break below 4,268.53 makes a continuation of the decline toward the next support levels more likely.

CRUDE OIL

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 93.01
• First scenario: Buy on a break above 94.06
• Targets: 95.78 then 97.68
• Alternative scenario: Sell on a break below 91.92
• Targets: 90.07 then 88.30
• Note: Oil is still moving within a downward trend and is trading below the main moving average. A break above 94.06 supports an extension of the upward correction, while a break below 91.92 makes a resumption of the decline toward the next support levels more likely.

EURUSD

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 1.13815
• First scenario: Buy on a break above 1.13950
• Targets: 1.14229 then 1.14582
• Alternative scenario: Sell on a break below 1.13627
• Targets: 1.13284 then 1.12991
• Note: The euro is moving in a clear downward trend and is trading below the main moving averages. A break above 1.13950 supports a shift in the movement toward an upward correction, while a break below 1.13627 makes a continuation of selling pressure toward the next support levels more likely.

GBPUSD

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 1.32406
• First scenario: Buy on a break above 1.32536
• Targets: 1.32865 then 1.33229
• Alternative scenario: Sell on a break below 1.32173
• Targets: 1.31819 then 1.31480
• Note: The pound is moving in a clear downward trend and is trading below the main moving averages. A break above 1.32536 supports an extension of the upward correction, while a break below 1.32173 makes a continuation of selling pressure toward the next support levels more likely.

NAS 100

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 30,385.56
• First scenario: Buy on a break above 30,553.09
• Targets: 30,685.84 then 30,811.04
• Alternative scenario: Sell on a break below 30,289.62
• Targets: 30,121.66 then 29,911.89
• Note: The index has entered a downward corrective move after the recent upward wave and is trading below the short moving averages. A break above 30,553.09 supports a return of the upward momentum, while a break below 30,289.62 makes a continuation of the correction toward the next support levels more likely.