Daily Market Analysis

Latest Economic Insights

• Key Headlines:
• The dollar rises to near 101.1 and holds its strong two-month levels with the rise in oil prices and safe-haven demand.
• Expectations of further tightening from the Federal Reserve are strengthening with the continued strength of the US economy and labour market.
• Markets are awaiting this week the inflation data preferred by the Federal Reserve and the US jobs report.
• Gold retreats to near $4,250 and approaches its lowest levels in seven weeks.
• Brent crude is trading near $107 and West Texas near $94 after the stalling of the US-Iranian proposal regarding Hormuz.
• Bitcoin is witnessing strong institutional demand with weekly ETF flows of around $2.39 billion and large quantities leaving the exchanges.

Fundamental Analysis

• The Dollar and Monetary Policy
  • The dollar index rose to near 101.1 on Monday and remained close to its highest levels in two months, supported by the rise in oil prices and renewed demand for the dollar as a safe haven with the state of uncertainty in the Middle East continuing.
  • The rise in oil came after President Donald Trump rejected the latest Iranian proposal to reopen the Strait of Hormuz, while Tehran affirmed that it will not ease its conditions, which revived concerns over a continued disruption to energy flows and rising inflationary pressures.
  • On the monetary policy front, a number of Federal Reserve officials indicated that the strength of economic growth and the labour market may justify further interest rate increases, while Beth Hammack said that the strength of the economy and concerns over government debt are also contributing to the rise in long-term Treasury yields.
  • Investors’ attention this week turns to the inflation measure preferred by the Federal Reserve and the US labour market data, where these figures will be important in determining whether conditions allow for further monetary tightening during the coming meetings.

• Gold:
  • Gold fell to near $4,250 per ounce on Monday, approaching its lowest levels in around seven weeks, with the continuation of the pressure resulting from the rise in oil prices and expectations of further US rate hikes.
  • The stalling of the negotiations between the United States and Iran lifted energy prices again, which reinforces inflation risks and supports US monetary policy remaining more hawkish, representing a direct pressure factor on gold.
  • On the other hand, the state of geopolitical uncertainty may provide some demand for the metal as a safe haven, but the direction of the dollar and yields and the US inflation and jobs data will remain the most influential factor during this week.

• Oil:
  • Brent crude rose to near $107 per barrel, while West Texas Intermediate moved near $94, after the United States rejected the latest Iranian proposals related to reopening the Strait of Hormuz.
  • Iran said that it is awaiting a final US response to its proposal to reopen the strait within seven days, but affirmed at the same time that it will not ease its conditions after Trump rejected the latest plan, which kept the chances of reaching a rapid agreement limited.
  • Regional risks also remained elevated after Saudi Arabia intercepted Houthi drones that were heading toward Riyadh and a missile that targeted Khamis Mushait, in addition to the issuing of alerts in Abha and Jazan, where Aramco energy facilities are located.
  • In the United States, Trump is considering the possibility of imposing a ban on diesel exports in an attempt to control the rise in fuel prices, which adds a new factor to the state of uncertainty in the energy markets.

• Bitcoin
  • Bitcoin witnessed a clear improvement in institutional demand during the past week, as US spot exchange-traded funds recorded flows of around $2.39 billion during the week, of which around $134.5 million came in the last session.
  • At the same time, the trading platforms recorded net outflows amounting to around 31,782 Bitcoin worth close to $2.52 billion, with around 19,500 Bitcoin leaving Binance and around 6,700 from Coinbase Pro, which points to a decline in the supply available inside the exchanges.
  • The derivatives market witnessed liquidations worth close to $190 million over 24 hours, distributed almost equally between long and short positions, while open positions declined by more than 11% during the past week.
  • Bitcoin is therefore showing support from institutional flows and the decline in supply inside the exchanges, but its direction during the week will remain sensitive to the US inflation and jobs data and their effect on the dollar, yields and interest rate expectations.

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

• There is no important economic data listed for today.

GOLD

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 4,175.27
• First scenario: Buy on a break above 4,205.72
• Targets: 4,237.49 then 4,272.64
• Alternative scenario: Sell on a break below 4,164.21
• Targets: 4,130.02 then 4,097.29
• Note: Gold is moving in a strong downward trend and is trading below the main moving averages after a clear selling wave. A break above 4,205.72 supports a shift in the movement toward an upward correction, while a break below 4,164.21 makes a continuation of selling pressure toward the next support levels more likely.

CRUDE OIL

• Trend: Sideways
• Timeframe: 30 minutes
• Current price: 94.68
• First scenario: Buy on a break above 95.75
• Targets: 97.47 then 99.37
• Alternative scenario: Sell on a break below 93.62
• Targets: 91.77 then 90.00
• Note: Oil is moving within a sideways range around the moving averages with no clear direction in the current movement. A break above 95.75 supports a shift in the movement toward the upside and targeting the next resistance levels, while a break below 93.62 makes a return of selling pressure toward the next support levels more likely.

EURUSD

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 1.13763
• First scenario: Buy on a break above 1.14023
• Targets: 1.14303 then 1.14655
• Alternative scenario: Sell on a break below 1.13701
• Targets: 1.13358 then 1.13065
• Note: The euro is moving in a downward trend and is trading below the main moving average, with selling pressure returning after a limited attempt at a rebound. A break above 1.14023 supports a shift in the movement toward an upward correction, while a break below 1.13701 makes a continuation of the downward trend toward the next support levels more likely.

GBPUSD

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 1.32322
• First scenario: Buy on a break above 1.32554
• Targets: 1.32883 then 1.33248
• Alternative scenario: Sell on a break below 1.32192
• Targets: 1.31838 then 1.31498
• Note: The pound is moving in a downward trend and is trading below the main moving average, with the price consolidating close to a support area. A break above 1.32554 supports a shift in the movement toward an upward correction, while a break below 1.32192 makes a resumption of the downward trend toward the next support levels more likely.

NAS 100

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 30,328.78
• First scenario: Buy on a break above 30,529.22
• Targets: 30,632.22 then 30,757.42
• Alternative scenario: Sell on a break below 30,236.00
• Targets: 30,068.04 then 29,858.27
• Note: The index is moving under downward pressure and is trading below the main moving averages after the retreat from the higher areas. A break above 30,529.22 supports a shift in the movement toward an upward correction in the direction of the next resistance levels, while a break below 30,236.00 makes a continuation of selling pressure toward the next support levels more likely.