Daily Market Analysis

Latest Economic Insights

• Key Headlines:
• The dollar steadies near 101.2 and holds its highest levels in two months with expectations of US monetary policy tightening continuing.
• Markets are pricing a probability approaching 70% for a further US rate hike in October.
• The yields on 10-year and 30-year US bonds remain above 5% and increase the pressures on gold.
• Gold is trading near $4,100 after a strong decline of around 4% in the previous session.
• Brent crude is trading near $106 and West Texas near $93 amid continued uncertainty between the United States and Iran.
• Bitcoin is trading near $83 thousand after retreating from $87 thousand amid strong liquidations and declining momentum.

Fundamental Analysis

• The Dollar and Monetary Policy
  • The dollar index traded near the 101.2 level on Tuesday, holding its strong two-month levels, with expectations continuing that the Federal Reserve will be forced to tighten monetary policy to a greater degree to confront the inflationary pressures related to the rise in energy prices.
  • Markets currently point to a probability approaching 70% for a further rate hike in October, after the Federal Reserve raised interest rates earlier in September for the first time in three years.
  • US Treasury yields also remained clearly elevated, with the yields on 10-year and 30-year bonds moving past the 5% level, which provides support to the dollar and increases the pressure on gold and non-yielding assets.
  • At the same time, Lisa Cook said that the potential productivity gains resulting from artificial intelligence may not be sufficient to offset price pressures in the near term, warning of the possibility of inflation broadening within the economy.
  • Investors’ attention now turns to the JOLTS and consumer confidence data today, ahead of the release of the inflation measure preferred by the Federal Reserve on Wednesday and the non-farm payrolls report on Friday, in order to obtain a clearer picture regarding the next step for interest rates.

• Gold:
  • Gold traded near $4,100 per ounce on Tuesday after a sharp decline of around 4% in the previous session, with the continuation of the pressure resulting from the rise in bond yields, the strength of the dollar and growing expectations of a rate hike.
  • The rise in oil prices also contributed to increasing the pressures on the metal, as the continuation of high energy costs reinforces inflation risks and gives the Federal Reserve additional justification for continuing monetary tightening.
  • Despite the continued state of geopolitical uncertainty, the movement of the dollar, yields and interest rate expectations remain the most influential factors on gold at present, especially with the important US inflation and jobs data approaching this week.

• Oil:
  • Brent crude rose to near $106 per barrel, while West Texas Intermediate moved above $93, with the return of the state of uncertainty regarding the negotiations between the United States and Iran supporting prices.
  • Reports indicated that Iranian officials doubt the possibility of reaching an agreement before the US midterm elections in November, after President Donald Trump rejected the latest Iranian proposal regarding the reopening of the Strait of Hormuz.
  • On the other hand, reports indicate that Trump may consider easing some sanctions and the freeze on Iranian funds if tangible progress is achieved in the nuclear negotiations, which keeps the door open to a diplomatic path despite the current disagreements.
  • Saudi Arabia also restored oil flows through the East-West line to around 3.5 million barrels per day after repairing the pipeline, which provides a counterbalancing factor to supply risks and limits any further rise in prices.

• Bitcoin:
  • Bitcoin traded near $83 thousand after reaching close to $87 thousand last week, with momentum declining and selling pressure emerging that briefly pushed the price to around $82,773.
  • The digital currency market witnessed liquidations exceeding $530 million over 24 hours, most of them concentrated in long positions, while Bitcoin’s open positions declined by around 2.21%, which reflects a decrease in leverage after the recent volatility.
  • On the institutional side, Strive bought around 1,107 Bitcoin worth $94.5 million at an average price of close to $85,396, raising its holdings to around 27,462 Bitcoin.
  • The $80 thousand level remains an important area to monitor should the correction continue, while Bitcoin’s movement this week will remain tied to the US economic data and its effect on the dollar, yields and interest rate expectations.

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

• From Australia, Interest Rate Decision issued by the Reserve Bank of Australia (September) 07:30
• From Spain, Core Consumer Price Index Excluding Food and Energy (YoY) (September)
• From the United States of America, CB Consumer Confidence Index (September) 17:00
• From the United States of America, Job Openings (JOLTS) (August) 17:00

GOLD

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 4,142.48
• First scenario: Buy on a break above 4,155.22
• Targets: 4,187.00 then 4,222.14
• Alternative scenario: Sell on a break below 4,113.71
• Targets: 4,079.53 then 4,046.79
• Note: Gold is moving in a strong downward trend and is trading below the main moving averages after a clear selling wave, with the price consolidating close to the current area. A break above 4,155.22 supports a shift in the movement toward an upward correction, while a break below 4,113.71 makes a continuation of selling pressure toward the next support levels more likely.

CRUDE OIL

• Trend: Sideways
• Timeframe: 30 minutes
• Current price: 94.59
• First scenario: Buy on a break above 95.86
• Targets: 97.58 then 99.48
• Alternative scenario: Sell on a break below 93.62
• Targets: 91.88 then 90.10
• Note: Oil is moving within a sideways range around the moving averages with the price consolidating close to the current area. A break above 95.86 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: 1.13603
• First scenario: Buy on a break above 1.13788
• Targets: 1.14072 then 1.14425
• Alternative scenario: Sell on a break below 1.13471
• Targets: 1.13128 then 1.12834
• Note: The euro is moving in a downward trend and is trading below the main moving averages, with selling pressure continuing on the current movement. A break above 1.13788 supports a shift in the movement toward an upward correction, while a break below 1.13471 makes a continuation of the downward trend toward the next support levels more likely.

GBPUSD

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 1.32344
• First scenario: Buy on a break above 1.32563
• Targets: 1.32893 then 1.33257
• Alternative scenario: Sell on a break below 1.32201
• Targets: 1.31847 then 1.31507
• Note: The pound is moving in a downward trend and is trading below the main moving average, with selling pressure on the price close to the current support area. A break above 1.32563 supports a shift in the movement toward an upward correction, while a break below 1.32201 makes a resumption of the downward trend toward the next support levels more likely.

NAS 100

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 30,262.35
• First scenario: Buy on a break above 30,410.98
• Targets: 30,459.42 then 30,584.62
• Alternative scenario: Sell on a break below 30,063.20
• Targets: 29,895.24 then 29,685.47
• Note: The index is moving under downward pressure and is trading below the main moving averages, with a current rebound from the lower areas. A break above 30,410.98 supports a shift in the movement toward an upward correction in the direction of the next resistance levels, while a break below 30,063.20 makes a continuation of selling pressure toward the next support levels more likely.