Daily Market Analysis

Latest Economic Insights

• Key Headlines:
• The dollar is trading near 101.4 and is heading toward monthly gains of around 2%, supported by the strength of the economy and hawkish interest rate expectations.
• Federal Reserve officials continue to signal the possible need for further interest rate increases to curb inflation.
• The yield on 30-year US bonds reaches around 5.62% and continues to pressure the precious metals.
• Gold is trading near $4,200 and is heading for a monthly loss of around 6% despite receiving support from the decline in oil prices.
• Brent crude is trading near $95 and West Texas near $89 with oil flows from the Middle East improving.
• Bitcoin is watching the $82,500 level with weak spot demand and rising probabilities of profit-taking after the recent advance.

Fundamental Analysis

• The Dollar and Monetary Policy
  • The dollar index traded near the 101.4 level on Wednesday and was on track to achieve monthly gains of around 2%, supported by the strength of the US economy, continued concerns over inflation and hawkish remarks from Federal Reserve officials.
  • Federal Reserve Governor Michael Barr affirmed that further interest rate increases may be necessary to curb inflation, while New York Federal Reserve Bank President John Williams said that raising interest rates again later this year may be appropriate.
  • Treasury yields also continued at elevated levels, with the yield on 30-year US bonds reaching around 5.62%, the highest level since June 2002, which reflects the continuation of market concerns over inflation and the interest rate path.
  • Investors’ focus turns today to the personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred measure of inflation, alongside the ADP and gross domestic product data, ahead of the non-farm payrolls report expected on Friday.

• Gold:
  • Gold traded near $4,200 per ounce on Wednesday after its recovery in the previous session, as the sharp decline in oil prices provided some support for the metal by easing concerns related to inflation.
  • Nevertheless, gold is still under strong pressure from the rise in Treasury yields and expectations of continued monetary policy tightening, and the metal is heading toward recording a monthly loss of around 6% during September.
  • Today’s US inflation data remains among the most important drivers, since a high reading of the PCE index could reinforce rate hike expectations and pressure gold, while a weaker reading could provide some support for the metal.

• Oil:
  • Brent crude retreated to near $95 per barrel, while West Texas Intermediate remained below $90 at close to $89, with concerns over supplies receding after a clear improvement in energy flows from the Middle East.
  • The data points to a recovery in the average of crude oil exports from the Middle East over ten days to around 17.5 million barrels per day, equivalent to close to 98% of pre-war levels.
  • Saudi Arabia also resumed its exports through the East-West pipeline at around half of its capacity, while the United States plans to release up to 40 million barrels from the Strategic Petroleum Reserve to help confront the rise in fuel prices.
  • At the same time, the industry data showed US crude inventories rising by around one million barrels last week, which added further pressure on prices despite oil remaining on track to achieve a third consecutive month of gains.

• Bitcoin
  • Bitcoin is holding its trading above the 50-week moving average for the first time since November, while the $82,500 level represents an important area in determining whether the recent breakout is able to continue.
  • On the other hand, some signs of weakening momentum are appearing, as spot demand fell by around 170 thousand Bitcoin over 30 days, while the growth in net futures positions slowed from around 164 thousand Bitcoin on 14 September to close to 16 thousand on 29 September.
  • The unrealised profits of short-term investors also reached around 33% coinciding with the price rising to close to $87,400, which increases the probability of profit-taking emerging after the recent advance.
  • Holding above $82,500 therefore remains important for maintaining the current momentum, while losing this area could lead to a retest of lower levels, especially if the US inflation data comes in supportive of the dollar and yields.

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

• From China, Manufacturing Purchasing Managers’ Index (September) 04:30
• From the United Kingdom, Gross Domestic Product (QoQ) (Q2) 09:00
• From the United Kingdom, Gross Domestic Product (YoY) (Q2) 09:00
• From Germany, Consumer Price Index (YoY) (September) 11:00
• From Germany, Consumer Price Index (MoM) (September) 11:00
• From Germany, German Consumer Price Index (MoM) (September) 15:00
• From the United States of America, Change in Non-Farm Private Sector Employment issued by ADP (September) 15:15
• From the United States of America, Core Personal Consumption Expenditures Price Index (YoY) (August) 15:30
• From the United States of America, Core Personal Consumption Expenditures Price Index (MoM) (August) 15:30
• From the United States of America, Gross Domestic Product (QoQ) (Q2) 15:30
• From the United States of America, US Crude Oil Inventories 17:30
• From the United States of America, Speech by US President Trump 22:30

GOLD

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 4,181.63
• First scenario: Buy on a break above 4,195.18
• Targets: 4,226.96 then 4,262.10
• Alternative scenario: Sell on a break below 4,155.69
• Targets: 4,119.49 then 4,086.75
• Note: Gold is moving in a downward trend and is trading below the main moving average, with a clear corrective rebound from the support area and the price arriving close to the current resistance. A break above 4,195.18 supports a continuation of the upward correction toward the next resistance levels, while a break below 4,155.69 makes a return of selling pressure toward the next support levels more likely.

CRUDE OIL

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 90.50
• First scenario: Buy on a break above 91.81
• Targets: 93.53 then 95.43
• Alternative scenario: Sell on a break below 89.67
• Targets: 87.82 then 86.05
• Note: Oil is moving in a downward trend and is trading below the main moving averages after a clear selling wave, with the price consolidating close to the current support area. A break above 91.81 supports a shift in the movement toward an upward correction, while a break below 89.67 makes a continuation of selling pressure toward the next support levels more likely.

EURUSD

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 1.13521
• First scenario: Buy on a break above 1.13587
• Targets: 1.13866 then 1.14219
• Alternative scenario: Sell on a break below 1.13265
• Targets: 1.12922 then 1.12629
• Note: The euro is moving in a downward trend and is trading below the main moving average, with the price rebounding from the support area and reaching the short-term moving averages. A break above 1.13587 supports a shift in the movement toward an upward correction, while a break below 1.13265 makes a resumption of the downward trend toward the next support levels more likely.

GBPUSD

• Trend: Sideways with an upward bias
• Timeframe: 30 minutes
• Current price: 1.32579
• First scenario: Buy on a break above 1.32728
• Targets: 1.33057 then 1.33421
• Alternative scenario: Sell on a break below 1.32324
• Targets: 1.32011 then 1.31672
• Note: The pound is moving within a sideways range with an upward bias after a strong push above the short-term moving averages, with the price approaching the current resistance. A break above 1.32728 supports a continuation of the upward move toward the next resistance levels, while a break below 1.32324 makes a return of selling pressure toward the next support levels more likely.

NAS 100

• Trend: Sideways with a downward bias
• Timeframe: 30 minutes
• Current price: 30,332.69
• First scenario: Buy on a break above 30,509.80
• Targets: 30,642.55 then 30,767.75
• Alternative scenario: Sell on a break below 30,246.33
• Targets: 30,078.37 then 29,868.60
• Note: The index is moving within a sideways range with a downward bias and is trading below the main moving average, with the price consolidating close to the current support area. A break above 30,509.80 supports a shift in the movement toward the upside and targeting the next resistance levels, while a break below 30,246.33 makes a return of selling pressure toward the next support levels more likely.