Daily Market Analysis

Latest Economic Insights

• Key Headlines:
• The dollar rises above 102 and is heading toward gains for a third consecutive week, supported by the strength of the economy and the rise in bond yields.
• Markets are pricing a probability approaching 75% that US interest rates will be kept unchanged this month, with the jobs report awaited.
• Gold is trading near $4,150 and is heading for a second weekly loss under pressure from the dollar and elevated yields.
• Escalating risks in the Middle East are once again supporting energy prices and increasing concerns over inflation.
• Brent crude is trading near $101 and West Texas near $92 with the possibility of a strengthened US military presence in the region.
• Bitcoin is seeing continued institutional flows and strong volatility driven by position liquidations in the derivatives market.

Fundamental Analysis

• The Dollar and Monetary Policy
  • The dollar index rose above the 102 level on Friday, heading toward gains for a third consecutive week, supported by the strength of the US economy, the rise in Treasury yields and growing geopolitical uncertainty in the Middle East.
  • Treasury yields reached their highest levels since 2002 this week, which widened the yield differential between the United States and other major economies and increased the appeal of the dollar.
  • At the same time, investors are trying to assess the Federal Reserve’s next step, where Vice Chair Philip Jefferson said that policymakers may need more time before determining the need for a further rate increase, while Neel Kashkari affirmed that inflation still requires caution.
  • Markets currently point to a probability approaching 75% that the Federal Reserve will keep interest rates unchanged this month, and therefore the focus today turns mainly to the US jobs report for September.
  • The jobs, unemployment and wage data will be important for interest rate expectations, especially with energy prices remaining high: strength in the labour market could support monetary policy staying hawkish, while weak data could ease the pressure on the Federal Reserve.

• Gold:
  • Gold traded near $4,150 per ounce on Friday and was on track to record a second consecutive weekly loss, affected by the strength of the dollar and the rise in US Treasury yields.
  • The recovery in oil prices also revived concerns over energy-related inflation, which limits the Federal Reserve’s ability to shift quickly toward a less hawkish policy and represents additional pressure on the metal.
  • On the other hand, the escalating tensions in the Middle East provide some demand for gold as a safe haven, but the movement of the dollar and yields and today’s US jobs report will remain the most influential factors on the short-term direction.

• Oil:
  • Brent crude traded near $101 per barrel, while West Texas Intermediate moved near $92, with geopolitical risks returning to support prices after several sessions that saw an improvement in supply expectations.
  • The United States is considering sending an additional aircraft carrier and around 10 thousand troops and Marines to the Gulf region, which increases concerns over the possibility of a new escalation in the confrontation with Iran.
  • At the same time, crude oil flows from the Middle East have recovered to levels close to those before the war, but markets still doubt the sustainability of this recovery without a permanent political agreement.
  • Several tankers also came under attack while crossing the Strait of Hormuz this week, coinciding with attacks that targeted refining and energy facilities in the region, which keeps the geopolitical risk premium elevated within prices.

• Bitcoin
  • Bitcoin is continuing to benefit from institutional demand, as spot exchange-traded funds saw strong flows during the third quarter, with net flows amounting to around $6.34 billion during the quarter despite the decline in momentum in late September.
  • Citigroup also raised its 12-month price forecast for Bitcoin from $82 thousand to $113 thousand, based on expectations of continued institutional flows and an improvement in the macroeconomic environment; this remains a forecast issued by the bank and not a guarantee of the price path.
  • In the derivatives market, the liquidation of short positions and margin calls led to sharp moves during the recent sessions, which reflects the continuation of elevated leverage and its ability to amplify price movement in both directions.
  • Today’s US jobs report remains an important factor for Bitcoin as well, because its effect on interest rate expectations, the dollar and bond yields may determine the direction of liquidity and risk appetite during the coming sessions.

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

• From China, Holiday, National Day all day
• From the Eurozone, Consumer Price Index (YoY) (September) 12:00
• From the United States of America, Non-Farm Payrolls Report (September) 15:30
• From the United States of America, Unemployment Rate (September) 15:30
• From the United States of America, Average Hourly Earnings (MoM) (September) 15:30

GOLD

• Trend: Sideways with an upward bias
• Timeframe: 30 minutes
• Current price: 4,179.64
• First scenario: Buy on a break above 4,206.57
• Targets: 4,238.35 then 4,273.49
• Alternative scenario: Sell on a break below 4,162.07
• Targets: 4,130.88 then 4,098.14
• Note: Gold is moving within a sideways range after its recovery from the lower levels, and is currently trading above the group of short moving averages with a main resistance remaining above the price. A break above 4,206.57 supports an extension of the upward move toward the next resistance levels, while a break below 4,162.07 makes a return of selling pressure toward the lower support areas more likely.

CRUDE OIL

• Trend: Sideways with a downward bias
• Timeframe: 30 minutes
• Current price: 92.92
• First scenario: Buy on a break above 94.36
• Targets: 96.08 then 97.98
• Alternative scenario: Sell on a break below 92.22
• Targets: 90.38 then 88.60
• Note: Oil is moving close to a support area and the moving averages after losing the recent upward momentum. A break above 94.36 supports a return of the buyers and a continuation of the move toward the higher resistance levels, while a break below 92.22 makes a return of selling pressure more likely, targeting 90.38 and then 88.60.

EURUSD

• Trend: Bearish with an upward correction
• Timeframe: 30 minutes
• Current price: 1.12557
• First scenario: Buy on a break above 1.12690
• Targets: 1.12969 then 1.13322
• Alternative scenario: Sell on a break below 1.12368
• Targets: 1.12025 then 1.11732
• Note: The euro is still within a clear downward trend and is trading below all the main moving averages, and the current movement represents a corrective rebound after the strong decline. A break above 1.12690 supports a continuation of the correction toward the next resistance levels, while a break below 1.12368 makes a resumption of the downward trend toward the next support levels more likely.

GBPUSD

• Trend: Bearish with an upward correction
• Timeframe: 30 minutes
• Current price: 1.32116
• First scenario: Buy on a break above 1.32312
• Targets: 1.32641 then 1.33005
• Alternative scenario: Sell on a break below 1.31949
• Targets: 1.31595 then 1.31256
• Note: The pound is still under downward pressure and is trading below the main moving averages, while the recent advance represents a correction toward a nearby resistance area. A break above 1.32312 supports an extension of the correction toward the higher levels, while a break below 1.31949 reactivates the bearish scenario toward the next support levels.

NAS 100

• Trend: Bullish with a short correction
• Timeframe: 30 minutes
• Current price: 30,573.85
• First scenario: Buy on a break above 30,756.50
• Targets: 30,889.25 then 31,014.46
• Alternative scenario: Sell on a break below 30,493.04
• Targets: 30,325.07 then 30,115.31
• Note: The index is holding a bullish structure and is trading above the main red moving average, but the current movement represents a correction after a rejection of the upper area. A break above 30,756.50 reconfirms the upward momentum toward the higher targets, while a break below 30,493.04 increases the likelihood of the correction deepening toward the next support areas.