Daily Market Analysis

Latest Economic Insights

Key Headlines:

• The dollar steadies near 99 amid anticipation of the US inflation data preferred by the Federal Reserve.
• Markets are awaiting the speech of Federal Reserve Chairman Kevin Warsh at the Jackson Hole symposium on Friday.
• Gold steadies near $4,650 and remains close to its highest levels in three months.
• A larger-than-expected rise in US oil inventories is pressuring crude prices.
• Brent crude is near $86 and West Texas near $80.
• Bitcoin moves past $80,000 before retreating slightly amid strong flows into exchange-traded funds.

Fundamental Analysis

• The Dollar and Monetary Policy
  • The dollar index steadied near the 99 level on Wednesday, with investors awaiting the release of the latest personal consumption expenditures (PCE) price index data in the United States, the Federal Reserve’s preferred measure of inflation, which may provide fresh signals about the direction of prices and the future of monetary policy.
  • Market attention also turns to the speech of Federal Reserve Chairman Kevin Warsh at the annual Jackson Hole symposium on Friday, although expectations suggest that he may avoid providing clear and direct guidance regarding the interest rate decision at the September meeting.
  • At the same time, the dollar remained close to its lowest levels in more than three months, with investors continuing to assess the implications of the US Treasury Department’s decision to double its buyback operations of long-term bonds with the aim of supporting liquidity and influencing borrowing costs.
  • Markets remain concerned that the debt buyback programme may offer only a temporary solution, while concerns continue regarding the rise in US government debt, fiscal sustainability and the possibility of the dollar coming under further pressure.
  • The decline in oil prices for the third consecutive session also contributed to easing inflation concerns, which partly reduced demand for the dollar as a safe haven and kept investors’ focus on the US inflation and growth data.

• Gold:
  • Gold steadied near the $4,650 per ounce level on Wednesday and remained close to its highest levels in three months, with markets awaiting the US personal consumption expenditures price index data for fresh signals on the direction of inflation and the Federal Reserve’s monetary policy.
  • Gold is benefiting from the continued weakness of the dollar and concerns related to US debt, alongside the recent decline in oil prices, which eased inflationary pressures and supported the positive outlook for the precious metal.
  • Investment demand also continued to provide support for gold, as China’s net imports of the metal via Hong Kong rose by around 11% on a monthly basis during July, indicating continued strength of demand in one of the largest gold markets globally.
  • The US inflation data remains the most prominent factor in the near term, since a lower-than-expected reading could support gold by reducing the likelihood of monetary policy tightening, while a high reading could bring pressure back on the metal through a rise in yields and in the dollar.

• Oil:
  • Brent crude traded near $86 per barrel, while West Texas Intermediate moved near $80, with oil prices coming under pressure after US crude inventories rose by more than market expectations.
  • US crude oil inventories rose by 4.2 million barrels in the week ending 21 August, compared with expectations of an increase of 1.9 million barrels, following a decline of 328 thousand barrels in the previous week.
  • At the same time, Cushing inventories rose by around one million barrels, while US crude oil production climbed to 13.83 million barrels per day from 13.805 million barrels per day, an increase of 503 thousand barrels per day compared with the previous year.
  • On the other hand, gasoline inventories fell by 3.2 million barrels, and distillate inventories declined by around 500 thousand barrels, which provided some positive signals regarding demand for oil products.
  • The Strategic Petroleum Reserve also declined by a further 3.7 million barrels to reach around 289.7 million barrels, approaching the range generally viewed as the accepted minimum operating level of between 250 and 300 million barrels.

• Bitcoin
  • Bitcoin moved past the $80,000 level and reached around $81,000 before retreating to the $78,970 area, recording weekly gains of close to 23% amid continued strong momentum and institutional flows.
  • Spot Bitcoin exchange-traded funds recorded net inflows of around $338 million on Monday, of which close to $209 million went to the iShares fund, while total net inflows during the week ending 21 August amounted to around $1.9 billion.
  • The main resistance is currently concentrated between $82,000 and $87,000, and a break above this area is an important factor for the continuation of the upward trend, while a failure to move past it could lead to a short-term correction toward the $75,000–$76,000 area.
  • At the same time, CryptoQuant data showed that large investors realised profits of around $1.2 billion over three days, with profit-taking reaching a peak of about $614 million in a single day.
  • The $70,000 area stands out as a potential demand zone in the event of a deeper correction, while flows into exchange-traded funds, trading volumes and leverage levels remain among the most important factors in determining Bitcoin’s ability to continue the upward move.

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

• From the United States of America, Core Personal Consumption Expenditures Price Index (YoY) (July) 15:30
• From the United States of America, Core Personal Consumption Expenditures Price Index (MoM) (July) 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

GOLD

• Trend: Bullish with a correction
• Timeframe: 30 minutes
• Current price: 4,634.42
• First scenario: Buy on a break above 4,657.12
• Targets: 4,688.89 then 4,724.04
• Alternative scenario: Sell on a break below 4,615.61
• Targets: 4,581.43 then 4,548.69
• Note: The general trend for gold is still bullish, but the price is going through a corrective phase and is trading close to the moving averages. A break above 4,657.12 supports a resumption of the advance, while a break below 4,615.61 opens the way for a deeper correction.

CRUDE OIL

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 81.96
• First scenario: Buy on a break above 83.50
• Targets: 85.22 then 87.12
• Alternative scenario: Sell on a break below 81.37
• Targets: 79.52 then 77.75
• Note: Oil is in a clear downward trend and is trading below all the main moving averages, so a break above 83.50 is required to begin a price recovery, while a break below 81.37 supports a continuation of the decline toward 79.52 and then 77.75.

EURUSD

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 1.16628
• First scenario: Buy on a break above 1.16833
• Targets: 1.17112 then 1.17465
• Alternative scenario: Sell on a break below 1.16511
• Targets: 1.16168 then 1.15874
• Note: The price is trading below the short-term moving averages with selling pressure. A break above 1.16833 restores the positive momentum, while a break below 1.16511 supports a continuation of the decline toward the next support areas.

GBPUSD

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 1.36244
• First scenario: Buy on a break above 1.36495
• Targets: 1.36824 then 1.37188
• Alternative scenario: Sell on a break below 1.36133
• Targets: 1.35778 then 1.35439
• Note: The price has fallen below the short-term moving averages and is approaching support at 1.36133, so a break above 1.36495 is required to regain the upward momentum, while a break of the support supports a continuation of the downward move.

NAS 100

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 29,176.89
• First scenario: Buy on a break above 29,308.36
• Targets: 29,441.11 then 29,566.31
• Alternative scenario: Sell on a break below 29,015.23
• Targets: 28,847.26 then 28,637.50
• Note: The general trend is still bearish and the price is below the main moving average. A break above 29,308.36 improves the positive picture, while a break below 29,015.23 restores selling pressure toward the lower supports.