Daily Market Analysis

Latest Economic Insights

Key Headlines:

• The dollar holds its gains near 99.6 after Kevin Warsh’s hawkish remarks at Jackson Hole.
• The probability of a US rate hike in September rises to around 57%.
• Markets are awaiting the US jobs report for August on Friday.
• Gold retreats to near $4,460 but remains up by more than 10% during August.
• Brent crude is trading near $90 and West Texas near $85 after new US strikes on Iranian targets.
• Bitcoin is benefiting from improved institutional demand, with support remaining near $77,000–$78,000.

Fundamental Analysis

• The Dollar and Monetary Policy
  • The dollar index traded near the 99.6 level on Monday after a strong rise in the previous session, supported by the hawkish remarks delivered by Federal Reserve Chairman Kevin Warsh during his speech at the Jackson Hole symposium on Friday.
  • Warsh warned that inflation is not slowing at a sufficient pace, and reaffirmed that the central bank remains committed to returning inflation to its 2% target, while indicating that current financial conditions are still not restrictive enough.
  • These remarks pushed markets to raise their expectations regarding an interest rate hike at the September meeting, with the probability rising to around 57% for an increase of 25 basis points, compared with only around 40% a week earlier.
  • The unexpected upward revision to the University of Michigan consumer confidence data also contributed additional support to the dollar, as it reaffirmed the continuation of a degree of resilience in the US economy.
  • Investors’ attention now turns to the US jobs report for August, due to be released on Friday, which will be among the most important data in determining whether the Federal Reserve will have sufficient justification to act in September.
  • On the geopolitical front, the dollar gained additional support from safe-haven demand after the US military targeted Iranian missile launch platforms that were preparing to lay mines in the Strait of Hormuz, in the first attack of its kind in more than a month.

• Gold:
  • Gold traded near the $4,460 per ounce level on Monday after falling by more than 3% in the previous session, affected by the hawkish shift in US monetary policy expectations following Kevin Warsh’s speech.
  • The increased probability of a rate hike in September led to a rise in yields and support for the dollar, which created direct pressure on gold as a non-yielding asset.
  • The metal also came under additional pressure from the rise in oil prices, since the advance in energy revives inflation concerns and strengthens the case for interest rates remaining high or even being raised again.
  • Nevertheless, gold is still on track to record gains exceeding 10% during the month of August, supported mainly by US debt concerns and what is known as the currency debasement trade, alongside investment demand and continued purchases by central banks.
  • Gold’s near-term direction remains closely tied to the results of the US jobs report, since weak data could bring interest rate expectations back down and support the metal, while strong data could reinforce the current pressures.

• Oil:
  • Brent crude rose to near $90 per barrel, while West Texas Intermediate moved near $85, with a strong start to the week after the new US strikes on Iranian targets linked to the Strait of Hormuz.
  • The US military targeted Iranian missile launch platforms that it said were preparing to lay mines in the strategic waterway, which returned the geopolitical risk premium to oil prices.
  • US forces affirmed that they are monitoring the Strait of Hormuz closely and remain ready to protect the free flow of trade, which reflects the continued high sensitivity of the security situation in the region.
  • The United States had eased its direct military operations against Iran since late July, shifting the focus toward sanctions and economic pressure to force Tehran to return to the negotiating table.
  • On the other hand, an Iranian official said on Friday that resuming diplomacy with the United States is “not impossible” following constructive talks with Qatar, which is playing the role of mediator in the dispute.
  • Despite the absence of a peace agreement so far, reports indicate the continued flow of between 6 and 8 million barrels per day through the Strait of Hormuz, which limits the likelihood of a severe and immediate shortage in supplies.

• Bitcoin
  • Bitcoin continued to benefit from improved institutional demand and buying linked to exchange-traded funds and companies, with a clear shift among some large investors toward a higher risk appetite.
  • Flows between exchanges and the transfer of part of the positions from the spot market to futures helped absorb some of the selling pressure, with liquidity remaining relatively high.
  • The data showed that large Bitcoin holders bought close to $3 billion over the past week, with liquidity concentrated near the $77,000 level and additional support appearing on the hourly chart near $78,000.
  • Traders are watching a potential upside target near $82,700 if demand continues and the price manages to hold the current support areas.
  • In the broader view, some analysts consider that Bitcoin is still relatively lagging behind the growth of the global M2 money supply, and that any future return of liquidity expansion or money printing could strengthen its appeal as a hedging instrument alongside gold.
  • In the short term, Bitcoin’s movement will remain tied to the direction of the dollar, US yields and interest rate expectations, especially with the US jobs report due this week.

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

From Germany, Consumer Price Index (MoM) 15:00

GOLD

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 4,437.24
• First scenario: Buy on a break above 4,452.09
• Targets: 4,483.86 then 4,519.01
• Alternative scenario: Sell on a break below 4,410.58
• Targets: 4,376.39 then 4,343.66
• Note: Gold is witnessing a sharp downward wave and is trading far below the moving averages. A break above 4,452.09 could open an upward correction, while a break below 4,410.58 confirms an extension of the downward wave.

CRUDE OIL

• Trend: Bullish
• Timeframe: 30 minutes
• Current price: 86.89
• First scenario: Buy on a break above 87.87
• Targets: 89.59 then 91.49
• Alternative scenario: Sell on a break below 85.74
• Targets: 83.89 then 82.12
• Note: Oil is showing a clear upward recovery and is trading above the moving averages after a strong reversal from the bottom. A break above 87.87 supports a continuation of the advance, while a break below 85.74 weakens the positive scenario and opens the way for a deeper correction.

EURUSD

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 1.15874
• First scenario: Buy on a break above 1.16033
• Targets: 1.16312 then 1.16665
• Alternative scenario: Sell on a break below 1.15711
• Targets: 1.15367 then 1.15074
• Note: The price is trading below the moving averages after a strong downward wave, so the advantage remains with the downside as long as it is below 1.16033, while a break above it could support the start of an upward correction.

GBPUSD

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 1.35426
• First scenario: Buy on a break above 1.35650
• Targets: 1.35980 then 1.36345
• Alternative scenario: Sell on a break below 1.35289
• Targets: 1.34935 then 1.34595
• Note: The downward trend is clear with the price remaining below the moving averages. A break above 1.35650 is required to ease the selling pressure, while a break below 1.35289 confirms the continuation of the decline.

NAS 100

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 29,388.83
• First scenario: Buy on a break above 29,527.91
• Targets: 29,636.03 then 29,761.23
• Alternative scenario: Sell on a break below 29,210.15
• Targets: 29,042.19 then 28,832.42
• Note: The index came under strong selling pressure and is now trading below the short-term moving averages, so the advantage remains with the downside below 29,527.91, while regaining this level strengthens the chances of an upward recovery.