Daily Market Analysis

Latest Economic Insights

Key Headlines:

• The dollar rises above 99.7 and reaches its highest level in around three weeks.
• The probability of a US rate hike during September rises to around 70%.
• The rise in bond yields and oil prices brings inflation concerns back to the forefront.
• Gold settles below $4,350 after a strong decline in the previous session.
• Brent crude is trading near $95 and West Texas near $90.
• Bitcoin is trading near $78,765 with institutional flows and accumulation by large investors continuing.

Fundamental Analysis

• The Dollar and Monetary Policy
  • The dollar index rose above the 99.7 level on Wednesday, reaching its highest level in around three weeks, supported by the rise in oil prices and global bond yields, which brought back concerns over inflation and reinforced expectations that the Federal Reserve will raise interest rates during September.
  • The rise in oil for the third consecutive session came amid the intensifying confrontation between the United States and Iran, which pushed investors to reprice the probability of a disruption to energy flows from the Middle East and a strong return of inflationary pressures.
  • At the same time, the remarks of Federal Reserve Chairman Kevin Warsh reinforced hawkish expectations, after he affirmed the central bank’s commitment to fighting inflation and returning it to the 2% target.
  • Market pricing currently points to a probability of close to 70% for an interest rate hike this month, while Federal Reserve Governor Michael Barr affirmed that the central bank must be prepared to raise interest rates if inflation does not continue to decline.
  • US Treasury yields also reversed a large part of the decline that occurred following the Treasury Department’s announcement of the expansion of the bond buyback programme, which indicates that inflation concerns and hawkish monetary policy have become stronger than the effect of the Treasury’s interventions in the short term.
  • Investors’ attention now turns to the private sector employment data issued by ADP, ahead of the non-farm payrolls report expected on Friday, in order to obtain a clearer picture regarding the strength of the labour market and the probability of a rate hike.

• Gold:
  • Gold settled below the $4,350 per ounce level on Wednesday, after falling by around 3% in the previous session under pressure from the rise in bond yields and oil prices and the growing expectations of a US interest rate hike.
  • The rise in yields creates direct pressure on gold, because the advance in the yield on government bonds raises the opportunity cost of holding the metal, which offers no periodic return.
  • The rise in oil also brings inflation risks back to the forefront, which strengthens the Federal Reserve’s hawkish stance and increases the likelihood of an interest rate hike being carried out during September.
  • On the other hand, the geopolitical risks in the Middle East remain a partial supporting factor for gold as a safe haven, although this support has so far not been sufficient to offset the effect of higher yields and a stronger dollar.
  • Gold’s direction over the coming sessions remains closely tied to the US jobs data, since weakness in the labour market could ease the bets on a rate hike and support the metal, while strong data could lead to a continuation of the current pressures.

• Oil:
  • Brent crude rose to near $95 per barrel, while West Texas Intermediate moved near $90, with prices continuing to rise for the third consecutive session amid escalating geopolitical risks in the Gulf region.
  • The US military launched new strikes on Iranian targets near the Strait of Hormuz, and President Donald Trump said that these operations came in response to Tehran’s attempts to lay mines in the strait and to an earlier attack that targeted a US military base.
  • In return, Iran said that it had responded with attacks on US bases in the region and had fired missiles toward Jordan, which revived concerns over a widening of the confrontation and its effect on energy flows.
  • Trump also threatened a much larger response if Tehran continues to escalate, which increased the risk premium in oil prices.
  • At the same time, US Treasury Secretary Scott Bessent said that around 17 million barrels of crude oil passed through the Strait of Hormuz on Monday, pointing out that the continuation of these flows shows that Iran does not have complete control over the waterway.
  • Despite the continuation of shipping movement, any further escalation could raise the risks to supplies and increase the likelihood of oil moving to higher levels.

• Bitcoin
  • Bitcoin traded near the $78,765 level amid continued institutional flows and accumulation operations by large investors, despite the market remaining sensitive to movements in the dollar and US yields.
  • Spot Bitcoin exchange-traded funds recorded flows approaching $1 billion during the past week, while net flows since the start of the year amounted to around $1.89 billion, with a large contribution from BlackRock’s products.
  • On-chain data also showed that the large wallets added around 60 thousand Bitcoin during August, with the purchase costs of large investors concentrated approximately between $56 thousand and $66 thousand.
  • At the same time, around 2% of the supply moved to groups with a higher cost, which reflects the presence of new buying at the recent higher levels.
  • Market order data shows the presence of limit buy orders worth around $118 million within the area between $69,000 and $76,700, which makes this area a potential support in the event of a correction.
  • Above the current price, selling operations are concentrated mainly within the framework of profit-taking, which means that the continuation of institutional flows and stability above the current support areas keeps the bullish picture in place, with the need to monitor the effect of the US employment data on liquidity and high-risk markets.

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

• From New Zealand, Interest Rate Decision issued by the Reserve Bank of New Zealand 05:00
• From the United States of America, Change in Non-Farm Private Sector Employment issued by ADP (August) 15:15
• From Canada, Interest Rate Decision issued by the Bank of Canada 16:45
• From the United States of America, US Crude Oil Inventories 17:30

GOLD

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 4,321.64
• First scenario: Buy on a break above 4,342.22
• Targets: 4,374.00 then 4,409.14
• Alternative scenario: Sell on a break below 4,300.71
• Targets: 4,266.53 then 4,233.79
• Note: Gold is still in a strong downward trend and is trading far below the moving averages, and the current move appears to be a correction after the sharp decline, so the advantage remains with selling as long as it is below 4,342.22, and a break below 4,300.71 confirms a resumption of the decline.

CRUDE OIL

• Trend: Bullish
• Timeframe: 30 minutes
• Current price: 91.33
• First scenario: Buy on a break above 92.51
• Targets: 94.23 then 96.13
• Alternative scenario: Sell on a break below 90.38
• Targets: 88.53 then 86.76
• Note: Oil is holding a clear bullish trend and is trading above the moving averages after a strong upward wave, so the advantage remains with buying as long as it is above 90.38, and a break above 92.51 supports the completion of the advance toward the higher targets.

EURUSD

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 1.15659
• First scenario: Buy on a break above 1.15895
• Targets: 1.16174 then 1.16527
• Alternative scenario: Sell on a break below 1.15573
• Targets: 1.15230 then 1.14937
• Note: The price is moving below the moving averages with the downward bias continuing, so the advantage remains with selling as long as it is below 1.15895, and a break below 1.15573 supports an extension of the decline toward the lower levels.

GBPUSD

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 1.34895
• First scenario: Buy on a break above 1.35137
• Targets: 1.35466 then 1.35830
• Alternative scenario: Sell on a break below 1.34774
• Targets: 1.34420 then 1.34081
• Note: The downward trend is clear with the price remaining below all the moving averages, and a break below 1.34774 reinforces the continuation of selling pressure, while any upward correction needs to regain 1.35137 first.

NAS 100

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 29,048.97
• First scenario: Buy on a break above 29,201.02
• Targets: 29,336.01 then 29,461.21
• Alternative scenario: Sell on a break below 28,910.13
• Targets: 28,742.17 then 28,532.40
• Note: The index is trading below the moving averages after a strong downward wave, so the advantage remains negative below 29,201.02, and a break below 28,910.13 gives a signal for a continuation of the decline toward the next support areas.