Daily Market Analysis

Latest Economic Insights

Key Headlines:

• The dollar steadies below 99 after the decline in expectations of a US rate hike in September.
• Christopher Waller’s dovish remarks lower the probability of a rate hike to around 50%.
• Gold is trading near $4,500, benefiting from the retreat in the dollar and bond yields.
• Markets are awaiting the US jobs report for fresh signals on Federal Reserve policy.
• Brent crude is trading near $95 and West Texas near $90 amid supply disruptions in the Middle East.
• Bitcoin is trading above $80 thousand with leverage volatility and liquidations continuing.

Fundamental Analysis

• The Dollar and Monetary Policy
  • The dollar index steadied at a level slightly below 99 on Friday after the sharp decline it recorded in the previous session, after more flexible remarks from one of the Federal Reserve’s officials pushed investors to scale back their expectations regarding an interest rate hike at the September meeting.
  • Federal Reserve Governor Christopher Waller said that he would support keeping interest rates unchanged if price pressures continue to ease, explaining that his next decision will depend to a large degree on the inflation data for August due to be released next week.
  • These remarks pushed markets to lower the probability of a rate hike in September to around 50%, compared with around 63% on the previous day, which led to a clear decline in the dollar and in Treasury yields.
  • Investors’ attention turns today to the US jobs report for August, which will provide fresh signals about the strength of the labour market and whether the economy is still able to withstand further monetary tightening.
  • The dollar also faced additional pressure from the rise in the Japanese yen, with markets continuing to monitor the possibility of intervention by the Japanese authorities and a tightening of the Bank of Japan’s monetary policy during the coming period.
  • For the week, the dollar index is heading toward recording a loss of close to 0.7%, with the balance continuing between inflation risks and the weakness of some economic data.

• Gold:
  • Gold traded near the $4,500 per ounce level on Friday after rising for several consecutive sessions, benefiting from the retreat in the dollar and in Treasury yields following Christopher Waller’s remarks.
  • The decline in expectations of a rate hike in September contributed to easing the pressure on gold, since keeping interest rates unchanged reduces the opportunity cost of holding the metal, which offers no yield.
  • Gold also continues to benefit from the state of geopolitical uncertainty in the Middle East, especially with the continuation of attacks between Iran and the allies of the United States and the rise in the risks of a disruption to energy flows.
  • On the other hand, high oil prices remain a factor that could revive inflationary concerns and increase the likelihood of a return to a more hawkish stance from the Federal Reserve if price pressures persist.
  • Today’s jobs report remains among the most important short-term factors for gold’s movement, as weak data could support the metal by lowering interest rate expectations, while strong data could bring back the selling pressures.

• Oil:
  • Brent crude traded near $95 per barrel, while West Texas Intermediate moved near $90, with concerns continuing over supply disruptions in the Middle East.
  • The Kuwaiti forces announced the continued exposure of the country to what they described as “ongoing Iranian aggression”, at a time when the air defences intercepted missiles and drones.
  • Iran also continued to respond to the US strikes by targeting Washington’s regional allies, including Jordan and Bahrain, which kept the risks of a widening of the conflict elevated.
  • Vessel movement through the Strait of Hormuz declined, with only six commercial vessels crossing on Wednesday compared with 11 vessels on Tuesday, and an average of close to 13 vessels during the previous ten days.
  • The Japanese company Mitsui O.S.K. Lines, one of the largest tanker operators globally, also expects the disruptions in the Strait of Hormuz to continue for a longer period than expected, with the possibility that conditions may not return to normal before the end of the year.
  • At the same time, damage to refineries in the Middle East and Russia and the insufficiency of alternative refining capacity could keep global fuel prices elevated into next year, which reinforces the inflationary risks.

• Bitcoin
  • Bitcoin rose by around 4.7% to trade near the $81,054 level, remaining above the $80 thousand barrier amid a clear increase in volatility and liquidations in the derivatives markets.
  • Over 24 hours the market witnessed liquidations exceeding $500 million, of which around $416 million came from short positions, with more than 119 thousand traders affected.
  • The period from 1 to 3 September also witnessed liquidations of short positions worth close to $82 million, in addition to around $47.5 million of Bitcoin liquidations within a single hour.
  • The main resistance is concentrated near $82,793, while the near support lies at $75,674, and a deeper support appears near $71,781.
  • In the event of a break of the $71,781 level and a close below it, the way could open toward the $62,677 and $57,776 areas, while a sustained break above $82,793 could lead to targeting the area between $90,000 and $97,867.
  • A large part of August’s gains came as a result of the covering of short positions in perpetual futures, with some traders returning to build new short positions after the recent rise, which keeps volatility elevated over the short term.

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

• From the United States of America, Average Hourly Earnings (MoM) (August) 15:30
• From the United States of America, Non-Farm Payrolls Report (August) 15:30
• From the United States of America, Unemployment Rate (August) 15:30

GOLD

• Trend: Bullish
• Timeframe: 30 minutes
• Current price: 4,480.99
• First scenario: Buy on a break above 4,495.33
• Targets: 4,527.11 then 4,562.25
• Alternative scenario: Sell on a break below 4,453.82
• Targets: 4,419.64 then 4,386.90
• Note: Gold is holding its strong recovery and is trading above the short-term moving averages after forming a clear upward wave. A break above 4,495.33 reinforces a continuation of the advance, while a break below 4,453.82 opens the way for a correction toward the lower supports.

CRUDE OIL

• Trend: Bullish with a downward correction
• Timeframe: 30 minutes
• Current price: 90.91
• First scenario: Buy on a break above 92.48
• Targets: 94.20 then 96.10
• Alternative scenario: Sell on a break below 90.34
• Targets: 88.49 then 86.72
• Note: Oil is still within a broader bullish structure but is currently going through a correction below the short-term moving averages, so regaining 92.48 reconfirms the upward momentum, while a break below 90.34 makes an extension of the correction toward the lower levels more likely.

EURUSD

• Trend: Bullish
• Timeframe: 30 minutes
• Current price: 1.16218
• First scenario: Buy on a break above 1.16413
• Targets: 1.16692 then 1.17045
• Alternative scenario: Sell on a break below 1.16101
• Targets: 1.15747 then 1.15454
• Note: The price is holding its trading above the moving averages after the recent recovery wave. A break above 1.16413 supports a continuation of the advance, while a break below 1.16101 weakens the positive momentum and opens the way for a deeper correction.

GBPUSD

• Trend: Bullish
• Timeframe: 30 minutes
• Current price: 1.35304
• First scenario: Buy on a break above 1.35548
• Targets: 1.35878 then 1.36242
• Alternative scenario: Sell on a break below 1.35206
• Targets: 1.34832 then 1.34493
• Note: The pound is attempting to establish the recovery above the moving averages after the recent rebound, and moving past 1.35548 confirms an extension of the upward move, while a return below 1.35206 restores selling pressure.

NAS 100

• Trend: Bullish
• Timeframe: 30 minutes
• Current price: 29,609.75
• First scenario: Buy on a break above 29,704.23
• Targets: 29,836.99 then 29,962.19
• Alternative scenario: Sell on a break below 29,411.11
• Targets: 29,243.14 then 29,033.37
• Note: The index is holding a clear bullish structure after the recent push and remains above the main moving averages, so a break above 29,704.23 supports the completion of the advance, while a break below 29,411.11 points to the start of a downward correction.