Traders appear to be booking profits ahead of a key US GDP report later today, with the USD index providing a solid bounce from 100. Gold might reach for 2700 (even if it does look stretched), while crude oil could be in for a deeper pullback.
By :Matt Simpson, Market Analyst
Traders appear to be booking profits ahead of a key US GDP report later today , and a highly anticipated PCE inflation report tomorrow. The US dollar was the strongest major currency on Fridy after the USD index provided a solid bounce from thew 100 handle.
This saw EUR/USD reverse back below 1.12 and formed a 2-day bearish reversal, GBP/USD form a bearish outside day and bearish engulfing days form on AUD/USD. US yields were also higher which helped USD/JPY close 144 for the first time in three weeks.
The S&P 500 reversed lower after reaching an intraday record high, while the Dow Jones index delivered a noteworthy bearish outside day at its own record high. And with news of China’s stimulus fading, that could weigh on the Hang Seng futures, which held beneath the May high on Wednesday and saw a false break of it on Tuesday.
Australia’s inflation rate fell to a 3-year low of 2.7% y/y in August, which places it back within the RBA’s 2-3% band. Yet the market reaction was muted as the central bank has already said it will look through the headline figures, as much of the declines are due to rebates on electricity. Trimmed mean - The RBA’s preferred measure of CPI – slowed to 3.4% and CPI less ‘volatile items and travel’ to 3.1%. The inflation rate is moving in the correct direction for doves, just not as quickly as they’d like. Which means the RBA are likely to retain their cash rate at 4.35% into next year.
Events in focus (AEDT):
We have quite the lineup of data from the US later today, with preliminary US GDP data for Q2 being released alongside jobless claims and durable goods orders. While GDP is backwards looking, it will stail shape expectations of any soft or hard landing and Fed policy as a consequence. With gold looking extended at its record highs, a decent set of growth figures could prompt some profit taking (and therefore mean reversion) ahead of tomorrow’s PCE inflation report.
Keep a close eye on the jobless claims figures given initial claims fell at their fastest weekly pace since May 2022 last week. Another weak print could further excite USD bears as it piles the pressure on the Fed to cut by more than their anticipated 50bp this year.
The SNB are expected to cut their interest rate by 25bp , although the bigger thing to watch out for is any working around a strong franc. Swiss exporters have been lobbying for a weaker currency and the central bank have been making noises around it. ING analysts also suspect that the SNB have been active franc sellers when USD/CHF reaches 0.84 or EUR/CHF falls to 0.94, which makes them key levels to monitor for any potential spikes higher.
- 09:50 – JP foreigner bond, stock purchases
- 12:30 – RBA financial stability review
- 15:00 – SG industrial production
- 16:00 – DE consumer sentiment
- 17:30 – SNB monetary policy decision (-25bp expected)
- 22:30 – US Q2 GDP, PCE prices, consumer spending, corporate profits, durable goods orders, jobless claims
Click the website link below to get our exclusive Guide to gold trading in H2 2024.
https://www.forex.com/en-us/market-outlooks-2024/h2-gold-outlook/
Gold futures technical analysis:
While several metrics pointed to a sentiment extreme for gold bulls, I noted during the consolidation around 2500 that speculative open interest was low by historical standards. Which suggested many were on the sidelines and could re-enter the gold ring upon a breakout. With gold prices around $200 higher, speculative gold bugs appear to be returning.
Yet while gold prices appear extended on the daily, it trades too close to $2700 for gold bugs to not have another crack at it. And given the strong trend on the 1-hour chart with potential bull flag, I suspect small dips may be bought today and we may see prices make a dash that milestone level. However, I also suspect gold prices will struggle to hold above there, and profit taking may be too tempting and a pullback could occur. Especially if GDP data comes in better than expected.
Crude oil technical analysis:
Crude oil prices bounced 8.4% over the past 10 trading days, thanks to a dovish Fed, weaker US dollar and rising concerns in the Middle East. Yet the latter two drivers worked against crude oil prices on Wednesday, with the front-month futures contract falling below $70 during its most volatile down-day since the 64.04 low.
Note crude oil’s inability to close above $72 or the 61.8% Fibonacci level on the daily chart. The week’s high also perfectly respected the 50-day average as resistance. As for market positioning, gross-long exposure fell to its lowest level in 14 years according to the last COT data, which suggests the recent rise for crude oil prices could be corrective.
Still, prices found support around a high-volume node and a spike low formed on the 1-hour chart. I suspect we could be in for at least a minor bounce from current levels today. But given the bearish price action on the daily chart, the preference is to fade into bounces in anticipation of a move down to $68.
View the full economic calendar
– Written by Matt Simpson
Follow Matt on Twitter @cLeverEdge
https://www.forex.com/en-us/news-and-analysis/usd-gold-crude-oil-asian-open-2024-09-26/
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.