This preview of weekly data looks at USOIL and XAUUSD where economic data coming up later this week are the main market drivers for the near short-term outlook.
The most important economic data for this week are: Preliminary German inflation, US GDP, EU Flash inflation, US PCE index, NBS manufacturing PMI
Thursday:
- Preliminary German inflation rate at 12:00 PM GMT. The market consensus for the month of August is for a decline on the figure of around 0.2% reaching 2.1%. If this is broadly accurate then it could most probably influence the European inflation figure on the following day.
- US GDP Growth Rate QoQ 2nd Estimate for the second quarter is expected to reach 2.8% against the previous reading of 1.4%. If this optimistic expectation is met then it might boost the Dollar while hurting many of its instruments traded against it.
Friday:
- Flash European inflation rate at 09:00 AM GMT. The rate for the month of August is expected to decrease to 2.3% down from the previous reading of 2.6%. This could affect negatively the Euro against its pairs at least in the short term.
- S core PCE at 12:30 PM GMT. The market is expecting this figure to remain stable at 0.2% month over month but if any unexpected surprise is seen at the time of publication would most probably create volatility in the majority of the dollar pairs.
Saturday:
- NBS manufacturing PMI at 01:30 AM GMT where the expectations are for a slight decrease reaching 49.2 points. The NBS is larger than the Caixin and is focusing more on larger state-owned firms. If the expectations are correct then it would mean that the state owned firms might be performing worse but have yet to reach the 50 point level indicating that the manufacturing sector of the NBS survey might still be shrinking and probably might have some effect on production related products like oil, natural gas, silver etc.
USOIL, daily
Oil prices rose after an Israeli strike on Hezbollah targets in Lebanon heightened Middle East tensions, with Brent approaching $80 a barrel and West Texas Intermediate surpassing $75.
Despite the escalation, oil fundamentals remained relatively stable, with volatility staying below earlier peaks and options skewing toward puts, indicating a bias toward lower prices. Expectations of U.S. interest rate cuts have also boosted market sentiment, however, caution remains regarding OPEC’s plans to increase output, which could limit further price increases. Overall, the outlook for oil prices is bullish due to geopolitical risks and technical support, but caution is advised due to potential market volatility from OPEC actions and the situation in Gaza.
On the technical side, the price has found sufficient support on the lower band of the Bollinger bands around the $72 area and has since rebounded to the upside. The Stochastic oscillator is not near the overbought level hinting that the recent minor bullish trend has still the potential to extend in the short term with the area of $78 being the major resistance level for now consisting of the 50% of the daily Fibonacci retracement level, the upper band of the Bollinger bands as well as the 50 and 100-day moving averages.
Gold-dollar, daily
Gold prices remain near record highs due to expectations of a September interest rate cut in the US and a softer dollar, making gold more attractive for investors. Federal Reserve Chair Jerome Powell’s dovish remarks have bolstered gold’s appeal, with traders fully expecting a rate cut next month. Powell clearly hinted at the possibility of U.S. rate cuts, suggesting that the pace and magnitude of these cuts would depend on upcoming economic data, potentially increasing demand for gold investments. On Friday, Powell supported the idea of starting rate cuts soon, stating that further easing in the job market would be undesirable. Traders have fully anticipated a rate cut next month, with the CME FedWatch tool indicating a 64% probability of a 25 basis point reduction and a 36% chance of a 50 basis point cut.
From a technical point of view, the price continued testing the all-time high area of around $2,500 currently trading even beyond this point at the time of this report being written. The Stochastic oscillator is in the extreme overbought level for the past 10 sessions indicating that there might be a correction in the near short term while the 50-day moving average is still trading well above the 0100-day moving average validating the overall bullish momentum in the market. The Bollinger bands are still quite expanded showing that volatility is still high in the market so if a correction were to happen to the downside there is the liquidity to support it.
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