Daily Market Analysis from Investizo.com

Fundamental analysis of XAU/USD

Gold prices rose, recovering from their lowest levels since late June, amid rising expectations of the minutes of the US Federal Reserve's monetary policy meeting. This rally in gold prices was supported by the emergence of cautious optimism in the market. The main contributing factors are expectations of further stimulus packages from China and the likelihood that the Fed will end the tightening cycle based on recent conflicting US data indicators. In addition, the recent passivity of major central banks appears to signal the end of the rate hike cycle. These moves have created a safety net for XAU/USD, especially given China's willingness to continue stimulus and India's economic measures. Despite this, the day before, gold prices were dragged to multi-day lows by strong US retail sales, data from China and US Treasury yields. The XAU/USD pair is also under pressure due to weakness in risk assets such as stocks, bonds and other commodities.



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Fundamental analysis of GBP/USD

Against the backdrop of a busy economic calendar, the GBP/USD pair is showing notable fluctuations. UK retail sales data for July showed a stronger-than-expected decline of 1.2%. On a year-on-year basis, retail sales fell 3.2%, contrasting with June's 1.6% decline, with core retail sales reflecting a similar downward trend. A number of factors, including rainy weather, higher cost of living and rising food prices, contributed to these low sales numbers. Lower retail sales may reduce the need for the Bank of England to tightly manage inflation. Rising interest rates and the current inflationary environment have led to lower consumer spending, which may ease demand-driven inflationary pressures. The UK Consumer Price Index (CPI) fell 0.4% for the month, ahead of market expectations. The core CPI, which excludes volatile components such as oil and food, presents a worrying picture of lingering inflation in the UK, which could prompt the Bank of England to raise rates further.

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Fundamental analysis of EUR/USD


The EUR/USD pair started the new week confidently, reaching the level of 1.09200, creating prerequisites for optimism in the European currency markets.
ECB Chief Economist Philip Lane recently stated that the Eurozone can avoid a prolonged recession. This sentiment has led to a rise in the single currency, especially as the German yield curve begins to tighten, suggesting that the ECB may adjust its policy. At the same time, the weakening of the US dollar provided support to the EUR/USD pair. The US Dollar Index fell to 103.130, but the resilience of the US economy suggests the possibility of a rate hike before the end of the year, which could offset the sharp fall in the US Dollar.





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Fundamental analysis of XAU/USD

After stabilizing around the key level of 1900.00, gold prices rebounded slightly to trade at 1903.50. This shift was driven by a decline in the US Dollar Index from a two-month high and a temporary slowdown in US Treasury yields, which recently hit a 16-year high. This allowed for some recovery to take place.



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Fundamental analysis of EUR/USD

On Thursday, EUR/USD resumed its uptrend for the second day in a row, trading near 1.08620. Much of Wednesday's gains were driven by weak US PMI data. Economic data from the eurozone was worrisome as the PMI for August fell to 47.0, below the forecast of 48.5. In eurozone leader Germany, the core PMI also fell to 44.7, well below market expectations of 48.3. Meanwhile, France's private sector contracted in the third quarter. In particular, confidence in the French economy fell sharply and there was considerable pessimism in the manufacturing sector.

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Fundamental analysis of EUR/USD

The EUR/USD pair continues to decline, trading at 1.07730. This behavior of the pair was influenced by such factors as the expectation of Fed Chairman Powell's speech and disappointing US economic indicators.

On Friday, data on the German economy takes center stage, focusing on the country's GDP and business climate index. After disappointing PMI data for August, market participants are preparing for potentially gloomier news. Germany's economy is forecast to contract by 0.2% year-on-year in the second quarter and remain flat in the next quarter. Notably, a quarterly contraction could have a significant impact on the market, which would also make the European Central Bank cautious. The business climate index is forecast to fall to 86.7 from a previous reading of 87.3, although this data could be overshadowed by GDP figures. While the focus remains on the state of the German economy, investors will be keeping a close eye on ECB statements, particularly the speech by its president Christine Lagarde, which is scheduled for today. Recent poor PMI results in the eurozone have cooled expectations for an ECB rate hike in September. Any hawkish remarks could revive buying interest.


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Fundamental analysis of XAU/USD

Gold prices started the week trading flat at 1916.00.Factors such as low Treasury yields and US dollar strength, despite hawkish comments from Fed Chairman Jerome Powell on interest rates during the year at a conference in Jackson Hole, contributed to gold's resilience. In his comments, Powell pointed to the strength of the US economy and raised the possibility of a rate hike amid growing concerns about inflation. However, the market reaction was somewhat subdued, suggesting that his views were in line with traders' expectations. Given the current rate of inflation and the continued strength of the US economy, a rate hike could come as early as November. Loretta Mester of the FRB Cleveland supported this view, saying that an interest rate hike after a period of relative equilibrium is possible.



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Fundamental analysis of WTI

Oil prices rose on Wednesday for several reasons. The key driver of the rise was a significant decline in U.S. crude oil inventories, as evidenced by a weekly decline of 11.5 million barrels, which peaked on August 25. The sharp drop was the largest since September 2016 and exceeded market expectations, signaling strong demand for oil. The decline in inventories underscores the challenges of replenishing supply and signals growing demand for energy. Another reason for high prices is the threat of Hurricane Idalia in the Gulf of Mexico. Current forecasts suggest the hurricane could move eastward and bypass major sources of oil, but its very presence could lead to potential supply chain disruptions in the region. The Gulf is an integral part of U.S. oil production, accounting for nearly 15% of U.S. oil production. This environmental uncertainty certainly underscores the unpredictable nature of the oil industry.

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Fundamental analysis of XAU/USD

Gold prices (XAU/USD) are showing strength, trading at 1943.70, and have recently reached a high since early August, supported by a number of factors, including a weaker US Dollar on speculation over future Federal Reserve decisions. Over the past few days, the US Dollar Index has pared gains, consolidating at 104.05, amid mixed data on the US economy that suggests the Federal Reserve may maintain its current interest rate policy at its next meeting in September. In addition, a series of economic measures aimed at stimulating the economy of China, a global powerhouse and one of the largest consumers of gold, pushed the XAU/USD exchange rate higher. Notable measures include the government's efforts to revitalize the private sector, as well as significant adjustments such as the People's Bank of China's reduction in the required reserve ratio. In addition, some Chinese banks have adjusted RMB deposit rates. The disappointing performance of US Treasury yields over the past few weeks has contributed to gold prices, especially as the XAU/USD pair remains steady above key technical support levels. Despite the recent US dollar rally, this momentum appears to be waning, which indirectly boosts gold's appeal. However, the prospect of further rate hikes later this year could limit the dollar's decline and thus limit gold's upside.


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Fundamental analysis of WTI

Benchmark US crude oil WTI - currently trading around 86.70. The recent strengthening of prices is due to a number of factors, both domestic and global. According to preliminary data from the American Petroleum Institute, U.S. oil inventories declined by 5.5 million barrels in the week ending September 1. This figure indicates supply constraints. Globally, major oil producers Saudi Arabia and Russia played a key role in influencing the trajectory of WTI. Both countries have decided to extend voluntary oil supply cuts until the end of 2023. Saudi Arabia is expected to cut production by 1 million bpd in the last quarter of 2023. On the other hand, Russia has pledged to cut production by 300,000 bpd. It is important to note that this reduction will be assessed on a monthly basis depending on changes in market conditions. Under the influence of these factors, oil futures contracts rose. With quotes trading near a nine-month high, market sentiment indicates that a short-term supply cut is imminent.

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