Welcome to the Weekly Market Update!
In this edition, we bring you the latest highlights and insights from the world of finance. We will cover the week’s top stories, provide market analysis, highlight economic developments, discuss upcoming events to watch, and present technical analysis. Let’s delve into the key information you need to stay informed and make informed financial decisions.
Top Stories of the Week
- ISM Services PMI Defies Expectations: US dominant sector, along with rising new orders and higher prices paid, fuels mounting inflationary pressures.
- USD/JPY Scales New Heights: Dovish statements from the BoJ and weak household spending push the pair to a 10-month high at 147.80, further buoyed by hawkish Fed commentary.
- Apple Takes a Hit in China: Government officials’ iPhone ban triggers a 3.4% share price decline, marking Apple’s largest daily dip in a month.
- ARM Sets IPO Range: Chipmaker eyes a share price between $47-$52, valuing the firm at $52 billion—slightly less than its July transaction implied.
- Novo Nordisk Tops Europe: The Danish pharma giant dislodges LVMH to become Europe’s most valuable company as demand for its weight loss drugs skyrockets.
Market Analysis
- Surge in Oil Prices: Brent crude smashed through the $90 barrier this week, its highest mark in 10 months. Saudi Arabia and Russia extended oil output cuts until December, keeping total output at a multi-year low of 9 million barrels per day. UBS strategists project this will create a market deficit, potentially pushing Brent to $95 by year-end. Concurrently, West Texas Intermediate hit a 10-month high of $87. While global energy demand soars, worries about China’s economy provide some counterbalance.
Economic Highlights
- Eurozone’s Grim Economic Outlook: The Eurozone’s business activity saw a deeper downturn than initially estimated in August, with its Composite PMI plummeting to 46.7—a level not seen since November 2020. This indicates the bloc could be heading into recession. Consumer spending has been hit by increased borrowing costs, driving the new business index down to early-2021 lows. While a slight easing in manufacturing downturn offers a glimmer of hope, employment prospects are bleak, with the composite employment index dropping to 50.2. This comes amidst experts like Cyrus de la Rubia from Hamburg Commercial Bank warning of challenging times ahead.
Upcoming Events to Watch
- ECB Rate ECB Rate Decision (Sep 14): All eyes on the ECB as it grapples with inflation above target and rising recession fears. A rate hike is less certain this round, making the decision highly anticipated.
- US CPI Data (Sep 13): With US inflation at 3.2% YoY in August, investors will be keenly watching for any change in consumer prices. A hotter-than-expected figure could push for a November rate hike.
- China Economic Data (End of week): Amid weakening economic data and a troubled property sector, key indicators like PMI, trade, and inflation figures are slated for release. A lack of aggressive stimulus could impact global risk sentiment.
- UK Jobs Data: BoE is in a tight spot as wage growth hits 8.2%. Investors are watching if this trend continues, as it could steer further rate hikes. GBP/USD is at a 3-month low.
- German ZEW (Sep 13): Falling factory orders and high interest rates have dampened economic sentiment in Germany. The upcoming ZEW report could provide pivotal insights, especially as EUR/USD trades at a 6-month low.
Technical Analysis
We have analyzed the most popular trading pairs and assets, including EUR/USD, GBP/USD, Gold, and US500. Our aim is to provide you with an insightful analysis of their trends and support/resistance levels, which will help you make informed decisions.
EUR/USD
The EUR/USD pair is currently caught in a downtrend, consistently forming lower highs and lows below the 50-day Simple Moving Average (SMA). The Relative Strength Index (RSI) has entered the oversold region, indicating a bearish stance. This indicates a strong bias towards a downward trajectory, with momentum likely pushing prices to test the 1.06 level. Any potential upward rebounds are expected to face resistance around 1.083 and, ultimately, 1.09.
GBP/USD
The GBP/USD pair is currently entrenched in a bearish trend, consistently establishing lower lows and lower highs, all while trading below the 50-day Simple Moving Average (SMA). The Relative Strength Index (RSI) recently encountered resistance at the 50 level and is now testing the August low, marking its lowest point this year, although it hasn’t yet entered oversold territory. Notably, the price has just breached a significant support level at 1.25, signaling increased bearish pressure.
XAU/USD
The XAU/USD pair is currently experiencing a downtrend, characterized by consistently forming lower lows and lower highs while trading below the 50-day Simple Moving Average (SMA). The Relative Strength Index (RSI) is in a neutral position, reflecting no clear bias in either direction. Notably, the second rebound from the 1900 level did not reach as high as previous rebounds, hinting at the potential for a breakdown during the next test of this level.
XUS500
XUS500 is currently following an uptrend, consistently forming higher highs and higher lows, although it remains below the 50-day Simple Moving Average (SMA). The Relative Strength Index (RSI) is indicating a neutral stance, without a clear directional bias. Recent market behavior is characterized by a three-day pullback following a robust four-day rally, suggesting a shift towards a more rangebound market environment.
Thank you for reading! Wishing you successful trades ahead!
Unlock your trading potential with FundYourFX, the award-winning instant funding prop firm. Experience real funding from day one, flexible trading rules, and profit share of up to 70%. Visit FundYourFX now and start achieving your trading goals today!
