enDaily Analysis 19/09/2024
Latest Economic and Fundamental Insights
The dollar index rose above 101.3 on Thursday, extending its recovery from 14-month lows as investors reacted to comments from Federal Reserve Chairman Jerome Powell after the central bank cut interest rates aggressively.
Gold holds near record highs as Fed cuts rate
On Wednesday, the Federal Reserve delivered its first interest rate cut since early 2020, with a larger-than-expected 50 basis point reduction to address declining inflation and a potential slowdown in the labor market.
Federal Reserve officials also expect the benchmark interest rate to be cut by another half percentage point by the end of the year.
The move is seen as increasing demand for gold by reducing the opportunity cost of holding non-yielding assets.
However, during a press conference, Federal Reserve Chairman Jerome Powell stated that the bank is in no rush to ease monetary policy and stressed that the dot plot forecast for the federal funds rate should not be viewed as a policy plan.
Gold is steady in early Asian trade, but could be hit by a potential technical correction after Comex gold for September delivery hit its third-highest close ever on Wednesday.
However, the 50 basis point interest rate cut by the Federal Reserve yesterday marks the beginning of a rate-cutting cycle.
The scale of the rate cut also opens the way for more aggressive action in the coming months. Gold
Long-term bond yields rose and Asian stocks rose after the US Federal Reserve announced a 50 basis point interest rate cut and indicated that the monetary easing cycle would be moderate.
Oil prices were little changed after the US interest rate cut failed to boost sentiment, with Brent crude trading at $74.00 and West Texas Intermediate at $70.00.
The U.S. Federal Reserve cut interest rates by half a percentage point on Wednesday. Rate cuts typically boost economic activity and energy demand, but the market saw them as a sign of a weak labor market that could slow the economy.
This view appears to outweigh the support that interest rate cuts typically provide to economic activity.
“While the 50bp rate cut signals stiff economic headwinds ahead, bearish investors were left feeling unsatisfied after the Fed raised its medium-term rate forecasts,” analysts at ANZ Bank said in a note.
Weak demand caused by the slowdown in the Chinese economy also continued to pressure the market.
China’s refinery output slowed for a fifth straight month in August, data from the country’s statistics bureau showed over the weekend. China’s industrial output growth also slowed to a five-month low last month, and retail sales and new home prices fell further.
Markets are also watching events in the Middle East after walkie-talkies used by the Lebanese militant group Hezbollah exploded on Wednesday, following similar pager explosions the day before.
-Bitcoin price started to rise again above the $60,500 resistance level. The Federal Reserve cut interest rates by 0.50%, which sparked a bullish wave in Bitcoin towards $62,500.
Smart technical reports
How they work
A likely scenario is proposed for today, and the probability of this scenario being achieved, according to technical analysis, may be between 60% and 75%.
If the first scenario fails, the probability of the second scenario being achieved will be between 60% and 75% certain.
The first scenario fails when the price reaches the level of the alternative scenario condition, and the alternative scenario is immediately activated and the prediction from the first scenario is cancelled.
These reports are not considered a substitute for the trader’s decision, but rather they are a tool to assist the follower in making his own decisions, as a reference based on the origins of classical technical analysis.
GOLD
General trend: Upward
Interval: Half an hour (30 minutes)
Current price: 2574.97
Scenario 1: Buy gold with a break and stability above 2576.58, targeting 2583.01 and 2590.14
Alternative scenario: Sell gold with a break and stability below 2565.20 with a target price of 2558.75 and then 2550.91
Comment: Trading above the supports and averages suggests an upward trend.
CRUDE OIL
Trend: Upward
Interval: Half an hour (30 minutes)
Current price: $70.26 per barrel
Scenario 1: Buy oil by breaking the $70.43 level, targeting $70.90 and then $71.46.
Alternative scenario: Sell oil with a break and stability by closing a candle below $69.75 levels, targeting $69.23 and then $68.65
Comment: Trading above the supports and averages suggests an upward trend.
EURUSD
General trend: Upward
Interval: Half an hour (30 minutes)
Current price: 1.11359 Scenario 1: Buy EUR/USD by breaking 1.11389, targeting 1.11574 and then 1.11798
Alternative scenario: Sell the EUR/USD with a break and stability with a candle closing below 1.11162, targeting 1.11002 and then 1.10789.
Comment: Trading above the supports and averages suggests an upward trend.
GBPUSD
Trend: Upward
Interval: Half an hour (30 minutes)
Current price: 1.32435
Scenario 1: Buy the pound dollar with a break and stability above the level of 1.32547, targeting the price of 1.32788 and then 1.33075.
Alternative scenario: Selling the pound/dollar with a break and stability with a close below 1.32247, targeting 1.32007 and then 1.31785
Comment: Trading above the supports and averages suggests an upward trend.
NAS100
Trend: Upward
Interval: Half an hour (30 minutes)
Current price: 19906
Scenario 1: Buy Nasdaq with a break and hold to close above 19941 with a target price of 20044 then 20162
Alternative scenario: Sell Nasdaq with break and hold with close below 19784 with target price 19660 then 19552
Comment: Trading above the supports and averages suggests an upward trend.
Economic Calendar
(Times are in GMT+3)
-From Britain Bank of England interest rate decision (September) 14:00
-From Britain Bank of England inflation message 14:30
-From USA Unemployment claims rate 15:30
-From USA Philadelphia Fed manufacturing index (September) 15:30
-From USA Existing home sales (August) 17:00
Fundamental Analysis
The dollar index rose above 101.3 on Thursday, extending its recovery from 14-month lows as investors reacted to comments from Federal Reserve Chairman Jerome Powell after the central bank cut interest rates aggressively.
On Wednesday, the Federal Reserve cut interest rates by 50 basis points, the first rate cut since the early days of the Covid pandemic.
The central bank indicated its confidence that inflation is moving sustainably toward 2% and moved to prevent a slowdown in the labor market.
Meanwhile, Powell said the central bank is in no rush to ease policy and that half-percentage-point cuts are not the “new pace.” He also said he does not expect the era of ultra-low interest rates to return and that the neutral rate will likely be much higher than the previous regime.
The dollar rose against the yen, with the largest buying activity recorded against the Japanese currency.
Gold held steady around $2,560 an ounce on Thursday after retreating from record highs in the previous session, as markets continued to assess the Federal Reserve’s decision.
Oil prices were little changed on Thursday as concerns over demand lingered, limiting the potential benefits of a bigger-than-expected interest rate cut by the U.S. Federal Reserve.
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