Analytics

The US dollar looks steady after a short-lived profit-taking seen at the start of the week. The greenback slipped from March highs registered above the 105.00 figure, retargeting the key level following the recent retreat. At this stage, the buck lacks the upside momentum after solid gains seen last week when the prices surged to fresh multi-month highs around 105.15.

During the previous session, the greenback failed to finish above the 105.00 figure that represents the immediate upside target for the time being. On Wednesday, the buck has settled in positive territory, deriving support from the 104.50 zone in anticipation of a US CPI report that will set the tone for the currency later in the day. Annual core inflation is expected to ease to 4.3% from 4.7%, but headline inflation is predicted to rise to 3.6% from 3.2%

Fed likely to pause

The release will be in focus ahead of Fed’s meeting next week, wherein another pause is the most likely outcome even as the labor market remains tight and inflation stays well above the 2% target. If the central bank refrains from a rate hike, USD bulls would be disappointed. However, a potentially hawkish tone by Powell may prevent the greenback from a plunging.

For now, the dollar looks ready

to extend its ascent after some correction. On the downside, the immediate support now arrives around 104.50, followed by the 104.10 zone. A wider technical picture stays positive as well. This week, the USD trades lower for the first time after eight weeks of gains in a row.

The safe-haven buck is also supported by mixed-to-negative risk sentiment across the financial markets. Global stocks are mostly lower ahead of CPI data as investors are cautiously waiting for signs that inflation pressures keeps waning in the United States.

After a brief break above $91 a barrel earlier in the week, oil prices retreated amid some profit-taking to settle just below the $90 figure ahead of the weekend. Still, Brent crude remains slightly positive on the week, trading around November 2022 highs and rising for a fourth month in a row.

After refreshing ten-month highs, oil futures retreated amid renewed fears about the health of China's slowing economy that darkens the outlook for global demand. Also, oil traders are nervous about a rising probability of another Fed rate hike amid a resilient economy. Of note, fresh data out of the United States showed that weekly jobless claims came in fewer than expected, while second-quarter labor costs rose more than anticipated.

Brent enjoys upbeat industry news

Earlier in the week, oil prices jumped after Saudi Arabia and Russia agreed to extend their voluntary oil production cuts through the end of this year. Saudi Arabia also said the country still would monitor the market and could take further action if necessary.

In other industry news, the US Energy Information Administration said that crude inventory balance dropped by 6.307 million barrels last week after a draw of more than 10 million barrels in the prior week. The report showed a four straight weekly decline in inventory. Gasoline stockpiles fell by 2.6 million barrels while distillate inventories saw a build of 0.679 million barrels after the prior week’s gain of 1.235 million.

Brent crude futures have settled around $89.70 during the European hours on Friday, with the $90 handle representing the immediate bullish target ahead of the weekend. Despite the current retreat, oil could stay afloat in the near term as risk sentiment improves while dollar demand wanes after the recent gains. Should Brent retest the $91 mark, fresh multi-month hughs will come into the market focus.

Bitcoin keeps losing ground this week, staying on the defensive along with other cryptocurrencies. Earlier, the BTCUSD pair failed to break above $26,000 on multiple occasions and has been sliding gradually since then. Still, the coin has been holding above the $25,300 zone that capped losses last week.

After a brief rally above $28,000 last month, the largest cryptocurrency by market capitalization witnessed a solid price correction that pushed the price back under $26,000 as interest in crypto dropped. It looks like BTC could see deeper losses in the weeks to come, especially as September is historically the worst month of the year for the crypto market.

On the other hand, traders are in wait-and-see mode now as US regulators may approve Bitcoin ETFs applications from BlackRock, Grayscale and others. If so, the decision may trigger solid inflows into the market, thus pushing BTC and its counterparts higher.

Strong USD pressures cryptos

On Wednesday, bitcoin price has settled just below $25,800, struggling to attract demand at the current levels. As bearish sentiment dominates the cryptocurrency market these days, BTC is likely to see more losses before attracting renewed demand and bouncing. On the downside, the immediate support now arrives at $25,600, followed by the $25,300 zone and the $25,000 figure. A failure to hold above $25,000 would pave the way towards the $24,000 nark that may cap further pressure.

On the negative side, the coin struggles as the US dollar keeps rallying across the board, thus pressuring risk assets, including cryptocurrencies. The USD index advanced to fresh March highs just below the 105.00 figure and could see more gains of the Fed signals another rate hike this year, citing the economy’s resilience and a still elevated inflation.

Cryptocurrency markets saw episodes of volatility these days, finishing marginally lower for the third week in a row. The price of bitcoin briefly rallied to $28,000 before retreating aggressively as the selling pressure reemerged abruptly. As a result, the BTCUSD pair slipped back to the $26,000 area where it has been oscillating since mid-August.

Digital currencies were pressured by the SEC that announced a delay in its decision on the spot Bitcoin ETF applications by BlackRock, Invesco and others. The Commission pushed its ruling until at least October while investors anticipated a decision for applications on September 1.

In other industry news, Bitwise has decided to pull back one of its Ethereum futures applications, in a move that would enable them to convert their BITC product to hold ETH futures as well as the BTC futures.

BTC needs a weaker dollar

The recent recovery in the US dollar put pressure on asset prices across markets, including crypto. The USD index saw a bounce from the 103.00 figure to climb back to the 103.50 zone in anticipation of the US jobs report. Weak numbers could be a sign of a cooling labor market that could spur the Fed to pause rate hikes. In this scenario, the dollar may retreat again, thus pushing higher the price of bitcoin.

On the upside, the immediate barrier now arrives around $26,300, followed by the $26,600-$26,800 zone. In a wider picture, the $28,000 figure represents the key target for bulls. On the flip side, a failure to hold around $26,000 would open the way towards the $25,750 intermediate support on the way towards $25,500. In the longer term, the largest cryptocurrency by market capitalization needs to get back to the $32,000 handle in order to resume the uptrend in earnest.

Gold prices keep rising these days, tracking positive global cues amid a fall in US dollar and Treasury yields. The US currency came under solid selling pressure during the previous session as consumer sentiment data came in lower than expected while another survey showed a decline in job openings in July. Weak data pushed up hopes for a less hawkish Federal Reserve, pressuring both the USD and yields.

Against this backdrop, the precious metal advanced to the $1,938 area for the first time in three weeks before steading on Wednesday just below fresh local highs. Now that the bullion is back above the key SMAs, the technical picture has improved further this week, with the prices distancing themselves further from the March lows registered earlier this month below the $1,900 mark.

Gold in wait-and-see mode

Gold struggles to extend the recent ascent today as the greenback looks steadier in anticipation of fresh economic reports due this week. However, should the numbers continue to surprise to the downside, the dollar could see further pressure amid expectations that the Fed may pause future interest rate hikes. In this scenario, the XAUUSD pair may receive another boost to challenge fresh local highs, with the nearest significant resistance arriving around $1,950.

In the immediate term, the bullion could see some consolidation before deciding on further direction, with European equities mostly little changed today as investor sentiment turns more tentative, mirroring the tepid mood in US stock index futures ahead of the ADP employment data later in US trading. In a wider picture, gold looks relatively upbeat but also stays vulnerable amid the dollar’s reluctance to lose ground as USD bulls still hope for another rate hike by the Fed this year.

Oil prices regained the upside bias on Thursday after three bearish sessions in a row. Brent crude derived support just below the $82 figure before bouncing towards the $84 zone ahead of the weekend. Oil is buoyed despite the rallying dollar in anticipation of Powell’s speech at Jackson Hole. The Fed governor is expected to shed more light on the central bank’s plans for interest rates.

Still, Brent crude is lower for the week so far in uncertain commodity markets, with concerns over slowing Chinese demand and increased US supply weighing. Worries intensified after the People’s Bank of China cut interest rates by a smaller-than-expected margin earlier this week.

Besides, the dollar rallied to its strongest levels since early-June amid a prospect of higher US interest rates that adds to concerns that slower economic activity could potentially dent demand for crude. By the way, data released earlier in the week showed that business activity in the United States remained weak this month.

All eyes on Powell

In industry news, crude inventories fell by 6.1 million barrels in the last week compared with expectations for a 2.8-million-barrel drop, the Energy Information Administration said this week. nGasoline stocks rose by 1.5 million barrels while distillate stockpiles rose by 0.9 million barrels versus expectations for a 0.2- million-barrel rise.

Brent crude has now settled around the $84 figure, holding well below this week’s highs registered around $85.83 a barrel. The technical picture suggests there is more room to the upside for the time being. However, the bullish potential could be capped by a stronger dollar if Powell delivers a hawkish tone, thus pressuring risky assets in general. In this scenario, oil could get back below $83 to finish the week with deeper losses.

The price of bitcoin has been oscillating around two-month lows these days, struggling to attract demand in the $26,000 area. Last week, the coin briefly plunged below $25,000 before steadying. Now, the cryptocurrency market awaits fresh catalysts to decide on further direction.

In the near term, the largest digital currency by market capitalization could stay pressured by a stronger dollar and the overall cautious tone in the traditional financial markets as investors are now anticipating Fed Chairman Jerome Powell’s remarks at Jackson Hole on Friday for more indication about the central bank's forward path on interest rates.

A more hawkish tone than expected could push the dollar higher along with Treasury yields that reached their highest level since November 2007 at the start of the week. As bitcoin’s recent bearish sentiment is due to the Fed’s decision to keep interest rates high, BTC’s potential upside is likely to be subdued as the US central bank is expected to keep rates elevated as long as inflation remains well above the 2% target.

More downside may lie ahead

Technically, the BTCUSD pair has been in a downward spiral since last month, when the ascent was capped just below the $32,000 handle. As the selling pressure mounts, the $20,000 handle is coming back into the market focus. Another break below $25,000 may attract more sellers into the game in the coming days/weeks.

On the upside, a decisive recovery above the $26,300 zone is needed for the price to retarget the $27,000 level, followed by the $30,000 key barrier. However, the path of least resistance is to the downside for the time being, especially as the US dollar stays resilient at two-month highs in anticipation of Powell’s speech.

The price of gold turned slightly higher on Friday after the recent slide, struggling to attract more decisive demand even as the buying pressure surrounding the US dollar ebbed. The greenback finished slightly lower on Thursday after a five-day ascent.

Earlier in the previous session, the greenback briefly jumped to mid-June highs in the 103.60 area before retreating slightly. Now, the dollar treads water just below the 103.50 area, looking steady and directionless ahead of the weekend.

Despite some correction, the overall technical picture stays positive for the time being even as the buck has so far failed to confirm a break above the 103.50 figure. Now that the dollar is back below this level, fresh drivers could be needed in the near term. Should the DXY see a more intense selling pressure, a break below the 103.20 zone would open the way towards a deeper retreat.

The surge in in the dollar is due to a rise in Treasury yields coupled with further deterioration in the Chinese yen. The selling pressure surrounding the yen intensified amid weak economic data and some challenges for property developers.

Technicals keep deteriorating

Earlier in the session, the precious metal bounced from the $1,888 level to settle above $1,890, with prices staying vulnerable. Should the pressure reemerge any time soon, the bullion could get back below the $1,885 zone that was seen during the previous session for the first time since March.

On the weekly timeframes, the technical picture keeps deteriorating as the metal keep distancing itself from the 20-SMA. On the upside, the immediate target is now represented by the $1,900 level, followed by the $1,915 zone. On the four-hour charts, the XAUUSD pair is holding below the 20-SMA while the RSI looks bullish, painting a mixed technical picture.

Oil prices keep bleeding this week, pressured by a combination of bearish drivers including concerns over an economic slowdown in China and stronger dollar. Continued signs of a hawkish Federal Reserve also add to a downbeat tone in the oil market. In particular, traders were upset by fresh hawkish signals from the minutes of the Fed’s July meeting. The central bank’s tone pushed the dollar higher, further pressuring crude prices.

The minutes of the meeting showed that nearly all members of the committee supported higher interest rates to combat high inflation. As a reminder, the data last week showed that U.S. inflation rose in July. Against this backdrop, the US dollar advanced along with Treasury yields to register fresh June highs around 103.60.

This, coupled with risk-averse environment sent Brent crude to two-week lows around the $83 figure that has been acting as the immediate support so far. A failure to hold above this level would pave the way to this month’s lows seen around $82.35 a barrel. Then, the $80 psychological level will come back into the market focus.

China woes in focus

Meanwhile, the Chinese factor adds to worries among oil traders, as retail sales disappointed, investments figures missed expectations, and business activity was constrained, according to the latest data. Besides, there are worries about a deflationary scenario that threatens to hit economic growth. In other words, Brent is pressured by woes about China’s economic deceleration that could dent oil demand.

In industry news, the data from the US Energy Information Administration showed that inventories dropped by 5.96 million barrels in the week of August 11 versus estimates for a 2.3-million-barrel contraction. At that, crude production hit its highest levels since the Covid-19 pandemic.

After a brief dip towards $83, Brent crude bounced to settle in positive territory for the first time in four trading sessions. In the immediate term, oil prices need to hold above $83.50 in order to make fresh recovery attempts instead of attracting another sell-off.

The price of bitcoin has been trending lower for the third session in a row on Friday, albeit still staying slightly positive on the weekly charts. Earlier in the week, the digital currency briefly peaked at $30,200 but failed to confirm a break above the $30,000 psychological level as market players opted to take some profit. Since then, the BTCUSD pair has slipped below $29,500 to find a local support around $29,350.

The overall tone in the cryptocurrency market loos cautious and unstable these days. Still, the coin should stay afloat in the near term or even see a potential rally backed by easing macroeconomic conditions. By the way, as fresh data showed, the US headline CPI gained 0.2% last month, raising the inflation indicator to 3.2%, which is lower than the expected 3.3% figure. The release strengthened bets the Fed will pause interest rate hikes. The central bank delivered another 25-bps hike last month.

Range-bound trading amid low volatility

As the largest cryptocurrency by market capitalization keeps oscillating around the $30,000 psychological level, the question is if the coin has found a bottom. The coin has been stuck in a narrow range over the last 2,5 months already, with volatility at a multi-month low. Should the digital currency hold above $29,000 in the near term, fresh bullish attempts could be expected. For now, consolidation could persist with the SEC not expected to give a decision on any of the spot Bitcoin ETFs until September at the earliest.

In industry news, online payments giant PayPal announced earlier in the week the upcoming launch of a US dollar-pegged stablecoin PayPal USD. PYUSD is fully backed by US dollar deposits, short-term US treasuries, and similar cash equivalents.