Yesterday’s Market Wrap
On Monday most markets were quiet with the US being on Holiday for Labour Day and trading assets remained in a small range. Yesterday we saw a pick up in trading activity, as economic events started rolling in, with the Chinese Caixing services report being released in the morning. The figures showed that the service sector continues to slow despite the positive reading in ISM manufacturing last week. That sent risk currencies lower in the Asian session although it wasn’t all bad as the domestic demand increased.
Later the Reserve Bank of Australia held its meeting which ended up sending the Aussie around 100 pips lower. There were no surprises from the RBA as they left the cash rate unchanged at 4.10% for a third straight meeting, with markets not expecting them to raise rates further.
However, the highlight of the day was the production cut in crude Oil output from major OPEC+ players. Saudi Arabia announced that the production for October, November, and December will be 9 million barrels per day. That was followed by comments from Russia’s Novak who said that Oil exports will be cut by 300,000 barrels/day until the end of 2023. That sent Oil around $2 higher, and now WTI seems to be headed for $90 again.
Today’s Market Expectations
Today starts with the GDP report from Australia. After yesterday’s RBA meeting, the Australian economy is expected to show a 0.3% expansion in Q2, with risks leaning to the downside. A miss would send the AUD on another bearish leg lower for at least 100 pips, similar to yesterday’s move following the RBA.
German Factory Orders and Retail Sales from the Eurozone are expected to show a decline, which would weigh further on the Euro, while later we have the Canadian Trade Balance ahead of the Bank of Canada meeting. The BOC is expected to hold rates unchanged at 5.0% and keep a slightly dovish bias, as inflation cools in Canada, which would be bullish for USD/CAD.
The ISM Services PMI from the US will close the day. They are expected to slow further from 52.7 points to 52.5 points in August, although markets are fearing a bigger miss. That would kill any remaining hope for another FED rate hike, which would be bearish for the USD and bullish for risk assets.
Yesterday the volatility picked up as US traders returned from the bank holiday weekend and we had several trades opened. We had six trading signals closing in total, four of them reached the take profit target, while two hit the SL targets, since there were a couple of reversals taking place.
GOLD Breaks Below the 200 SMA
Gold experienced a shift in market sentiment over the past two weeks after it had been bullish for most of August but turned bearish. Initially, the price briefly dropped below the $1,900 mark. However, this bearish sentiment led to a more optimistic outlook for Gold as buyers re-entered the market. This resulted in a price increase, with gold reaching $1,953 by Friday afternoon. The price encountered significant resistance and has been retreating lower since then.
Currently, on the H4 chart, Gold seems to be heading lower after being overbought earlier. The 200 SMA (purple) was acting as a support indicator, but sellers pushed the price below this moving average yesterday, so the picture is looking bearish again for Gold.
XAU/USD – 240 minute chart
Booking Profit in WTI Oil
Saudi Arabia has made an announcement regarding oil production cuts that will extend through the end of the year. They plan to reduce their production to 9 million barrels per day for the months of October, November, and December. It is expected that Russia will also follow suit with similar production cuts.
Russian Deputy Prime Minister Alexander Novak mentioned last week that Russia intends to reduce its oil production by 300,000 barrels per day. As a result of these announcements, the price of crude oil is currently surging, with its value increasing by nearly $2 and reaching a price above $87.50 per barrel, which hit the take profit tarted for ou buy Oil signal.
Cryptocurrency Update
BITCOIN Getting Comfortable Below $26,000
BTC/USD – Daily chart
We decided to open another buy Bitcoin signal yesterday after the pullback, going in long just above the 100 MS Aon the H4 chart above.
- BTC Buy Signal
- Entry Price: $27,157.1
- Stop Loss: $25,113
- Take Profit: $29,113
ETHEREUM Keeps Trading in the Range Above $1,600
Ethereum has demonstrated a higher level of resilience compared to Bitcoin. While it was not immune to the recent crypto market crash, with the ETH/USD pair dropping below $1,600, there’s a significant observation on the weekly chart. The 200-day Simple Moving Average (SMA), represented by the purple line, acted as a support level during this turbulent period.
Considering this observed support and…
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