Last week was a rollercoaster for traders around the globe. Oil prices swung dramatically because of tensions between Israel and Iran. At the same time, the Nasdaq 100 (NAS100) almost ended its uptrend. Gold, on the other hand, hit its highest price ever: $2354. The euro and Bitcoin stayed in their same price range.
Economic outlook improves
A glimmer of optimism was visible in the realm of economic indicators. The economic landscape appeared to be upswing, as evidenced by China's manufacturing sector. The official Manufacturing PMI leapt to 50.8, up from 49.1, while the private Caixin Manufacturing PMI nudged to 51.1 from 50.9, signalling expansion.
In the USA, the ISM Manufacturing index crossed the pivotal 50 threshold for the first time since November 2022, signalling growth. The Eurozone offered its surprise, with inflation receding more than anticipated, dipping from 2.6% to 2.4%, undercutting the forecasted 2.5%.
Yet, the spotlight belonged to the U.S. Nonfarm Payrolls report, which shattered expectations by reporting 303,000 new jobs, significantly surpassing the anticipated 212,000 and the previous 270,000.
Neel Kashkari from the Federal Reserve threw a curveball by suggesting there might not be any rate cuts this year. Usually, he's the first to want to cut rates to support the economy.
The strong US data, and improving Chinese economy is supportive for risky assets, and as we step into the new week, it looks like crypto currencies are the best to capitalize on the news, gold prices are also bid as a strong world economy is inflationary, and crude oil prices are up for the same reasons, but also because of middle east tensions.
What to watch this week
Wednesday
- New Zealand Official Cash Rate at 03:00 BST
- US Inflation at 13:30 BST
- Bank of Canada rate meeting at 14:45 BST
- FOMC Meeting Minutes at 19:00 BST
Thursday
- ECB rate meeting at 13:15 BST
EUR/USD
EUR/USD is stuck in a large wedge pattern. A breach to 1.0944 or 1.0696 is needed to form a new trend. Wednesday’s US CPI, and Thursday’s might trigger a breakout from the range, but it looks unlikely for now.
GBP/USD
GBP/USD is trapped in a range of 1.2515 and 1.2824. A breach to 1.2515 might send the price towards 1.2230, per the chart pattern seen below. Also, as US economy is stronger than expected, the Fed is pushing back on rate cuts, and the Bank of England is dovish, a bearish slide below 1.2515 is more likely than a breakout above 1.2824.
USD/JPY
USD/JPY could surge on a breach to 151.89 and reach 157.38 a few weeks later per a large ascending triangle. The strong US economy and a dovish Bank of Japan rate cut are supporting higher prices.
Brent Crude oil
Crude oil prices are in a short-term up trend above 87.58, and traders are likely having their eyes on the 92.44 high, followed by 93.68. The strong US economy, the improving Chinese manufacturing sector, and Middle East tensions, and OPEC+ supply curbs are supporting prices.
Gold prices
Gold prices keep a bullish uptrend if the price trades above $2265. The strong US economy might lift inflation, and so is the uptrend Crude oil prices, and this is supporting gold prices.
Nasdaq 100 (NAS100)
The Nasdaq 100 is trading sideways and struggling given the strong US economy and lower likelihood of rate cuts. The underling bias will remain upwards as long as the price trades above 17,776.
Bitcoin
Bitcoin prices just triggered a triangle pattern with a target of 85K. The pattern will remain in play as long as the price trades above $68,845.
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