Dollar Gains, Gold Pressured, and Economic Indicators in Focus

The dollar gains as gold remains pressured. Key economic indicators are in focus today. Discover the latest on market movements, inflation data, and central bank policies affecting trading and investment.

Market Overview:

The U.S. dollar index (DXY) has seen modest gains this morning, climbing from above 101.50 to around 101.80 by midday in Asia. However, gold prices remain constrained below $2,500 per ounce, with U.S. and Canadian markets reopening after a three-day Labour Day weekend, anticipating a return to typical trading volumes and activity.

Impact on Europe & U.S. Sessions:

In Switzerland, inflation has notably eased, with July’s headline and core CPI coming in at 1.3% and 1.1% year-over-year, respectively. Despite continued, albeit marginal, economic growth, the Swiss franc may face headwinds if inflationary pressures continue to wane and economic output remains subdued. This could potentially strengthen the USD/CHF pair as European trading begins.

Dollar Index (DXY):

Key News Events:

• ISM Manufacturing PMI (2:00 pm GMT)

Expectations for DXY:

The manufacturing sector has contracted for four consecutive months, with July’s ISM PMI dropping to 46.8. The August estimate of 47.5 suggests a fifth month of decline, highlighting ongoing sector weakness. While the dollar has recently regained some demand, a weak ISM print today could alter this trend.

Central Bank Notes:

• The Federal Funds Rate target range remains unchanged at 5.25% to 5.50%.
• The Federal Reserve aims for maximum employment and 2% inflation, and it will take a cautious stance on rate reductions until inflation trends sustainably towards 2%.
• The Fed continues to reduce its Treasury and agency securities holdings, slowing the decline pace.
• The next Federal Open Market Committee (FOMC) meeting is on September 17-18, 2024.

Next 24 Hours Bias:

• Weak Bullish

Gold (XAU):

Key News Events:

• ISM Manufacturing PMI (2:00 pm GMT)

Expectations for Gold:

Gold prices may see some support if today’s ISM Manufacturing PMI report reflects continued sector weakness. A further decline in manufacturing activity could bolster gold prices as the dollar’s strength wavers.

Next 24 Hours Bias:

• Weak Bearish

Australian Dollar (AUD):

Key News Events:

• No major news events.

Expectations for AUD:

The Australian dollar remains steady above 0.6750, trading around 0.6780 in Asia. Key support and resistance levels are set at 0.6700 and 0.6850, respectively.

Central Bank Notes:

• The Reserve Bank of Australia (RBA) held the cash rate steady at 4.35%.
• Inflation remains above the target range despite a significant reduction from its peak in 2022.
• Economic activity is subdued, with weak momentum and a slower-than-expected recovery in consumption and the labor market.
• The next RBA meeting is on November 5, 2024.

Next 24 Hours Bias:

• Weak Bearish

Dollar Gains, Gold Pressured, and Economic Indicators in Focus

New Zealand Dollar (NZD):

Key News Events:

• No major news events.

Expectations for NZD:

The Kiwi dollar is trading around 0.6230, with support at 0.6200 and resistance at 0.6300.

Central Bank Notes:

• In August, the Reserve Bank of New Zealand (RBNZ) lowered the Official Cash Rate (OCR) to 5.25%.
• Inflation is approaching the target range, with underlying measures consistent with a low inflation environment.
• Economic growth is below trend, and further easing will depend on continued low inflation and stable pricing behavior.
• The next RBNZ meeting is on October 9, 2024.

Next 24 Hours Bias:

• Weak Bearish

Japanese Yen (JPY):

Key News Events:

• No major news events.

Expectations for JPY:

The Japanese yen remains under pressure, with USD/JPY trading around 146.70. Support and resistance levels are at 143.70 and 149.30, respectively.

Central Bank Notes:

• The Bank of Japan (BoJ) maintained its uncollateralized overnight call rate at around 0.25% while reducing its JGB purchases.
• Inflation is projected at 2.5% for fiscal 2024 and 2% for fiscal 2025 and 2026.
• Economic growth is expected to exceed the potential growth rate, supported by moderate overseas growth and domestic conditions.
• The next BoJ meeting is on September 20, 2024.

Next 24 Hours Bias:

• Weak Bearish

Euro (EUR):

Key News Events:

• No major news events.

Expectations for EUR:

The euro has been relatively stable, trading around 1.1065. Support and resistance levels are 1.1035 and 1.1105.

Central Bank Notes:

• The European Central Bank (ECB) kept rates unchanged in July after a June rate cut.
• Inflation remains above target, with mixed signals from underlying inflation measures.
• The euro area economy grew in Q2 but slower than in Q1, with services driving recovery while industrial production and exports lag.
• The next ECB meeting is on September 12, 2024.

Next 24 Hours Bias:

• Weak Bearish

Swiss Franc (CHF):

Key News Events:

• CPI (6:30 am GMT)
• GDP (7:00 am GMT)

Expectations for CHF:

The Swiss franc may face challenges if inflation continues to ease and economic output remains modest. USD/CHF could strengthen as inflation and GDP data are released.

Central Bank Notes:

• In June, the Swiss National Bank (SNB) lowered its key policy rate to 1.25%.
• Inflation forecasts show a decrease to 1.3% in 2024 and further declines in subsequent years.
• GDP growth is moderate, with an expected 1% growth for 2024.
• The next SNB meeting is on September 26, 2024.

Next 24 Hours Bias:

• Weak Bullish

Pound (GBP):

Key News Events:

• No major news events.

Expectations for GBP:

The pound remained above 1.3100, trading around 1.3140. Key support and resistance levels are 1.3050 and 1.3220.

Central Bank Notes:

• The Bank of England (BoE) cut its Official Bank Rate to 5.00% in August.
• CPI inflation will rise to around 2.75% in the latter half of the year.
• GDP growth has been strong but shows signs of underlying weakness. The BoE will continue to monitor inflation risks closely.
• The next BoE meeting is on September 19, 2024.

Next 24 Hours Bias:

• Weak Bearish

Canadian Dollar (CAD):

Key News Events:

• No major news events.

Expectations for CAD:

Canadian markets reopen after the Labour Day weekend, with USD/CAD testing the 1.3500 threshold. Support and resistance levels are 1.3430 and 1.3520, respectively.

Central Bank Notes:

• The Bank of Canada lowered its target overnight rate to 4.50%.
• GDP growth might be 1.2% for 2024, with stronger growth anticipated in 2025 and 2026.
• Inflation moderated to 2.7% in June, with core measures below 3%.
• The next BoC meeting is on September 4, 2024.

Next 24 Hours Bias:

• Weak Bullish

Oil:

Key News Events:

• No major news events.

Expectations for Oil:

Crude prices increased 1.1% overnight due to Libyan port suspensions and reduced national production amid political disputes. WTI oil reversed from a low of $73.40 to an overnight high of $74.93 per barrel. Prices are trading around $74.50 as Asian markets open.

Next 24 Hours Bias:

• Weak Bearish

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