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4
Sep

German Trade Balance, Sentix Investor Confidence, ECB President Speaks

calendar 04/09/2023 - 08:03 UTC

The U.S. dollar continued to move upwards last week, following a few days of closing in the red, with the USDX managing to end 0.15% higher for the week. The Non-Farm Payrolls report showed that job growth picked up in August, but the unemployment rate increased to 3.8%, suggesting that labor market conditions were easing thus raising expectations that the Federal Reserve will not raise interest rates this month. The dollar also seems to be recovering against the Turkish lira, posting gains of 0.69% on a weekly basis, and closing in on the all-time high of 27.48 reached last month.

Energy prices surged last week, following two consecutive weekly declines, with WTI up by 7.35% while Brent gained 4.82% on the weekly chart. Part of the move could be attributed to upbeat Chinese factory activity and additional stimulus implemented as well as expectations that major producers would keep supplies tight and the Federal Reserve would likely leave interest rates unchanged in its upcoming meeting.

The main US stock indices also jumped in the past week, following rising expectations that the Fed would ease its monetary policy stance, with the US 500 up by 2.41%, the US 30 rising by 1.43% and the US tech 100 gaining by 3.58% in the past week. The move came after a jump in unemployment cemented expectations of a pause in interest rate hikes this month, while shares of streaming firms received some strong pressure from a dispute between Disney and Charter Communications. Tesla was once again the most traded stock in the Nasdaq with $32.6 billion worth of shares exchanged during the session, however, it declined by 5% after the EV maker cut prices some of its models in the U.S.

With U.S. markets closed due to a bank holiday on Monday, investors are shifting their focus on Germany’s trade balance report, the eurozone Sentix Investor Confidence survey and a speech by ECB President Lagarde at the European Economic and Financial Centre, in London.

EUR/USD

The EUR/USD pair posted weekly losses of 0.26%, after falling heavily in the last two sessions of the week.

Inflation in the Eurozone per the European Central Bank’s (ECB) favourite gauge, rose to 0.6% MoM versus -0.1% expected. Over the past four months, the average monthly increase in core HICP has more than halved to 0.20% MoM than 0.6% reported in the first four months of 2023. ECB policymaker, Francois Villeroy de Galhau said that the underlying inflation has peaked since April and appears to have begun its decline.

In US, the headline US Non-Farm Payrolls (NFP) rose to 187K in August versus 170K expected and 157K prior (revised) even as the Unemployment Rate marked an uptick to 3.8% from 3.5% market forecasts and previous readings.

EUR/USD

Gold

Gold prices ended the session almost unchanged on Friday, but still posted a weekly rise after an increase in the U.S unemployment rate boosted bets that the Federal Reserve might pause the interest rate hikes.

U.S. bond yields and the dollar erased initial losses after the manufacturing data, further pressuring non-yielding bullion. But capping non-yielding gold’s declines, data released on Friday showing a rise in the unemployment rate and moderation in wage growth backed expectations that the Fed would not raise interest rates this month. Gold prices ended the week near $1940.00 per ounce extending the positive rebound for a second consecutive week.

Gold

WTI Oil

Oil prices rose on Friday to their highest in over half a year and snapped a two-week losing streak, buoyed by expectations of tightening supplies. WTI contract on iForex platform posted a weekly gain of 7.35% ending the week at $85.945 per barrel.

Oil market responded to growing market conviction that Saudi Arabia will extend in October its voluntary monthly production cut of one million barrels per day introduced in July. A keenly watched U.S. report on Friday also showed a rise in the unemployment rate and moderation in wage growth, bolstering expectations of a pause in interest rate hikes.

WTI Oil

US 500

U.S. stocks were mixed after the close on Friday, as gains in the Oil & Gas, Basic Materials and Industrials sectors led shares higher while losses in the Consumer Goods, Utilities and Telecoms sectors led shares lower.

U.S. stock indexes settled for a mixed close and benchmark Treasury yields rebounded after a U.S. jobs report showed an uptick in unemployment, cementing expectations that the Federal Reserve will let interest rates stand at its September meeting. At the end of the session US 500 and US 300 posted minor gains of 0.05% and 0.15% respectively, while US Tech 100 ended the session slightly lower posting losses of 0.14%.

US 500

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