1. Forex Market Insight
The European Central Bank (ECB) said last Thursday,9th September 2021 that it will reduce the size of its emergency bond purchases in the coming quarter, taking the first small step toward phasing out emergency aid.
During the Covid-19 pandemic, said emergency aid has supported the eurozone economy. Last year, the European economy was hit hard by the ravages of the Covid-19 pandemic, and the European Central Bank did its best to save the economy.
Now that high vaccination rates across Europe have enhanced the recovery prospects, policymakers are under pressure to acknowledge that the worst is over. With this, the ECB is responding by slowing down the bond purchases under the Pandemic Emergency Purchase Program (PEPP).
The market expects the ECB to make this major decision in December. By then, the ECB will conduct a full assessment of its bond purchase program and observe the impact of the Delta virus on the economy. At the same time, this will lead to having a better grasp towards the direction of the Federal Reserve’s exit from its stimulus program.
(EUR/USD 1-hour chart)
Today, the euro is still paying attention to the 1.1853-line. As long as the euro runs steadily below the 1.1853-line, it will keep the bearish trend. Below, pay attention to the support of the 1.1795 and 1.1779 positions. If the euro rises above the 1.1853-line, it will open up room for further recovery. At that time, pay attention to the suppression of the 1.1880-line.
GBP Intraday Trend Analysis
The U.K. Consumer Price Index (CPI) reached a three-year high of 2.5% in June before unexpectedly falling back to 2% in July, below the market’s expectations. The public expectations for inflation over the next 12 months rose to 3.1% in July from 2.8% in June. The fall in inflation for July reduced the intensity of the current inflationary pressures within the U.K. economy.
However, inflation is expected to accelerate further over the remainder of the year, well above the Bank of England’s 2% target, as the supply chain remains tight amid a strong rebound in demand.
Even so, with the expansion of production facilities, inflation is expected to fall back to around 2% by the end of next year. The market’s expectations for the U.K. CPI in August are 2.9%, and the continued rebound of the pandemic since August may further fuel the CPI uptrend.
(GBP/USD 1-hour chart)
Today, the British pound still maintains its bearish trend. With this, focus on the suppression range from 1.3878 to 1.3890 at the top, and the support at 1.3817 and 1.3771 at the bottom.
2. Precious Metals Market Insight
Spot gold fell by 2.2% this week to $1787.58 per ounce, ending the previous four consecutive weekly gains. Simultaneously, the dollar index stopped falling and rebounded this week, giving gold bulls a heavy blow.
In addition, the Federal Reserve officials are now generally supportive of tapering bond purchases during the year. Thus, the market is expecting the Fed to officially start in November, which will put huge pressure on gold prices.
However, the European Central Bank announced on Thursday, 9th September 2021 to taper its bond purchases in favor of bringing a respite to gold prices. The stock market’s four days losing streak this week has also brought some support to gold prices, as the general risk sentiment of the market receded.
(Gold 1-hour chart)
Today, pay attention to the direction of the gold price’s breakthrough in the range of 1782 to 1801. If it breaks through 1801 and rises above 1805, it will open up a greater upside potential. At that time, pay attention to the suppression of the 1819-line. If it falls below 1782, it will open a greater downside potential. At that time, pay attention to the support of the two positions of 1774 and 1768.
3. Commodities Market Insight
WTI Crude Oil
WTI crude oil futures recorded the longest streak of weekly gains since July, rising by 2.3% on Friday, 10th September 2021. Meanwhile, the offshore oil production of more than 1 million barrels per day has yet to recovered from the Hurricane Ida about two weeks ago.
At the same time, refineries in Louisiana are resuming operations. Thus, boosting the crude oil demand. The crude oil prices in the New York market have been fluctuating in a $4 range since the end of August. The market was pulled by different factors, including the shutdown of most the Gulf of Mexico production due to the hurricane and the decline in U.S. inventories, both of which boosted oil prices, while the persistence of the pandemic suppressed higher prices.
(Crude oil 1-hour chart)
The oil price has formed a wide range at 67.37 to 69.75. Today, we will pay attention to the direction of the oil price’s breakthrough in this range. If it breaks the 69.75 line, it will open up a greater upside potential. At that time, pay attention to the suppression of the 70.49-line. If it falls, it will break through the 67.37-line and open up a greater downside potential. At that point, pay attention to the 66.83 first-line of support.
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