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Weekly Analysis: Key Economic Factors to Watch September 9 - 13 Welcome to a new week. This week, aside from the United States, which remains a key focus for global investors, we should also watch other major economies—namely Germany, China, the United Kingdom, and the broader Eurozone region. These economies are interconnected, and shifts in their performance can have far-reaching implications for global markets. In this article, we will outline the crucial economic factors to watch this week and explain why they matter for your investment strategy. Key Points - Shift from Labor Market to US Inflation Concerns: Rising wage pressures and inflation risks are now at the forefront. - China's Economic Impact on the Eurozone: Trade imbalances and liquidity in China could dampen European growth. - European Central Bank (ECB) Interest Rate Decision: Possible rate cuts to support the struggling Eurozone economy, particularly in manufacturing. - The UK Economy: Persistent challenges due to political and economic uncertainty. Economic Data to Watch 1. US CPI/PPI: Inflation data to gauge future Federal Reserve policy. 2. Prelim UoM Inflation Expectations: Market expectations for inflation. 3. Prelim UoM Consumer Sentiment: Consumer confidence, which drives spending. 4. US 30-year Bond Auction: An indicator of market sentiment on long-term US economic stability. 5. China Trade Balance: Indicator of China’s international trade and demand for European goods. 6. China M2 Money Supply y/y: Measurement of cash flow and liquidity within China. 7. German Final CPI m/m: Inflation data to assess price stability. 8. German WPI m/m: Wholesale price index, relevant for manufacturing. 9. French Final CPI m/m: Inflation in France, impacting the Eurozone outlook. 10. ECB Main Refinancing Rate: Key interest rate decision by the ECB. 11. UK Claimant Count Change: A look at the UK labor market. 12. UK GDP m/m: A measure of monthly GDP growth in the UK. --- Shifting Focus from Labor Market Conditions to U.S. Inflation Concerns Last week, the US labor market took center stage with the non-farm payrolls report, which showed a modest increase of 142,000 jobs, below analysts' expectations but a significant rise from the previous month’s 89,000. The unemployment rate dropped by 0.1% to 4.2%, aligning with market expectations. However, the most concerning data point was the jump in average hourly earnings, which rose by 0.4% from 0.2% in the previous month. According to wage-push inflation theory, increases in wages can lead to higher inflation as businesses pass these costs on to consumers (Fisher, 1930). This has dampened expectations of a Federal Reserve interest rate cut, as inflation risks have become more prominent. The link between wage growth and inflation is critical here because persistent inflation could force the Fed to maintain a more hawkish stance at its upcoming FOMC meeting (September 17-18, 2024). Hypothesis: Stronger-than-expected wage growth will push inflationary pressures higher, leading the Federal Reserve to delay any potential rate cuts. Based on the Phillips Curve, which explains the inverse relationship between unemployment and inflation (Blanchard & Johnson, 2017), the Fed may be more concerned about keeping inflation under control rather than stimulating the labor market further. As a result, last week saw a sell-off in risk assets such as the NASDAQ and S&P 500, as inflation fears led to concerns about tighter monetary policy. Investors should watch the US CPI data set to be released on September 11 for further insights into inflationary pressures. In addition to the CPI data, we recommend monitoring the Prelim UoM Inflation Expectations and Consumer Sentiment data on September 13. These indicators provide forward-looking views of inflation and consumer financial security, which are critical to assessing potential shifts in economic growth and inflation dynamics. Moreover, the US 30-year bond auction will give us a sense of investor sentiment regarding long-term inflation risks and the broader US economic outlook. --- China’s Economic Impact on the Eurozone China, as a major trading partner for Europe, plays a pivotal role in shaping the Eurozone’s economic health. A slowdown in China’s trade activity could hurt European exports, particularly in sectors like automobiles and industrial machinery, which rely heavily on Chinese demand (Krugman & Obstfeld, 2009). For instance, Germany, Europe’s largest economy, is highly dependent on exports to China, and any disruption here could spell trouble for the Eurozone. Hypothesis: A declining trade balance in China will reduce European export demand, particularly in the automotive and industrial sectors. Weakening Chinese trade figures could lead to a slowdown in German manufacturing, further exacerbating the already fragile Eurozone economy. This week, the China Trade Balance data and M2 Money Supply y/y will be crucial. The trade balance will give us insight into China’s external demand, while M2 will indicate liquidity conditions within China. If liquidity is tightening, this could also signal weaker consumer demand within China, compounding the global trade slowdown. --- European Central Bank (ECB) Interest Rate Decisions On September 12, the European Central Bank (ECB) is expected to announce its policy interest rate. With inflation remaining below target and key sectors like manufacturing still struggling, a rate cut is on the table. Germany’s industrial sector, in particular, has been grappling with energy cost shocks, exacerbated by the loss of cheap energy from the Nord Stream pipeline bombing. Hypothesis: The ECB may cut rates to support economic growth in the Eurozone, especially in countries like Germany where manufacturing has been hit hard by energy shortages. This is consistent with monetary policy theory, where central banks cut rates to stimulate investment and spending when growth is weak (Friedman & Schwartz, 1963). However, investors should be mindful that a rate cut could weaken the euro in the short term, though it could stimulate economic activity over the long term. Watch German Final CPI m/m and German WPI m/m data this week for further insights into the health of Germany’s manufacturing sector and how inflation is evolving. These indicators will help assess whether the ECB’s rate cut could provide the necessary stimulus. --- The British Economy Despite the UK’s political and economic challenges, the pound sterling remains one of the world’s major currencies. Changes in the UK economy can still influence global currency markets and trade. This week, labor market data (UK Claimant Count Change) and GDP growth will be key indicators to watch. Labor market weakness could signal broader economic stagnation, which, combined with political instability, could put downward pressure on the pound. Hypothesis: A weaker-than-expected labor market report could push the UK closer to stagflation, pressuring the Bank of England to keep rates lower for longer. This would weaken the pound as investors seek higher yields elsewhere (Campbell & Shiller, 1998). Additionally, UK GDP m/m will offer insights into whether the economy is growing despite these challenges. If growth is stagnant, it will reinforce the view that the UK’s economic recovery is faltering, further complicating policy decisions. --- Conclusion This week, inflation concerns dominate the global economic outlook. The US is grappling with rising wages, China’s trade balance is critical for Europe’s prospects, and the ECB’s decision could set the tone for the Eurozone’s economic recovery. In the UK, weak labor market data and sluggish growth could spell trouble for the pound. As always, investors should remain cautious and stay updated on economic data releases to adjust their portfolios accordingly.
TVC:DXY
by ThaiAnalyst
Levels discussed on Livestream 9th September9th September DXY: Currently at 101.50, just below bearish trendline. If trendline broken and above 101.60, could trade up to resistance of 102 NZDUSD: Sell 0.6125 SL 20 TP 40 AUDUSD: Sell 0.6650 SL 20 TP 60 GBPUSD: Watch for break of 1.31 and reaction at support level of 1.3045 EURUSD: Sell 1.1035 SL 15 TP 45 USDJPY: Sell 143.30 SL 50 TP 120 USDCHF: Sell 0.8455 SL 30 TP 55 USDCAD: Consolidating, could retest resistance at 1.36, look for downside potential Gold: Break above 2500 could trade to 2515
TVC:DXY
by JinDao_Tai
Working off the rise in the dollar index DXY. H4 09.09.2024Working off the rise in the dollar index DXY Last week I expected the dollar index to rise to the area of 102 and higher. We made a pullback on it, but the depth of the correction was bigger than initially expected, but it did not affect the result. Now they are making a rebound to 102, but then might correction around 102.30. On Thursday we will know the US inflation for August and the unemployment rate on Friday. On this news the main movements on the dollar will be made.
TVC:DXYLong
by KovachTrader
DXY Completes Bullish Harmonic Pattern Near 100.50DXY Completes Bullish Harmonic Pattern Near 100.50 The DXY has completed a bullish harmonic pattern near the 100.50 level. The psychological price zone around 100 appears to be robust, especially considering the current upward price reaction in DXY. On the daily chart, this marks the second harmonic pattern identified from our previous analysis, and is rising perfectly. While the fundamental situation remains somewhat unclear at the moment. The upcoming US CPI data and FOMC rate decision this month could provide more clarity. DXY may continue to rise further in a more defined manner, although the situation remains complex. You may find more details in the chart! Thank you and Good Luck! ❤️PS: Please support with a like or comment if you find this analysis useful for your trading day❤️
TVC:DXYLong
by KlejdiCuni
3
USD/JPY Pullback is inevitable Current Situation: USD/JPY has been in a strong downtrend, evidenced by the consistent lower highs and lower lows, but it is now showing signs of a potential retracement. The pair is moving towards a demand zone around 141.764, which aligns with potential buying pressure that could trigger a bounce in the near term. As we can see on the 4HR a possible target for a pullback would be the 0.618 Fib level. Meanwhile, the DXY (U.S. Dollar Index) is showing signs of retesting the 101.320 resistance. Additionally DXY 4HR chart is already in an uptrend and looking to grow to 0.618 FIB level. USD/JPY is currently consolidating in the a recent supply zone, it is also possibly looking to retest the supply zone around 144.000. With momentum growing on the DXY I would be cautious taking any short positions at the moment.
TVC:DXYLong
by Sebastian22-
Weekly Recap & Market Forecast $SPX (Sept 8th—> Sept 13th)Hello Investors! 🌟 September started with a sharp decline as investors pruned risk assets from their portfolios amid concerns over US economic data and rising worries about growth. Let’s break down the key events that influenced the markets this week. 📉 Market Overview: The week opened with a broad sell-off across equities, commodities, and crypto, as US Treasury yields dropped to their lowest levels in more than a year. Disappointing August ISM manufacturing data set the tone for a week of worse-than-expected economic readings, stoking fears that the elusive “soft landing” may be slipping further away. US equities gave back all the gains made in the second half of August, with much of the selling attributed to multiple compression, particularly in technology stocks. Nvidia was the most prominent example, with its stock falling ~25% from its earnings peak amid historic daily declines in market cap. The S&P 500 faced resistance near the 5,600 level, struggling above 20x next year’s earnings. By the end of the week, the S&P lost 4.2%, the Dow dropped 2.9%, and the Nasdaq tumbled 5.8%, marking the tech index’s worst decline since November 2022. Stock Market Performance: 📉 S&P 500: Down by 4.2% 📉 Dow Jones: Down by 2.9% 📉 NASDAQ: Down by 5.8% Economic Indicators: WTI Crude Oil: Prices slid to their lowest levels since June 2023, prompting OPEC+ to extend its 2.2M bpd voluntary production cuts through November. Bank of Canada: Cut rates by 25 basis points in a move to boost economic growth, while PM Trudeau faced political challenges after losing support from a key coalition partner. JOLTS Jobs Data: Missed estimates significantly, falling below 8M job openings for just the second time this year. The ratio of job openings to unemployed workers dropped below a key Fed gauge, reinforcing the case for rate cuts. ADP Employment Report: Hit a three-year low, showing declining pay growth for those who didn’t change jobs, adding to concerns about labor market weakness. Fed’s Beige Book: Revealed flat or declining economic activity in nine out of twelve districts, suggesting economic sluggishness that could influence the Fed’s next moves. August Jobs Report: Showed further labor market deceleration, with downward revisions to June and July payrolls. The report kept the door open for more aggressive Fed action, with FOMC officials signaling that at least 50 basis points will be debated at the September 18th meeting. Treasury and FX Markets: Yield Curve: Continued to normalize as the US 2-year yield traded 4 basis points below the 10-year rate. Futures Markets: Priced in over 100 bps of cuts by the end of 2024 and ~225 bps by September 2025. Dollar/Yen Exchange Rate: Traded close to its August lows, while the VIX volatility index rose above 23 but remained below early August highs. Corporate News: Docusign: Posted strong quarterly results and guidance, getting back on track after struggles during the post-pandemic period. Hewlett Packard Enterprises: Delivered respectable earnings but saw shares fall, as investors were unimpressed with guidance. Broadcom: Reported an uninspiring Q3, leaving investors with more questions about the pace of AI growth, contributing to broader tech sector pressure. Nvidia: There was speculation that NVDA had received a subpoena from the DOJ, but this turned out to be false news. While they are under investigation, no formal subpoena has been served yet. M&A News: Nippon Steel’s Acquisition of US Steel: Faces challenges as reports suggest the Biden Administration may block the deal on national security grounds. Verizon: Agreed to acquire Frontier Communications for $9.6B, expanding its fiber network and positioning itself for future growth.
TVC:DXY
by WallSt007
DXY's Trend in Question: Support Holding, But Bulls need 102In my Friday analysis, I mentioned that if the DXY drops below the support zone, defined by the recent low and the year's starting price, we could expect further downside. Initially, following the release of the NFP data, the price did decline, but it quickly reversed after reaching the support level, forming a strong bullish reversal candle with a long tail on the chart. While we can't confirm a trend reversal yet and USD bulls are still not in out of the woods, as long as this support holds, there is a strong possibility of a move to the upside. For a clearer medium-term outlook, we need a break above the 102 level. If this happens, the path to 104 should open up, and we can expect the price to rise toward that zone.
TVC:DXY
by Mihai_Iacob
Daily Technical Analysis of Gold,Currencies,and Indices 9/9/2024Daily Technical Analysis for Gold, Currencies, and Indices - September 9, 2024 Introduction: Greetings, everyone. This is Mohammed Qais Abdulghani, financial market expert, presenting the daily technical analysis for the major currency pairs, commodities, and indices for Monday, September 9, 2024. Key Economic Data: Before diving into the technical analysis, let’s review the key economic data expected to be released today, which may have a direct impact on price movements: • Today, Japan will release its GDP report. • Later this week, on Wednesday, we await significant data for the U.S. dollar, including the Consumer Price Index (CPI) and Core CPI, along with the U.S. crude oil inventory report. • On Thursday, the market expects the European Central Bank (ECB) interest rate decision for the euro, along with U.S. unemployment claims and the Producer Price Index (PPI). Technical Analysis: U.S. Dollar Index (DXY): • The U.S. Dollar Index is showing signs of stability after Friday’s mixed U.S. data. Average hourly earnings increased, while the Non-Farm Payroll (NFP) report came in below expectations but higher than the previous figure. Unemployment rates matched prior results, adding some positive sentiment. • The index remains in a descending channel, trading below the key resistance level of 102. • We will not see a recovery in gains unless the price breaks above 102 on the 4-hour chart. • Continued trading below 102 threatens further declines towards the 100.300 level. EUR/USD: • The pair is correcting slightly, influenced by a positive correction in the Dollar Index, but as long as prices remain above 1.1000, the positive outlook persists. • The pair is targeting 1.1200 and 1.1350 levels. • A break below 1.1000 would invalidate the bullish scenario. GBP/USD: • The pair is approaching a crucial support level at 1.3100. • A break below this level could lead to a deeper decline, targeting 1.2900 and 1.2850. • Holding above 1.3100 would keep the upward potential intact. USD/JPY: • The pair remains under pressure. • As long as prices stay below 145 yen, the next targets are 140 yen and 134 yen. • A break above 145 yen would invalidate the bearish outlook. USD/CHF: • The pair is also under pressure, with prices remaining below 0.5810, targeting 0.5700 and 0.5630. AUD/USD: • The pair is attempting to relinquish its gains, and a break below 0.6670 may lead to a bearish move towards 0.6500 and 0.6250. NZD/USD: • The pair is retreating slightly, and trading below 0.6225 could lead to further downside, targeting 0.6100 and potentially lower levels. USD/CAD: • The pair is capitalizing on the dollar’s correction and falling oil prices. • If prices break above 1.3600, we could see renewed gains towards 1.3750 and 1.3900. GBP/JPY: • Holding below 196.90 yen signals potential for further declines, with a potential target of 184.00 yen. EUR/JPY: • The pair faces selling pressure, and a break below 158.00 yen may lead to a sharp decline towards 153.00 and 148.00 yen. EUR/GBP: • Trading below 0.8450 points to further downside targets at 0.8375 and 0.8300. USD/TRY: • The pair is trading around 34 lira, with potential upside towards 34.50 lira and 35 lira if prices can hold above current levels. BTC/USD: • Bitcoin remains under pressure, and a break below 52,000 dollars could drive the price down to 44,000 dollars. ETH/USD: • A break below 2,200 dollars could result in a deeper bearish wave, targeting 1,600 dollars. XRP/USD: • Remaining below 55 cents, XRP could face a downward move towards 46 cents and 40 cents. Gold (XAU/USD): • Gold is under pressure due to mixed U.S. data, but the bullish scenario remains intact as long as prices stay above 2,460 dollars per ounce. • A continuation of gains would require a breakout above 2,520 dollars. Crude Oil (WTI): • Continued trading below 70 dollars per barrel could target a drop towards 62 dollars. Silver (XAG/USD): • Trading below 29 dollars points to a further decline, with targets at 27.50 dollars and 26 dollars. Natural Gas (NG): • Holding above 2.20 dollars could push prices towards 2.60 dollars and 3.20 dollars. Dow Jones (DJIA): • A break below 40,000 points could lead to a sharp decline, targeting 39,000 points. NASDAQ: • A break below 18,250 points could lead to a decline towards 17,200 and potentially 16,000 points. FTSE (UK): • Continued trading below 8,200 points suggests further downside, targeting 7,900 and 7,600 points. DAX (Germany): • A break below 18,200 points could push the DAX towards 17,500 and 16,800 points. CAC (France): • Trading below 7,600 points could drive the index lower, targeting 7,200 points. Nikkei (Japan): • Remaining below 37,000 points, we expect further downside towards 35,000 and potentially 33,000 points. Conclusion: Thank you for your attention. Please accept my best regards, and stay tuned for more updates. This analysis was prepared by Mohammed Qais Abdulghani, financial market expert, based on current data and market trends. Please note that all strategies and analyses are subject to market changes, and it is advisable to follow the latest economic developments for well-informed decisions.
TVC:DXY
by MohammedQais
1