Forex market analysis this week
let’s begin with the forex market overview, How has the U.S. dollar performed this week?
U.S. dollar hits nearly 3-week high against several major currencies, according to Thursday’s Data.
The market spotted surprising growth in U.S. retail sales in August. These results have alleviated concerns regarding a sharp slowdown in economic growth.
The U.S. dollar index rose further after the report was released, with the latest increase of 0.5% to 92.923. It reached the highest level since August 27.
Retail sales increased by 0.7% last month. This was partly due to back-to-school shopping and child tax credit payments. The July data was revised downwards.
Another report showed that as of this week, the number of initial jobless claims in the U.S. increased by 20,000. It was seasonally adjusted to 332,000.
Economists had predicted that 330,000 people would apply in the past week.
On Tuesday, after the inflation report was weaker than expected, the U.S. dollar index dropped to a one-week low of 92.321. On September 3, the employment data was disappointing, with a low of 91.941 for the month.
At the two-day Fed policy meeting that ends next Wednesday, investors seek to clarify the outlook for cuts and interest rates.
A contraction usually boosts the U.S. dollar, demonstrating that the Fed is one step closer to tightening monetary policy.
It could also be translated as the central bank plans to purchase fewer debt assets, effectively reducing the number of dollars in circulation, increasing its value.
Performance of other major currencies
After falling to a six-week low of 109.110 in the previous trading day, the U.S. dollar rose 0.3% to 109.68 yen.
The euro fell 0.5% against the U.S. dollar to 1.1758 US dollars. The Swiss franc also fell against the U.S. dollar and reached 0.9260 Swiss francs. Elsewhere, the Australian dollar fell 0.7% to US$0.7285 against the U.S. dollar.
Earlier, data showed that the country’s unemployment rate unexpectedly dropped to 4.5%. Still, the Bureau of Statistics stated that this change reflects a decline in the participation rate rather than strengthening the labor market.
Stocks market overview this week
Asian stocks and U.S. stock index futures rose slightly on Friday. The traders assessed the resilience of the global recovery to the prospect of reduced Fed stimulus measures and risks to China.
Japanese and Hong Kong stocks rose. Technology stocks rose too, for the first time this week.
China’sChina’s stock market was mixed. The result was caused by China’sChina’s Evergrande Group’sGroup’s debt and the central bank’s short-term capital injection to ease tensions. After iron ore prices fell, mining companies weakened the Australian stock market.
The S&P 500, Nasdaq 100, and European futures all rose
Before the expiration of the options and futures quarters on Friday, the U.S. stock market closed mostly lower after fluctuating between ups and downs, which may trigger volatility.
After the unexpectedly strong U.S. retail sales, U.S. Treasury yields and the U.S. dollar remained high. It alleviated economic concerns caused by delta pressure and highlighted the reason for the Fed’sFed’s support. The increase in initial jobless claims may reflect weekly data fluctuations as the labor market fully recovers.
Due to the impact of the delta virus variant on the economic reopening, the effect of rising inflation, and the latest events in China, analysts expect the global stock markets to fall for the second consecutive week.
Next week, the Fed’s policy meeting may be a source of volatility, as traders await more clues about the timetable for cuts in bond purchases and eventual rate hikes.
Crypto market overview this week
Let’s overview the crypto market’s and Bitcoin’s latest performance. Bitcoin has successfully broken through the resistance level of USD 48,000. Furthermore, it continued to move towards the actual psychological price of USD 50,000. At the same time, Ethereum climbed above the resistance level of $3,600 and tried to gain additional upward momentum.
Smaller cryptocurrencies, such as Dogecoin or XRP have failed to develop substantial momentum. It seems that today’s traders’ main interest is Bitcoin and Ethereum.
The dominance of Bitcoin, which measures the market value of Bitcoin as a percentage of the total market value of cryptocurrencies, is close to 41%. Bitcoin’s recent rebound has failed to provide vital support for Bitcoin’s dominance, which indicates that traders’ interest in altcoins remains strong.
Bitcoin continued to move higher and tried to stabilize above the resistance level of $48,000
RSI is still in a moderate zone. In case a suitable catalyst occurs, there is still enough room for additional upward momentum.
Successful testing of the resistance level of 48,000 USD will open the way for testing the next resistance level of 50,000 USD. If Bitcoin surpasses the critical resistance level of $50,000, it will attract more speculative traders and move towards the next resistance level at $51,500.
Breaking the resistance at 51,500 USD will open the way to test the resistance at 53,000 USD. If Bitcoin manages to break through the resistance level of 53,000 USD, it will increase even more to the next resistance level of 55,000 USD.
Speaking of support, Bitcoin needs to return below US$48,000 to have a chance to form a downward momentum in a short time. Bitcoin’s next support level is located at the 20 EMA, at $47,300.
If Bitcoin breaks below the 20 EMA, it will move towards the support level of $46000. A successful test of this support level will examine the 50 EMA support level of $45,500. If Bitcoin breaks below the 50 EMA, it will continue to fall and move towards the support level of $44,000.
Commodity market weekly overview
Although more supplies were restored in the Gulf of Mexico after the two hurricanes, oil prices remained almost unchanged on Friday. Analysts expect the benchmark contract to achieve a weekly increase of about 4%, as production recovery lags demand.
At 0147 GMT, the US West Texas Intermediate (WTI) crude oil futures price fell 2 cents to US$72.59 per barrel, unchanged on Thursday.
Brent crude oil futures edged up 4 cents to US$75.71 per barrel and rose 21 cents on Thursday.
Both contracts are about to rise by about 4% this week. Brent crude oil is close to a seven-week high, and WTI is close to a six-week high because the U.S. Gulf of Mexico’s recovery rate after Hurricane Ida damaged facilities was slower than expected. August, Tropical Storm Nicholas struck this week.
As of Thursday, two and a half weeks after Hurricane Ida hit, approximately 28% of crude oil production in the U.S. Gulf of Mexico is still in a state of suspension.
Preliminary data from the US Energy Information Administration show that US crude oil exports in September have fallen from 3 million barrels per day at the end of August to 2.34 million barrels per day to 2.62 million barrels per day.
The data from the International Energy Agency this week showed that OECD oil inventories fell to a low point in November, as the recovery in fuel demand is much likely to exceed supply.
As Covid-19 cases in countries such as Indonesia, Malaysia, and Thailand appear to have reached their peak, the risk of weakening demand in Southeast Asia has diminished.