Daily Market Report - Thursday, Aug 31, 2023


The euro remains under pressure against the US dollar and other currency pairs following the release of Eurozone inflation data. The latest Eurozone CPI report showed that the annual inflation rate was unchanged at 5.3% YoY in August. The inflation rate was expected to fall to 5.1%. On the other hand, the latest economic data showed the French Consumer Price Index (CPI) went up by 4.8% on an annual basis in August while the annual inflation rate in Germany fell from 6.2% to 6.1% in August. Moving ahead, ECB July monetary policy meeting minutes arrive later today. That's the next piece of major economic news that could alter the ECB's thinking on interest rates.

Euro bearish sentiment driven by weaker-than-expected release of German retail sales data and dovish comments from ECB Executive Board member Isabel Schnabel. She said economic prospects for the euro area are more dire than officials predicted in June, while underlying inflation remains “stubbornly high”. We can't predict where the peak rate is going to be, or for how long rates will have to be held at restrictive levels – Isabel added.


European shares traded higher boosted by better-than-expected earnings results from the UBS, the Swiss banking giant. Switzerland's largest bank reported $29 billion in net and pre-tax profit in Q2. US stock futures are holding their early gains after the soft ADP employment numbers gave traders confidence that the Federal Reserve will curtail its hawkish tones on inflation.


Oil prices hit a new weekly high as the API and EIA surprised the market with a massive inventory draw. The EIA crude inventory data showed the US crude inventories tumbled by 10.6 million barrels last week, far exceeding forecasts for a 3.3-million-barrel draw. The upside momentum was also supported by better-than-expected manufacturing PMI data from China, the world’s second-largest economy. China is now the single largest imported of crude oil globally.

In the currency market, the US dollar index slightly recovered after hitting a fresh weekly low on Wednesday. The dollar traded with a strong bearish sentiment throughout this week. However, the dollar has been primarily supported in recent weeks by expectations the Federal Reserve will continue with rate hikes. Fundamentally the DXY is expected to be extra volatile the next two days due to a busy economic calendar and all eyes remain on today’s PCE data and Friday’s US employment report. Both economic figures might influence the Federal Reserve’s decision on whether to act more aggressively.


The precious metal turned more bullish following the release of downbeat US economic data. Today again the US economic data completely dominate markets. Gold Investors and traders wait for one of the most awaited economic events of the week US PCE inflation data for more clues about the Federal Reserve's next steps. The PCE inflation data is set to be released at 12:30 GMT.

Economic Outlook

On the data front, the US gross domestic product (GDP) growth came in at 2.1% in the second quarter of 2023, lower compared to the second advance estimates of 2.4%. The ADP data showed that the number of ADP employment in the United States, increased by 177,000 in August, which was lower than the expected 195,000 and was the lowest in five months.

Moving ahead today, the important events to watch:

Eurozone – ECB minutes: GMT – 11:30

US – PCE price index: GMT – 12:30

US – Jobless claims: GMT – 12:30

Technical Outlook and Review

For the euro, the first nearest support level is located at 1.0850. In case it breaks below this level, it will head towards the next support level which is located near 1.0810. On the upside, 1.0920 will act as an immediate and strong hurdle while 1.0950 will be a critical resistance zone because, above this, bulls are likely to dominate.


The important levels to watch for today: Support- 1.0850 and 1.0810 Resistance- 1.0920 and 1.0950.

GOLD: For today, considering heavy volatility there are chances the metal can rally back to above the key resistance of $1954 and $1960. On the downside, any meaningful pullback now seems to find some support near the $1938/33 zones,

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The important levels to watch for today: Support- 1938 and 1933 Resistance- 1954 and 1960.

Quote of the day –“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” ~ Peter Lynch.
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