The Dollar Index Keeps Steady While Yen Rebounds, Gold & Silver are Stagnant (09.03.2024)

The dollar index held steady at 101.6, as investors awaited key US jobs data that could influence the Federal Reserve's rate decision. The EUR/USD pair faced resistance at 1.1100, with support at 1.1000. The Japanese yen rebounded after a four-day decline but faced challenges due to disappointing manufacturing data and potential delays in rate hikes by the Bank of Japan. The USD/JPY pair saw resistance at 147.20 and support at 146.30. Gold prices fell below $2,500, influenced by a stronger dollar and expectations of Fed rate cuts, with resistance at $2,505 and support at $2,485. GBP/USD traded in a narrow range, awaiting US jobs data later in the week, with resistance at 1.3190 and support at 1.3100. Silver remained steady at $28.45, with resistance at $29.00 and support at $28.00, amid mixed economic signals and potential Fed rate cuts.Bottom of Form

Dollar Index Steady Ahead of US Jobs Data

The dollar index held steady around 101.6 on Tuesday as investors prepared for crucial US jobs data this week, which could impact expectations for the Federal Reserve’s interest rate decision. Key reports include the jobless claims data scheduled for release on Thursday and the August payrolls report on Friday. Fed officials have indicated a willingness to lower borrowing costs due to concerns about the labor market. Recent data released on Friday showed that US core PCE prices increased steadily in July, dampening hopes for a significant 50 basis point rate cut by the Fed in September. Currently, markets are pricing in a 69% chance of a 25 basis point rate cut this month, with a 31% probability for a larger 50 basis point reduction. The dollar reached two-week highs against the euro. Also in Europe, the ECB is also expected to implement rate cuts, following the sharp slowdown in inflation reported in August’s preliminary figures.

In the EUR/USD pair, the first support level is at 1.1000. If this level is breached, the next supports to watch will be 1.0950 and 1.0900. On the upside, the first resistance is at 1.1100; if this level is surpassed, the next targets will be 1.1150 and 1.1200.

Yen Rebounds Amid Manufacturing Data Concerns

The Japanese Yen (JPY) ended its four-day losing streak on Tuesday, making gains against the US Dollar (USD). However, the JPY faced challenges as disappointing Japanese manufacturing data raised concerns that the Bank of Japan (BoJ) might delay additional rate hikes. Japan has allocated ¥989 billion for energy subsidies in response to rising energy costs and cost-of-living pressures. This government intervention could potentially contribute to inflation. The BoJ’s hawkish stance has been underscored by recent increases in Tokyo's inflation. Additionally, Japanese companies reported a significant rise in capital spending for the second quarter. The downside for the USD/JPY pair may be limited as the US Dollar strengthens due to improving Treasury yields. Traders are keenly awaiting US employment data, especially the August Nonfarm Payrolls (NFP), to gain insights into the timing and scale of potential Federal Reserve rate cuts.

From a technical perspective, the first resistance level is at 147.20. If this level is surpassed, the next targets will be 147.50 and 148.70. On the downside, the initial support is at 146.30; if this level is breached, the next supports to watch will be 145.50 and 144.75.

Gold Prices Dip Ahead of Key US Economic Reports

Gold remained below $2,500 per ounce on Tuesday, continuing its pullback from last week’s record highs as investors awaited US data to adjust their expectations for the Federal Reserve’s interest rate decision. This week’s key data points include the ISM surveys, JOLTS job openings, ADP employment report, and non-farm payrolls. Several Fed officials have recently raised concerns about increasing risks to the labor market. Markets anticipate a total of 100 basis points in rate cuts over the Fed’s remaining three meetings this year, which would reduce the opportunity cost of holding non-interest-bearing assets.

Technically the first support level is at 2,485. If this level is breached, the next supports to watch will be 2,475 and 2,430. On the upside, the initial resistance is at 2,505; if this level is surpassed, the next targets will be 2,530 and 2,550.

GBP/USD Holds Range as Markets Await US Jobs Data

GBP/USD remained in the middle of its trading range on Monday, affected by a sparse economic calendar in the UK and the closure of US markets for the Labor Day holiday. Despite a dull start to the week, the pair appears set for a short-term pullback, unless US jobs data later in the week causes a significant market shift. The UK economic calendar is light this week, with only minor data releases available for GBP traders. In contrast, US Purchasing Managers Index (PMI) figures will be released throughout the week, but the focus will be on labor market reports scheduled for Thursday and Friday. On Thursday, the US ADP Employment Change report will provide an initial glimpse into the labor market, leading up to Friday’s crucial Nonfarm Payrolls (NFP) data. This week’s reports will be the last major labor updates before the Federal Reserve’s highly anticipated rate decision on September 18. Additionally, US JOLTS job openings, due on Wednesday, are expected to remain steady near 8.1 million for July, consistent with the previous month’s 8.184 million.

For GBP/USD, the initial support lies at 1.3100, followed by 1.3050 and 1.3000 below. On the upside, the first resistance is at 1.3190, with subsequent levels at 1.3230 and 1.3265 if the pair breaks above this resistance.

Silver Stagnant as Traders Eye Fed Rate Decision

Silver is trading at $28.45 on Monday morning which is the same as yesterday. Silver closed 3.24% lower despite reaching a six-week high, ending August with a 0.48% loss as gold outperformed. Traders are closely watching for a potential Federal Reserve rate cut in September, with current market odds suggesting a 69% chance of a 25 basis point reduction and a 31% chance of a 50 basis point cut. The lusterless demand from Asia, particularly China, has created headwinds for silver, even with the introduction of new import quotas. The upcoming Nonfarm Payrolls (NFP) report will be crucial in shaping the Fed's decision, as weaker data could strengthen the case for a more aggressive 50 basis point rate cut.

From a technical perspective, the first resistance level to watch is at 29.00. If silver breaks above this level, the next resistance levels to watch will be 29.65 and 30.00, respectively. On the downside, the initial support level is at 28.00, with subsequent support levels at 27.50 and 27.00.