Market Drivers; US Session, September 5

The US dollar continued its downward trend, breaching the crucial 101.00 level. This decline was fueled by persistently low US interest rates and growing speculation that the Federal Reserve might implement a more aggressive interest rate cut, potentially halving the cut in its next meeting.

The US Dollar Index (DXY) extended its losses, testing the 101.00 support level. Investors displayed caution ahead of the highly anticipated US labor market report on Friday. The Nonfarm Payrolls data, the Unemployment Rate, and a speech by Federal Reserve Vice Chair Williams are scheduled for September 6.

EUR/USD built upon its previous day’s gains, surpassing the 1.1100 level as the US dollar continued to weaken. The German Balance of Trade and Industrial Production data are expected to be released on September 6, followed by the final estimate of the Eurozone’s Q2 GDP growth rate and employment change figures.

USD/JPY reached new four-week lows after breaking below the 143.00 support level. The decline was attributed to a weaker US dollar, lower interest rates, and hawkish comments from a Bank of Japan official. Domestic economic indicators, such as Household Spending and the preliminary Coincident and Leading Economic Indexes, are expected to be published on September 6.

AUD/USD extended its rebound, maintaining its position above the 0.6700 level. The Australian dollar benefited from the selling pressure in the US dollar, a recovery in commodity prices, and a cautious tone from the Reserve Bank of Australia’s Bullock. Home Loans and Investment Lending data for Australian homes are scheduled for release on September 6.

GBP/USD continued its upward trajectory, approaching the critical 1.3200 level. This rise was supported by the broader weakness in the US dollar and a positive outlook for riskier assets. Key economic data for the UK, including the Halifax House Price Index and the BBA Mortgage Rate, are scheduled for release on September 6.

Commodities:

Oil prices experienced a volatile day, reaching a new 2024 low near $68.80. However, prices rebounded following positive news from OPEC+ and a bullish report on weekly US crude oil inventories by the EIA.

Gold prices surged above the $2,520 per ounce level, building on Wednesday’s gains. This increase was fueled by a weaker US dollar and declining US interest rates. Silver also rallied, reaching weekly highs above $29.00 per ounce and approaching its 55-day and 100-day simple moving averages.

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