Daily Market Report

09/08/2023
06:29

The Dollar extended its advance on Tuesday as traders await the upcoming inflation figures from the U.S., in the meantime, stocks retreated after Moody’s downgraded several U.S. banks and placed many others under review. The rating agency said that banks will face many challenges to be profitable in a rising interest rates environment. Moreover, some lenders are having high exposure in commercial real estate. On the other side, the U.S. trade balance deficit widened as figures showed a deficit of -3.7 B compared to expectations of -2.8 B. Consequently, the S&P500 lost 0.42%, the Nasdaq composite fell 0.79%, and the Dow Jones dipped by 0.45%. Later today, market participants will be waiting for the latest building permit figures which are expected to decline from 10.5% to -2.1%, meanwhile, Oil traders will focus on crude oil inventories.

From a technical standpoint, the stock market corrective move is likely to continue in the coming hours until we see how inflation data will impact market sentiment. Therefore, the Dow short-term trend remains neutral while the daily chart is still showing a series of higher highs and higher lows which can keep the downside potential limited. As of now, the focus will be on the key support zone located between 35000-34950 levels. The bullish momentum should remain unchanged while prices continue to trade above it. On the flip side, a breakdown can trigger a new wave of weakness that can extend to the next support located at the 34500 level.
Finally, a breakout above the 35500 resistance is needed for a continuation higher toward the 35700 followed by the 35875 level.

In the FX Market, the U.S. Dollar managed to rebound as mentioned earlier which helped the USDJPY currency pair to advance further in the direction of the key resistance level which stands at 143.50. The trend is likely to stay bullish in this pair if prices continue to hold above the 141.50 level which represents the daily support for this pair. Therefore, the pair is expected to trade sideways to higher in the coming hours as the corrective move seen earlier this week has ended. The next level of interest stands at 143.85 and a break above it should reinforce the bullish momentum and can lead to an extension higher toward the 144.25-144.65 weekly resistance zone in the coming days.

In the commodity market, gold remains under pressure after breaking below the 1943 daily support. This level has turned into resistance which reinforces the negative outlook for the yellow metal in the near term. In the coming hours, we might see a price stabilization, however, any bounce attempt is likely to remain limited as new sellers are expected to remain in control while prices continue to trade below the 1945 level. In the meantime, a break below the 1923 support is needed to clear the path for another wave lower that can target the 1913 level. On the flip side, only a daily close above 1945 can weaken the bearish scenario.

Finally, WTI crude managed to recover from its previous daily losses as the bullish momentum remain strong. Any drop is likely to be limited in Oil while prices continue to hold above the support zone located between the 79.10 and 78.30 levels. In the short term, a daily close above the 83.30 key resistance is needed to confirm another extension higher toward the 85.50 barrier.

Economic Analyst
Amine Hiani