Daily Market Report

10/07/2023
09:16

All three major U.S indexes closed lower on Friday following the latest release of the Non-Farm payrolls which came out below expectations. In the meantime, the unemployment rate fell to 3.6% as expected while the hourly average earnings exceeded forecasts.
As of now, investors continue to think that the FED is likely to resume raising interest rates as early as this month. The next FOMC rate decision is scheduled for the 26th of July and the probability of a 25bps rate hike stands at 92%.

Looking at the weekly performance of the stock market benchmarks, the Dow dropped 1.96% registering its worst weekly performance since March, the S&P500 slid 1.16%, meanwhile, the Nasdaq composite lost 0.92%.

The U.S. Dollar faced heavy selling pressure in the FX market after benefiting from a positive surprise following the ADP jobs data earlier last week. On the contrary, the Non-Farm payrolls missed expectations, triggering a new sell-off in the Greenback. Both the Euro and the British pound rose against the Dollar adding 0.70% and 0.79% respectively while the USDJPY entered a corrective phase as the currency pair fell 1.32% on Friday. In the commodity market, gold managed to bounce after finding strong buyers near the psychological support of $1900 per ounce. Technically, the yellow metal short-term trend remains bearish, however, when looking at the bigger technical picture we can see that the main trend is still up, and the focus will be on the 1932-1937 resistance zone during this week as a successful breakout above it can increase the odds of a potential bullish reversal that can extend to the next resistance which stands at the 1955 level. On the flip side, a break below last week’s low at the 1902 level can trigger fresh selling in gold towards the 1885-1870 support zone.

On the other side, WTI crude posted strong gains confirming the increase of the short-term bullish momentum as mentioned in our previous reports. From a technical standpoint, oil prices are still stuck inside a wide range, as shown in the chart below, with $67.00 a barrel acting as the main support and $75.00 representing a key barrier for future price action. As of now, buyers will likely aim to target the upper band of the current range located at the 75.00 level, however, the intermediate resistance located at 73.85 should be cleared first. On the flip side, a move back lower toward the 72.50 level is expected to provide support in the near term. To conclude, oil prices should stay supported if it continues to trade above the 71.15 level which represents the key weekly support.

Looking at the major economic releases for this week, the focus will be on the U.K.’s employment data alongside the latest GDP figures. Moreover, the Reserve Bank of New Zealand is expected to leave interest rates unchanged at 5.50%, on the opposite, investors expect Bank of Canada to raise rates by another 25bps from 4.75% to 5.00% on Wednesday.

In the U.S., investors will keep an eye on the latest inflation data. Forecasts are pointing to a high reading in the CPI monthly figures which are likely to rise from 0.1% to 0.3%.

Economic Analyst
Amine Hiani