Not the most thrilling start to the week, with the US bank holiday naturally bringing with it a more peaceful opening session but markets in Europe have started fairly well.
Perhaps there’s some carryover from last week – I’m still surprised at the lack of uplift from the jobs report – or the prospect of a stimulus-induced boost to China’s economy. Or maybe there’s nothing much at all behind the small gains in Europe and we’re just getting back into the swing of post-summer break trading.
August was far from encouraging and the narrative appeared to follow quickly behind – interest rates will stay higher for longer, recessions are coming for us all etc. There may have been too much read into trade of the last month – I may be proven wrong – but I suspect we’ll know over the next couple of weeks how much that will show to be the case.
The economic data today has been minor both in terms of numbers and impact/interest. German exports slumped again which won’t come as a surprise to many given how they’ve performed for so long, teetering on recession and maybe so again. Global trade has suffered considerably and Germany seemingly particularly so, with China’s sluggish demand clearly not helping.
Oil steady today but momentum remains with the rally
Oil prices are a little flat today after rallying another 5% last week. Brent hit a new high for 2023 in the process and, despite paring earlier gains today, there still appears to be plenty of momentum in the rally.
That there is still plenty of momentum so close to $90 a barrel may suggest we could see a strong push to break above which would represent a big shift in the market dynamic in quite a short period of time.
Saudi Arabia and Russia have been managing additional voluntary cuts on a monthly basis and could withdraw them at any point but I can’t imagine they’ll be in any rush and risk sending the price tumbling again.
Gold remains short of key technical resistance
Gold has been a little choppy today but nothing has really changed since Friday. It continues to trade a little shy of $1,950 after trying to break above in the immediate aftermath of the US jobs report. That it failed to hold above here was perhaps a little surprising – it couldn’t have really delivered more for Fed doves – and maybe a bearish signal; a show of significant resistance.
It’s failed around here for four days now and there are a combination of technical resistance levels that could be pushing back. Perhaps the rebound of the last couple of weeks has run out of steam.
For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/
Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA
