The volatility in the financial market during the European trading session remains significantly high, driven by expectations that the Federal Reserve will reduce interest rates by 25 basis points in the next meeting. Generally, low interest rate policies put downward pressure on the yields of interest-bearing assets which enhances the attractiveness of Gold as a non-yielding asset, thereby helping to keep its price stable amid global uncertainties.
On another note, the energy market is also experiencing turmoil after the Trump administration imposed additional sanctions on two major Russian oil companies, Rosneft and Lukoil, citing Moscow’s insufficient commitment to the peace process in Ukraine. This move aims to undermine the Kremlin’s revenue-generating capabilities to fund its war but has resulted in a spike in Oil prices by around 3%. Looking ahead, market attention will shift towards US housing data to be released tonight.
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Here are the details from Trading Central:
- The US existing home sales data will be released at 21:00 WIB; forecast at 3.9M compared to the previous 4M.
GOLD
Gold prices strengthened during the European trading session, reaching a peak of $4,137 per troy ounce. The key support came from the heightened speculation surrounding the Fed’s interest rate cuts and the global geopolitical uncertainties fueling demand for safe haven assets. Should the US economic data tonight indicate weakness, the likelihood of Gold strengthening towards the nearest resistance level could increase.
OIL
Oil prices saw a sharp increase to $61.85 following the additional US sanctions placed on Rosneft and Lukoil. The rising tensions from the failed meeting between President Trump and Vladimir Putin also added pressure to the prices. This sentiment might sustain the upward momentum in Oil throughout the evening session.
EURUSD
The EURUSD pair continues to experience selling pressure, reaching a low of 1.15906 during the European session. The trade tensions between the US and China are bolstering the US Dollar as a safe asset. However, if US economic data tonight shows results weaker than expected, high volatility could strike this pair once again.
GBPUSD
The GBPUSD pair also faced selling pressure during the European session. The strengthening of the US Dollar and a decline in global risk appetite are weighing on the British Pound. The US’s retaliatory plans against China are further worsening market sentiment. Should the economic data from the US tonight come out worse than anticipated, the pressure on GBPUSD might be limited.
USDJPY
USDJPY is on an upward trend during the European session, peaking at 152.663. The US Dollar has appreciated for five consecutive days, while the Japanese Yen is under pressure due to the new Japanese cabinet considering a stimulus package of $90 billion to mitigate the impacts of rising prices. As long as this sentiment remains, USDJPY still has the potential to test the nearest resistance level tonight.
NASDAQ
The Nasdaq index remains under pressure in the European trading session. Disappointing earnings performances from Tesla and IBM, coupled with fresh concerns regarding US plans to restrict software exports to China, are affecting market sentiment. Investors are seen shifting from tech stocks to defensive sectors amid still high valuations. Selling pressure is likely to persist over the Nasdaq through the US evening session.
