Market news

Week 10 data: Oil and gold before the NFP

By Antreas Themistokleous

05 March 2024

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This preview of weekly data looks at USOIL and XAUUSD where economic data coming up later this week are the main market drivers for the near short-term outlook.  The most important economic data for this week are:

Tuesday:

  • US Services PMI at 15:00 GMT for the month of February. The consensus is for a slight decrease of 0.4 points reaching 53. This might be rather bullish news for the Dollar since it would mean that the services sector in the States is still expanding for the whole of 2024 so far.

Wednesday: 

  • Australian GDP growth rate at 12:30 AM GMT. The market consensus is for a decline in the figure to reach 1.4% against the previous 2.1%. If the consensus is confirmed then it could potentially create some short-term losses on the Australian dollar against its pairs. 

  • US job openings are expected to be released at 15:00 GMT. The expectations are for a decline in the figure of around 131,000 jobs but this might not have a significant effect on the dollar since the data is for the month of January and also all eyes will be focusing on the job report later this week for a more accurate conclusion on the labor market. 

  • Fed chair Testimony: Jerome Powell is expected to talk cautiously about lowering interest rates when he speaks to Congress this week on Wednesday and Thursday. He'll likely stress the need for clear proof that inflation is moving toward the Federal Reserve target of 2%. Some officials at the Federal Reserve suggest delaying rate cuts, but most people expect a change in the middle of the year, depending on how the economy is doing. This careful approach is in line with the central bank's efforts to balance economic growth and stable prices.

Thursday:

  • ECB Interest rate decision at 13:15 GMT. The market consensus is that the central bank of Europe will keep the rates stable at 4.5% at their meeting on 7 March. If there is a surprise rate hike then the Euro might find support against other major currencies while a cut might create some losses in the short term. Investors and traders are rather focused on the subsequent press conference following the release that will be focusing on getting possible insights on the monetary policy steps ahead. 

Friday:

  • Canadian unemployment rate at 13:30 GMT. The market is expecting a slight increase in the figure of around 0.1% for February. This might have a minor negative effect on the loonie if the expectations are confirmed.

  • US Job report at 13:30 GMT where the non-farm payrolls and unemployment rate are going to be published. The expectation for the NFP is for a decline to reach 200,000 against the previous recording of 353,000. If these expectations are correct, the dollar could move down in various pairs in the aftermath of the release. On the other hand, the unemployment rate is expected to remain static at 3.7%. 

USOIL, daily

OPEC+ extended production cuts, signaling a response to lower demand and increased output from other producers. The slow but steady rise in oil prices this year has been influenced by tightening physical conditions, geopolitical tensions, and delayed expectations for Fed interest rate changes. The ongoing stalemate in cease-fire negotiations in the Middle East could keep oil prices steady or push them higher, while hedge funds' short positions in the oil market have reached their lowest point since October.

On the technical side, the price is trading in a somewhat aggressive bullish trend and is currently testing the inside resistance area where it reacted in mid and late November of 2023. Also, it is trading exactly on the upper band of the Bollinger bands indicating that volatility is fueled up while the Stochastic oscillator is in the extreme overbought levels. Both these indicators point to the scenario of a possible correction to the downside in the near short term. If this becomes a reality then the first area of possible support could be found around the $78 price area which is the support level of the 38.2% of the daily Fibonacci retracement level as well as the 20-day moving average. On the other hand, if the bulls prove to be stronger than the bears and the bullish momentum keeps at its current pace then the resistance level of $81 might be the first target since it is made up of 50% of the daily Fibonacci retracement as well as an area of price reaction in early November. 

Gold-dollar, daily

The gold price is currently near a two-month high due to subdued USD demand, a softer risk tone, and upcoming US data/events that could provide a fresh boost. The recent disappointing US macro data, like the decline in the second estimate of the GDP growth and lower than expected manufacturing PMI, as well as less-hawkish remarks by Federal Reserve officials have weakened the US Dollar, contributing to a supportive environment for the Gold price. The momentum created for gold on the other hand has been quite unexpected making it a rather risky choice for short-term traders but let's check the technical image as well to get a better understanding of the move.

From the technical point of view, gold price has broken above the bearish trading channel that was in effect since late 2023 while also breaking above the resistance of the 23.6% of the daily Fibonacci retracement level. The 50-day moving average is still trading above the 100-day moving average further validating the bullish momentum while the Stochastic oscillator has been pushed to extreme overbought levels. If the Dollar index (DXY) continues to decline in the coming sessions it would not be strange to see a retest of the all-time high level in gold prices near the $2,120 price area. In the event however of a correction then the first possible area of support might be found around the $2,020 which consists of the 38.2% of the Fibonacci retracement level, the dynamic area between the 50 and 100-day moving averages as well as the psychological support of the round number.


This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.


Author:

Antreas Themistokleous
Antreas Themistokleous

Antreas Themistokleous is a trading specialist in Exness. He is a Certified Financial Technician since 2018. As a member of the Society of Technical Analysts, Antreas is implementing advanced use of indicators and patterns to conclude in an action plan for different trading strategies.