September’s preliminary PMIs in focus

September’s preliminary PMI figures in focus

The USD continued to strengthen in the FX market yesterday and today we note the release of UK’s, France’s, Germany’s, the Euro Zone’s and the US preliminary PMI figures for September as potential market movers. We intend to focus on Germany’s manufacturing sector, given the stiff competition its automakers are facing from China. A possible drop of the indicator’s reading could signal slower expansion of economic activity and thus weigh on the common currency.  

Mixed signals from US  stock markets

We received mixed signals from US equities yesterday, as Dow Jones edged lower, S&P 500 remained relatively stable and Nasdaq gained some ground. We still view US stock markets as rather optimistic and should such a sentiment be enhanced today, we may see US stock markets rising. On a fundamental level, developments in the Middle East continue to get traders’ attention, while some optimism about AI seems to be maintained while attention is turning towards the Trump-Xi meeting tomorrow.

Oil prices continue to edge lower

Prices of Brent and WTI continued to drop as the oil market expectations for diplomacy to work in the US-Iran conflict remain high. US President Trump stated that US and Iranian officials met on the sidelines of the UN General Assembly signalling some mobility. Should market hopes for a diplomatic easing of tensions be enhanced we may see oil prices dropping further. 

Gold’s price remains stable

Gold’s price has remained relatively stable since the start of the week, blurring the negative correlation with the USD, given its strengthening in the FX market. The path of oil prices, the level of US bond yields, central bank purchases of the precious metal, all tend to affect gold’s price, yet we currently still view the Fed’s stance as the primary structural factor behind gold’s direction. A possible enhancement of the market’s expectations for the Fed to tighten its monetary policy could weigh on gold’s price.   

Other highlights for today

Today on a monetary level, we note that ECB’s Tuominen, Cipollone and Lane, BoE’s Smith and Lombardelli and the Fed’s Barr are scheduled to speak. In tomorrow’s Asian session, we get Australia’s August employment data.

Charts to keep an eye out

EUR/USD continued to drop yesterday after breaking the 1.1470 (R1) support line, now turned to resistance. We maintain a bearish outlook for the pair and intend to keep it as long as the downward trendline guiding it remains active. The RSI indicator has dropped reaching the reading of 30, signalling a strong bearish market sentiment for the pair and supporting our outlook. Should the bears remain in charge over the pair, we may see EUR/USD breaking the 1.1350 (S1) support line and start aiming for the 1.1210 (S2) support level. Should the bulls take over, we may see EUR/USD initially breaking the prementioned downward trendline in a first signal that the downward motion has been interrupted and continue higher to break also the 1.1470 (R1) resistance level and start aiming for the 1.1575 (R2) resistance level.

WTI’s price continued to lose ground yesterday, aiming for the 87.55 (S1) support line. We maintain a bearish outlook for WTI’s price as long as the downward trendline guiding it remains intact. Should the bears maintain control over WTI’s direction, we may see it breaking the 87.55 (S1) support line and start aiming for the 82.00 (S2) support level. Should the bulls take over, we may see WTI’s price breaking the 94.30 (R1) resistance line clearly, paving the way for the 101.00 (R2) resistance level.

EUR/USD daily chart

• Support: 1.1350 (S1), 1.1210 (S2), 1.1065 (S3).
• Resistance: 1.1470 (R1), 1.1575 (R2), 1.1685 (R3). 

WTI daily chart

• Support: 87.55 (S1), 82.00 (S2), 76.00 (S3).
• Resistance: 94.30 (R1), 101.00 (R2), 108.85 (R3).