The US dollar rose on Thursday after unemployment claims dropped, easing recession fears. Initial jobless claims fell to 233,000 for the week ending August 3, suggesting the labour market is stronger than anticipated. The dollar index reached a weekly high of 105.77. Investors will now focus on the upcoming US consumer price inflation report and comments from Fed Chair Jerome Powell at the Jackson Hole Economic Policy Symposium later this month.
DOW JONES
U30USD (Daily). After the collapse of major world stocks, US indices are quick to regain their confidence. Dow Jones did not break the bullish projection line and is targeting 40,000 as a supply area and psychological level.
OIL
US crude oil prices rose over 4% this week due to eased recession fears and tensions in the Middle East, which could disrupt production. Oil prices increased as the S&P 500 recovered its losses. On Friday, West Texas Intermediate was $76 per barrel. Tensions remain high after the assassination of Hamas leader Ismail Haniyeh. Israel is preparing for potential retaliations from Iran and Hezbollah, while the US seeks diplomatic solutions.
WTIUSD (Daily). Oil faced a strong price rejection at 72.40 USD per barrel again and formed a triple bottom pattern. With the geopolitical tension, we believe the price will progress towards the resistance level at 84 USD per barrel.
YEN
The dollar's gains were most notable against the yen. This followed a 1.6% drop on Wednesday after the Bank of Japan (BOJ) downplayed the chance of an imminent rate hike. The yen had hit a seven-month high of 141.67 yen to a dollar earlier in the week due to recession worries and a surprise BOJ rate hike, which led investors to unwind carry trades that boosted the yen. Contrasting opinions from the BOJ about future rate hikes and market volatility have kept investors cautious.
USDJPY (Daily). This pair halted its decline and rebounded after plunging 2,000 pips in a month. Interest rate differential could further lift the dollar against the yen to the 38.2% or 50% Fibonacci levels at 149.50 and 151.80 respectively.
GOLD
Gold price rose over 1% on Thursday due to strong safe-haven demand and expectations of a significant interest rate cut by the Federal Reserve in September. Major brokerages predict a 50-basis-point rate cut in September, with a 72% chance according to the CME Fed Watch Tool. Gold increased to $2,431, as investors sought stability by shifting from risk assets to gold. The outlook for gold remains strong but volatile. Geopolitical tensions, such as recent killings of Hamas and Hezbollah leaders, could lead to retaliatory actions by Iran, supporting gold as a hedge against uncertainties.
XAUUSD (H4). After touching support at 2365.00 last week, Gold rebounded confidently. The US rate cut in September and geopolitical tensions could push the Gold price towards $2,475 an ounce.
Fullerton Markets Research Team
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