The US dollar index (DXY) remains anchored close to the 104.00 mark, manifesting indications of potential vulnerabilities. The recent labor market data released on Friday added to the concerns. The numbers depicted a noticeable shift, with the unemployment rate creeping up from 3.5% to 3.8%. Additionally, wage growth showed signs of deceleration, moving from 4.4% to 4.3%.
Such alterations in the labor market dynamics are paramount in influencing central bank decisions. With these figures in mind, market analysts are growing increasingly optimistic that the Federal Reserve might halt its rate hike trajectory in September. Current forecasts place the likelihood of an interest rate hike by year-end at 32%. Should upcoming data releases echo similar weak sentiments, this probability may undergo further downward revisions, potentially exerting downward pressure on the dollar index.
Trade Suggestion: SELL STOP at 104.10, with a Target Price (TP) at 103.50 and a Stop Loss (SL) set at 104.30.
GBP/USD: A Renewed Hope Amidst Economic Commitments
The Sterling-Dollar pair (GBP/USD) hovers around the 1.2620 level. Over the past weekend, UK Finance Minister Jeremy Hunt shed light on the country's inflation trajectory, emphasizing the government's commitment to curbing it. As per his comments, the UK aims to slice its inflation rate by half, targeting roughly 5% by the close of 2023.
Hunt reassured citizens, hinting at brighter days ahead. Come autumn, the brunt of soaring prices on household expenditure is projected to alleviate. This, combined with a surge in productivity, is anticipated to bolster the nation's economic growth. The imminent release of August's business activity data for the services sector is on many investors' radars. Should the index solidify its position above the 50-point benchmark, signaling growth, the British pound could enjoy a robust support level.
Trade Suggestion: BUY STOP at 1.2640, Target Price (TP) set at 1.2740, and a Stop Loss (SL) at 1.2610.
BRENT: Riding the Wave of Global Dynamics
The Brent crude oil price is inching closer to the pivotal $90 per barrel threshold. A confluence of factors is steering this trajectory. Leading oil exporters are signaling a contraction in supply; Russia unveiled plans to cut its daily output by 300,000 barrels come September. Similarly, all eyes are on Saudi Arabia as the market awaits its nod for extending its 1 million barrels per day output reduction into October.
In a parallel development, China's recent announcement of forming a novel government body to champion the interests of private enterprises is also playing a role. This strategic move is designed to invigorate the national economy and magnify its international competitiveness. Such initiatives are forecasted to fuel domestic businesses and, by extension, amplify oil consumption in the world's most populous nation. Given these intertwined global dynamics, Brent oil showcases a promising upside trajectory.
Trade Suggestion: BUY STOP at 89.00, with a Target Price (TP) of 92.00 and a Stop Loss (SL) set at 88.00.